chapter 11

analysis paralysis

a decision making process in which more and more time is spent on gathering information and thinking about it, but NO decisions actually get made

sample misunderstanding bias

occurs when individuals make generalizations from a small number (or a single) source of information rather than through large, randomly drawn samples that represent a wide audience

overconfidence bias

occurs when individuals overestimate their ability to predict future events.

hindsight bias

occurs when looking backward in time where mistakes made seem obvious after they have already occurred. becomes a problem especially when judging someone else's decisions

creative

solutions to the problem are not clear, new solutions need to be generated, you have time to immerse yourself in the issues

idea quotas

A set number of ideas a group must reach before they are done with brainstorming. research shows that the quantity of ideas actually leads to better idea quality in the end.

brainstorming

Another unique aspect of _______ is that since the variety of backgrounds and approaches give the group more to draw upon, the more people are included in the process, the better the decision outcome will be. Interestingly, research also shows that having group members ____ alone with no interaction with each other before engaging in team _____ results in a higher quality and quantities of ideas

programmed decisions

Choices that occur frequently enough that we develop an automated response to them, straight-forward decisions, such as what to wear, what to eat, do not consume much time

Group Decision Support Systems

Interactive computer-based systems that are able to combine communication and decision technologies to help groups make better decisions.

rational decision

Research shows that when engaging in a _______ making model, decision makers are more likely to behave unethically compared to when following an intuitive decision model.

creative decision-making process

Step 1: Problem Recognition Step 2: Immersion (in literature) Step 3: Incubation (worked on problem for months) Step 4: Illumination (something dawns on you) Step 5: Verification & Application

Knowledge Management Systems

Systems for managing knowledge in organizations, supporting creation, capture, storage, and dissemination of information.

anchoring and adjustment bias

The tendency for individuals to rely too heavily on arbitrary numbers, irrelevant traits, of facts when making decisions ( single piece of information).

creativity

_____ occurs as an interaction among three factors: people's personality traits (openness to experience, risk taking), their attributes ( expertise, imagination, motivation), and the situational context (encouragement from others, time pressure, physical structures)

fundamental attribution error

a bias that exists when positive outcomes are seen as a function of personal characteristics while negative outcomes are attributed to external circumstances

availability bias

a situation in which information that is more readily available is seen as more likely to occur. For example, an illustrative study asked participants if they thought individuals were more likely to die of auto accidents or stomach cancer and, if so, by how much? Most people reported that auto accidents caused more deaths—likely because auto accidents are reported more in the news when compared to stomach cancer fatalities, at a rate of more than 100-to-1 while the true difference between them is actually less than 2-to-1.

Crowdsourcing

alternative to brainstorming, outsourcing a problem to a large group / crowd, organizations are relying on the power of masses to creatively solve business problems

consensus

another decision-making rule that groups may use when the goal is to gain support for an idea or plan of action. While consensus tends to require more time, it may make sense when support is needed to enact the plan. The process works by discussing the issues at hand, generating a proposal, calling for consensus, and discussing any concerns. If concerns still exist, the proposal is modified to accommodate them. These steps are repeated until consensus is reached. Thus, this decision-making rule is inclusive, participatory, cooperative, and democratic.

decision rule

automated response to problems that occur routinely ex. how a restaurant replies to complaints, have a policy to do the same thing every time

illusions of unanimity

based on self-censorship and direct pressure on the group; the lack of dissent is viewed as unanimity, characteristic of groupthink

decision making

can be classified into three categories based on the level at which they occur : strategic decisions, tactical decisions, operational decisions

nonprogrammer decisions

conscious thinking, info gathering, and careful consideration into a decision ex. who to appoint to an open position, who to choose as the supplier

tactical decisions

decisions about how things will get done (ex. issuing coupon to increase sales) ex. How should we market the new product line? What should we do to help facilitate employees from the two companies working together? Who should be let go when we downsize? made my managers

Bias

decision-making trap

strategic decisions

decisions that are made to set the course for organization. changing strategic direction or introducing a new product that requires years of development would represent a strategic decision ex. Should we merge with another. company? Should we downsize our organization? usually made by top management teams, CEOs, and boards of directorrs

operational decisions

decisions that employees make each day to run the organization ex. helping serve customer needs thru routine interactions or order fulfillment. ex. What should I say to customers about our new product? How will I balance my new work demands? How often should I communicate with my new coworkers? made by employees throughout the organization

rational decision making-model

describes a series of steps that decision makers should consider if their goal is to maximize the quality of their outcomes. formal steps with the goal of achieving an optimal result in terms of the quality of a decision, best applied to major decisions in which the costs are high and the consequences of different decision outcomes is significant. urges decision makers to generate an exhaustive set of alternatives instead of only a few. By generating a large number of alternatives that cover a wide range of possibilities, individuals are likely to make a more effective decision that does not sacrifice one criterion for the sake of another.

