Book 1, Chapter 7: Decision Making

What is a key to making great decisions?

Learn how to assimilate a large amount of information (inputs), explore a variety of ideas, and draw on a diverse array of experience.

What are the four criteria managers generally use to evaluate alternative solutions?

Legality, ethics, feasibility, practicality

Goals

Long-term achievements or outcomes that a department or organization wants to accomplish; goals express broad, general intentions.

What is important when evaluating outcomes?

Measurable objectives; if such objectives do not exist, it is difficult to evaluate outcomes objectively.

What two elements are required for brainstorming?

1. A thorough understanding of a problem or opportunity 2. A set of ground rules that defined acceptable conduct of the group while being flexible enough to enable creativity.

Which of the steps of the Rational Decision-Making Process are best suited to groups? To individual?

1. Establish goals and objectives: Groups are better. 2. Identifying causes and developing alternative solutions: Individual efforts of all group members are needed. 3. Evaluating alternative solutions: Collective judgment of the group is superior. 4. Selecting a solution: Group consensus results in acceptance of more risk. 5. Implementation and follow-up: Best suited to an individual manager.

When evaluating alternative solutions, what two cautions should be kept in mind?

1. Keep the evaluating step separate from the previous step of identifying solutions. 2. Be wary of solutions that are evaluated as being "perfect".

How can common brainstorming problems be minimized?

1. Set specific goals for the team. 2. Provide meaningful incentives for high performing teams. 3. Have a skilled facilitator manage the process.

The intensity of anxiety in cognitive dissonance will be greater when any of what three conditions exist?

1. The decision is an important one psychologically or financially. 2. There are a number of forgone alternatives. 3. The forgone alternatives have many favorable features.

What four basic rules must be observed during a brainstorming session?

1. There are no dumb ideas. 2. No ideas are to be criticized. 3. Use ideas to build on others. 4. Seek quantity over quality.

Electronic Brainstorming

A form of brainstorming that relies on networked computers for submitting and sharing creative ideas; beneficial in that all ideas can be archived in their original form

Decision

A means to achieve some result or to solve some problem. The outcome of a process that is influenced by many forces. Decisions are organizational responses to problems and the organizational mechanisms through which attempts are made to achieve a desired state.

Cognitive Dissonance

A mental state of anxiety that occurs when there is a conflict among an individual's various cognitions (e.g. attitudes and beliefs) after a decision has been made; a conflict between what the decision-maker knows/believes and what was done

Lateral Thinking

A process of generating novel ways to solve problems faced by an individual or group.

Delphi Method

A series of questionnaires distributed to group members who anonymously reply and receive statistical feedback; intended to determine the extent to which group members agree or disagree about a problem, and ultimately reach a consensus of opinion.

Devil's Advocate

An appointed critic of proposed group actions, whose role is to uncover underlying issues with the prevailing direction of the group.

Gut Instincts

An emotional filter that often has no underpinning of hard analytical support.

Information

An evolved or more complete data set, derived from a collection of processed data where context and meaning have been added for a more thorough analysis.

It is necessary to make value judgments regarding the selection of opportunities in the assignment of priorities.

It is necessary to make value judgments about the various possibilities.

How do effective decision-makers manage their ego?

Ask questions first, collaborate with others, and take the time to analyze options and outcomes that impact all parties involved.

What are the impact of values on establishing objectives?

It is necessary to make value judgments regarding the selection of opportunities in the assignment of priorities

Idea Mapping

Brainstorming beginning with a well-defined problem; individuals generate ideas that are consolidated on a large Idea map, and participants acquire a common understanding of issues associated with the ideas; as sharing occurs, new ideas that arise are added to the map; ideas are then prioritized so further action can be taken. Improves collaboration and generates a large quantity of ideas.

List some methods for efficiently collecting a broad assortment of inputs.

Brainstorming, interviewing, polling, surveying, meetings

List three techniques for stimulating group creativity

Brainstorming, the Delphi technique, and the nominal group technique

What are the starting points for facing ethical dilemmas?

Considering the rights of others, adhering to strong values, living up to high standards of behavior

The source of an input is critical for assessing what two factors?

Credibility (input reliability) and bias (presence of a hidden agenda)

Nonprogrammed Decisions

Decisions required for unique and complex management problems; occurs when there are no decision rules in place to apply to a situation.

If a solution appears to have no drawbacks, or if there is unanimous agreement on a course of action, what role should be assigned?

Devil's advocate

Data

Disparate facts, statistics, or random inputs that, when taken in isolation, hold little value.

How can cognitive dissonance be reduced? What do individuals usually do instead of this?

Dissonance can be reduced by admitting that a mistake has been made; because people are reluctant to admit making a wrong decision, they are more likely to attempt to reduce their dissonance by: 1. Seek information that supports the wisdom of their decision. 2. Selectively perceive (distort) information in a way that supports their decision. 3. Adopt a less favorable view of the forgone alternatives. 4. Minimize the importance of the negative aspects of the decision and exaggerate the importance of the positive aspects.

Group Passing Technique

Each person in a circular group writes down one idea and then passes the piece of paper to the next person, who adds some thoughts; repeated multiple times until each person receives their original idea back with extensive elaboration; more time consuming, but allows for independent and dedicated thought about a problem.

True/False: Groups usually takes less time to reach a decision than individuals

False. Groups usually takes more time to reach a decision than individuals

Before a decision is made about a solution to a problem, what first needs to be developed and considered?

Feasible alternative solutions, plus their potential consequences

Nominal Group Technique

Generates a ranked list of ideas by having participants write down ideas anonymously, engage in structured discussion of each idea for clarification, then vote privately to rank the ideas; top-ranked ideas may be sent back for further brainstorming; arrives at a consensus quickly and encourages all participants to have an equal say.