group decision making

disadvantages of _____: groups rarely outperform their best member, suffer from process losses, suffer from coordination problems, suffer from groupthink, takes more time

originality

how unique a person's ideas are

fundamental attribution error

ex. In a classroom setting, a student who received a good grade in a class might be tempted to attribute this outcome to their own intelligence or exceptional work ethic. On the other hand, poor performing students might blame course testing procedures or quality of education provided by the instructor.

direct pressure

exerted on any members who express strong arguments against any of the group's stereotypes, illusions, or commitments. characteristic of groupthink

alternatives

other possible solutions to a problem in the decision making process, set criteria before searching for _______ may prevent individuals from making mistakes

individual decision making

preferred for emergencies, if the individual in question has all the information needed to make a decision and if implementation problems are not expected. CONS: fewer ideas

groupthink

tendency to avoid a critical evaluation of ideas the group favors

intuitive

use this model when goals are unclear, there is time pressure and analysis paralysis would be costly, you have experience with the problem

rational

use this model when information on alternatives can be gathered and quantified, the decision is important, you are trying to maximize your outcome

bounded rationality

use this model when the minimum criteria are clear, you do not have or you are not willing to invest much time to make the decision, you are not trying to maximize your outcome

stereotyped views of outgroups

when groups discount rivals' abilities to make effective responses, characteristic of groupthink

self-censorship

when members of the group minimize their own doubts and counterarguments, characteristic of groupthink

satisfice

to accept the first alternative that meets minimum criteria, bounded-rationality model. similar to rational decision making, but rather than choosing the best option and maximizing the potential outcome, the decision maker saves cognitive time and effort by accepting the first alternative that meets the minimum threshold. research supports that taking this approach may be effective as too many choices actually lead to fewer choices being made.

rational decision-making model

1. Identify the problem 2. Establish decisions criteria 3. Weigh decision criteria 4. Generate alternatives 5. Evaluate the alternatives 6. Choose the best alternative 7. Implement the decision 8. Evaluate the decision

SCAMPER

A checklist tool that helps you think of changes you can make to an existing marketplace to create something new - a new product, a new service, or both. Substitute, combine, adapt, modify, put to other uses, eliminate, rearrange

Groupthink

A situation in which group members seek unanimous agreement despite their individual doubts

Nominal Group Technique (NGT)

A technique designed to help with group decision making by ensuring that all members participate fully.used to structure group meetings when members are grappling with problem solving or idea generation. It follows four steps. First, each member of the group begins by independently and silently writing down ideas. Second, the group goes in order around the room to gather all the ideas that were generated. This continues until all the ideas have been shared. Third, a discussion takes place around each idea, and members ask for and give clarification and make evaluative statements. Finally, group members vote for their favorite ideas by using ranking or rating techniques.

wildstorming

A variation of brainstorming in which the group focuses on ideas that are impossible and then imagines what would need to happen to make them possible.

premortem

A way to imagine what might go wrong and avoid it before spending a cent or having to change course along the way.

decision trees

Diagrams where answers to yes or no questions lead decision makers to address additional questions until they reach the end of the tree. Decision trees are helpful in avoiding errors such as framing bias. Decision trees tend to be helpful in guiding the decision maker to a predetermined alternative and ensuring consistency of decision making—that is, every time certain conditions are present, the decision maker will follow one course of action as opposed to others if the decision is made using a decision tree.

majority rule

a decision-making rule in which each member of the group is given a single vote and the option receiving the greatest number of votes is selected. This technique has remained popular, perhaps due to its simplicity, speed, ease of use, and representational fairness

Brainstorming

a group process of generating ideas that follow a set of guidelines, including no criticism of ideas during the ____ process, the idea that no suggestion is too crazy, and building on other ideas (piggybacking).

decision criteria

a set of parameters against which all the potential options in decision making will be evaluated, make this before beginning the search for alternatives to prevent decision makers from favoring one option too much and setting criteria accordingly

intuitive decision-making model

arriving at decisions without conscious reasoning. The model argues that in a given situation, experts making decisions scan the environment for cues to recognize patterns.Thanks to training, experience, and knowledge, these decision makers have an idea of how well a given solution may work. If they run through the mental model and find that the solution will not work, they alter the solution before setting it into action. If it still is not deemed a workable solution, it is discarded as an option, and a new idea is tested until a workable solution is found. Once a viable course of action is identified, the decision maker puts the solution into motion. The key point is that only one choice is considered at a time.Novices are not able to make effective decisions this way, because they do not have enough prior experience to draw upon.