Is group decision-making best suited to programmed or non-programmed decisions?

Group decision-making best suited to non-programmed decisions

From lowest to highest quality, how are inputs categorized and filtered?

Gut instincts (lowest), data, information, knowledge (highest)

Knowledge

Information that has been refined by analysis such that it has been assimilated, tested, and/or validated; actionable because proof of concept exists.

What happens if a situation exists where two objectives cannot be optimized simultaneously?

One objective will be optimized while the other is suboptimized.

Decision making occurs in response to what two stimuli?

Opportunities and threats

List some common characteristics shared by creative decision-makers.

Perseverance, risk-taking propensity, openness, tolerance of ambiguity

What are the positive and negative aspects of brainstorming?

Positive: Allows a team to obtain the best possible results by combining many resources; helps generate a large number of ideas quickly; allows all participants to add value. Negative: Social loafing; conformity; idea production blocking (people not listening and/or forgetting their idea because they have to wait their turn to speak); downward norm setting (lowest performing members pull the meeting down to their level)

List some factors that negatively impact open discussion

Pressure to conform, the influence of a dominant personality type in the group, status incongruity (lower-status individuals feel compelled to go along with the wants of higher-status individuals), the attempt of certain participants to influence others because they are perceived as experts in the problem area

Creativity

Process by which an individual, group, or team produces novel and useful ideas to solve a problem or capture an opportunity.

What are the two types of decision distinguished by Herbert Simon?

Programmed decisions and non-programmed decisions

Describe the "five whys" method of problem solving

Repeatedly ask "why?" Generally, after an individual has asked why five times, they will have worked through the various outer layers of a problem and found the true issue.

What are two obstacles to identifying alternative solutions to a problem?

Seeing the world from a single managerial mindset; being too close to a problem to see it from a fresh perspective

Programmed Decision

Situations in which specific procedures have been developed for repetitive and routine problems.

What are the strengths and weaknesses of the Delphi Method?

Strengths: Resistance to groupthink; ability to tap into a wide range of expertise. Weaknesses: Time involved to administer the series of questionnaires; inability to cope with widely differing opinions.

What is a good test of the soundness of a decision?

The behavior of people relative to the decision.

Framing

The decision-maker's perception, in terms of gains or losses, of a decision's possible outcomes. When choices are perceived as being between losses, there is a greater propensity to take risks than when perceived as being between gains.

Brainstorming

The generation of ideas in a group through non-critical discussion

Values

The guidelines and beliefs that a person uses when confronted with a situation in which a choice must be made.

What two things must be assessed when evaluating a decision?

The outcome of the decision and the process by which it was reached.

What four factors influence the approach to decision-making?

The type of decision being made, it's urgency, resources available, and confidentiality.

What are the impact of values on choosing an alternative?

The values of the decision maker influence which alternative his chosen.

Bounded Rationality Approach

This approach assumes that decision making is not a perfectly rational process, but rather one that is fraught with constraints and limitations. Though not optimal, decisions are thought to be satisfactory and acceptable.

Who is typically concerned with programmed decisions? With nonprogrammed decisions?

Top management focuses on nonprogrammed decisions, while first-level management focuses on programmed decisions. The nature, frequency, and degree of certainty surrounding a problem dictates at what level of management a decision will be made.

True/False: If a policy is established to handle a problem, it will not be necessary to develop and evaluate alternatives each time a similar problem arises.

True

True/False: Consensus decisions with five or more participants are shown to be superior to individual decision making, majority vote, and leader decisions.

True. Consensus decisions with five or more participants are superior.

True/False: A good decision can be negated by poor implementation.

True. In this regard, implementation can be more important than the actual choice of an alternative.

True/False: Many people are bolder, more innovative, and advocate taking greater risks when in groups.

True. People are more willing to accept risk as group members.

True/False: Decisions that coincide with intense time pressure and uncertainty are likely to be made impulsively rather than using a rational, systemic approach.

True. These decisions are based on gut feeling or intuition. The goal then shifts from achieving a desired outcome to making a decision, whether right or wrong, and dealing with the consequences later. More effective decisions result from combining systematic and intuitive approaches to decision making.

What three issues determine the significance of a problem?

Urgency, impact, and growth tendency

What are the impact of values on implementing a decision?

Value judgments are necessary in choosing the means for implementation.

What are the impact of values on evaluating and controlling?

Value judgments cannot be avoided when corrective action is taken.

Before you can fully understand the dynamics of a decision-making process, what must you appreciate?

You must appreciate the behavioral influences on you and other decision-makers in the organization when making decisions.

What three conditions is the alternative-outcome relationship based upon?

• Certainty: Complete knowledge of outcome probability for each alternative. • Uncertainty: No knowledge of outcome probability for each alternative. • Risk: Some knowledge and probable estimate of outcome for each alternative.

Describe the Rational Decision-Making Process

• Identify and analyze the problem. • Develop alternative solutions. • Evaluate alternatives. • Select the best solution. • Implement the decision. • Return to the beginning and repeat as necessary.

What factors make it difficult to identify and analyze a problem?

• Perceptual problems. • Defining problems in terms of solutions (jumping to conclusions). • Failing to identify the cause of a problem.

List some of the most common explanations why decision-makers make unethical choices.

• Pressure to perform well. • Pressure to be competitive. • It is the norm to hide research and survey information. • Lack of accountability for problems. • Cost is valued over safety.

List some questions that may be asked when assessing the decision-making process.

• Was enough information gather? • Was the information of high-quality? • Were appropriate individuals or groups consulted? • How did the decision maker handle uncertainty? • How was consensus reached? • Was bias or emotion involved in selecting the solution?