creativity

generation of new, imaginative ideas. first step in the innovation process. innovation begins with ______ , but it also involve realistic planning and follow-through. innovation and _____ are not the same.

the emergence of self-appointed mindguards

happens when one or more members protect the group from information that runs counter to the group's assumptions and course of action, characteristic of groupthink

Flexibility

how different the ideas are from one another, if you are able to general several distinct solutions to a problem, your decision-making process is high on ______ .

collective rationalizations

in which members downplay negative information or warning that might cause them to reconsider their assumptions, characteristic of groupthink. Members of the group develop rationalizations to explain away any warning that is contrary to the group's thinking.

structured decision-making processes

include rational, bounded, rationality, intuitive, and creative decision making

Bounded Rationality Model

individuals knowingly limit their options to a manageable set and choose the first acceptable alternative without conducting an exhaustive search for alternatives, recognizes the limitations of decision-making processes

rational decision-making model

involves a number of unrealistic assumptions. it assumes that people completely understand the decision to be made, that they know all their available choices, that they have no perceptual basis, and that they want to make optimal decisions. individuals rarely sit down and complete all eight steps in the rational decision-making model. even when access to all information is possible, it can be challenging to compare the pros and cons of each alternative and rank them according to preferences

Delphi Technique

it is a group process using written responses to a series of questionnaires instead of physically bringing individuals together to make a decision. The first questionnaire asks individuals to respond to a broad question such as stating the problem, outlining objectives, or proposing solutions. Each subsequent questionnaire is built from the information gathered in the previous one. The process ends when the group reaches a consensus. Facilitators can decide whether to keep responses anonymous. This process is often used to generate best practices from experts.

decision-making

making choices among alternative courses of action, including inaction

An unquestioned belief in the group's inherent morality

may incline members to ignore ethical or moral consequences of their actions, characteristic of groupthink

searching for alternatives

most challenging step of the rational decision-making model, often leads to failure

Escalation of commitment bias

occurs when individuals continue on a failing course of action after information reveals this may be a poor path to follow. sometimes called the sunk costs fallacy because the continuation is often based on the idea that one has already invested in this course of action. First, decision makers do not want to admit that they were wrong and escalation of commitment is related to a desire to save face and preserve one's reputation. Second, time invested into the failing cause of action is associated with escalation of commitment. Decision makers may incorrectly believe that spending more time and energy might somehow help them recover their losses

group decision making

preferred when one person does not have all the information and skills needed to make a decision, if implementing the decision will be difficult without the involvement of those who will be affected by the decision, and if time urgency is more modest, then decision making by a group may be more effective. PRO: greater commitment to ideas, can piggyback on others' ideas, interaction can be fun CON: social loafing - harder to identify responsibility for decisions

1. identify the problem 2. establish decision criteria 3. weight decision criteria 4. generate alternatives 5. evaluate the alternatives 6. choose the best alternative 7. implement the decision 8. evaluation the decision

rational decision-making model

Satisficing

refers to a situation in which individuals select the first acceptable alternative instead of seeking the best possible decision. While this bias might actually be desirable when making simple decisions such as what to wear during an informal event, it can be a decision-making error during big decisions such as choosing between competing job offers, or making a major purchase with long-term impact.

creative

research shows that individuals who are open to experience, less conscientious, more self-accepting, who seek more feedback, and are more impulsive tend to be more _______

illusion of invulerability

shared by most or all of the group members, which creatives excessive optimism and encourages them to take extreme risks, characterizes group think. Members of a group in which no one voices their disagreement may have the perception that their group is performing well. In essence, group members believe that their group as a whole could not possible perform sweeping errors in judgment.

devil's advocate

some who is assigned the role of challenging and questioning the group. this person may prevent the group from premature agreement.

temporal order

the change in X occurs before the change in Y ex. Does an increase in employee satisfaction occur before sales increase?

fluency

the number of ideas a person is able to generate

correlation and causality bias

the situation where correlation is confused with causality

framing bias

the tendency of decision makers to be influenced by the way that a situation or problem is presented to them. depending on how a problem is presented, individuals choose an alternative that is disadvantageous simply because of how it is framed

correlation, temporal order, ruling out other potential causes

three elements are necessary to understand why one thing affects another

fluency, flexibility, originality

three factors of creativity