MNGT 301 ch 9 - Managerial Decision Making

classical model

-clear-cut problem and goals -condition of certainty -full information about alternatives and their outcomes -rational choice by individual for maximizing outcomes

political model

-pluralistic; conflicting goals -condition of uncertainty or ambiguity -inconsistent viewpoints; ambiguous information -bargaining and discussion among coalition members

Innovative Decision Making

-start with brainstorming -use hard evidence -engage in rigorous debate -avoid groupthink -know when to bail -do a postmortem

administrative model

-vague problem and goals -condition of uncertainty -limited information about alternatives and their outcomes -satisficing choice for resolving problem using intuition

Six Steps in the managerial decision-making process

1. Recognition of decision requirement 2. Diagnosis and Analysis of Causes 3. Development of alternatives 4. Selection of desired alternative 5. Implementation of chosen alternative 6. Evaluation and feedback

six biases

1. being influenced by initial impressions 2. justifying past decisions 3. seeing what you want to see 4. perpetuating the status quo 5. being influenced by emotions 6. being overconfident

decision

A choice made from available alternatives.

Nonprogrammed decisions

A choice made in response to a situation that is unique, is poorly defined and largely unstructured, and has important consequences for the organization.

ambiguity

A condition in which the goals to be achieved or the problem to be solved is unclear, alternatives are difficult to define, and information about outcomes is unavailable.

Programmed decisions

A decision made in response to a situation that has occurred often enough to enable managers to develop decision rules that can be applied in the future.

classical model

A decision-making model based on the assumption that managers should make logical decisions that are economically sensible and in the organization's best economic interest.

administrative model

A decision-making model that includes the concepts of bounded rationality and satisficing and describes how managers make decisions in situations that are characterized by uncertainty and ambiguity.

after-action review

A disciplined procedure whereby managers review the results of decisions to evaluate what worked, what didn't, and how to do things better.

wicked decision problem

A highly ambiguous situation can create what is sometimes called a "_______________". "____________" are associated with conflicts over goals and decision alternatives, rapidly changing circumstances, fuzzy information, unclear links among decision elements, and the inability to evaluate whether a proposed solution will work. For "_____________", there often is no "right" answer.

devil's advocate

A person who is assigned the role of challenging the assumptions and assertions made by the group to prevent premature consensus.

evidence-based decision making

A process founded on a commitment to examining potential biases, seeking and examining evidence with rigor, and making informed and intelligent decisions based on the best available facts and evidence.

5 Whys

A question-asking method used to explore the root cause underlying a particular problem. The first "why" generally produces a superficial explanation for the problem, and each subsequent "why" probes deeper into the causes of the problem and potential solutions.

certainty

A situation in which all the information the decision maker needs is fully available.

opportunity

A situation in which managers see potential organizational accomplishments that exceed current goals.

problem

A situation in which organizational accomplishments have failed to meet established goals.

point-counterpoint

A technique that breaks a decision-making group into two subgroups and assigns them different, often competing, responsibilities.

brainstorming

A technique that uses a face-to-face group to spontaneously suggest a broad range of alternatives for making a decision.

descriptive

An approach that describes how managers actually make decisions in complex situations rather than dictating how they should make decisions according to a theoretical ideal.

coalition

An informal alliance among managers who support a specific goal or solution.

administrative model

Another approach to decision making, called the "_______ _______", is considered to be descriptive, meaning that it describes how managers actually make decisions in complex situations rather than dictating how they should make decisions according to a theoretical ideal. The administrative model recognizes the human and environmental limitations that affect the degree to which managers can pursue a rational decision-making process. In difficult situations, such as those characterized by nonprogrammed decisions, uncertainty, and ambiguity, managers are typically unable to make economically rational decisions even if they want to.

satisficing

Because managers do not have the time or cognitive ability to process complete information about complex decisions, they must practice "________".

electronic brainstorming

Brainstorming that takes place in an interactive group over a computer network, rather than meeting face to face.

decision styles

Differences among people with respect to how they perceive problems and make choices.

administrative model/political model

However, "___________ and _____________" decision-making procedures and intuition have been associated with high performance in unstable environments in which decisions must be made rapidly and under more difficult conditions.

a basic assumption of the political model

Information is ambiguous and incomplete. The attempt to be rational is limited by the complexity of many problems, as well as personal and organizational constraints.

implementation

Involves using managerial, administrative, and persuasive abilities to translate a chosen decision alternative into action.

Programmed and Nonprogrammed Decisions

Management decisions typically fall into one of two categories

fu pan

Managers at Lenovo apply a technique called "______", which means "replaying the chessboard," in which they review every move to improve the next one.

a basic assumption of the political model

Managers do not have the time, resources, or mental capacity to identify all dimensions of the problem and process all relevant information. Managers talk to each other and exchange viewpoints to gather information and reduce ambiguity.

a basic assumption of the political model

Managers engage in the push and pull of debate to decide goals and discuss alternatives. Decisions are the result of bargaining and discussion among coalition members.

personal decision style: analytical style

Managers with "____________" like to consider complex solutions based on as much data as they can gather. These individuals carefully consider alternatives and often base their decisions on objective, rational data from management control systems and other sources. They search for the best possible decision based on the information available.

risk

Means that a decision has clear-cut goals and good information is available, but the future outcomes associated with each alternative are subject to chance.

normative

Means that it defines how a manager should make logical decisions and provides guidelines for reaching an ideal outcome.

bounded rationality

Means that people have the time and cognitive ability to process only a limited amount of information on which to base decisions.

uncertainty

Occurs when managers know which goals they want to achieve, but information about alternatives and future events is incomplete.

a basic assumption of the political model

Organizations are made up of groups with diverse interests, goals, and values. Managers disagree about problem priorities and may not understand or share the goals and interests of other managers.

personal decision style: conceptual style

People who tend toward a "__________________" also like to consider a broad amount of information. However, they are more socially oriented than those with an analytical style and like to talk to others about the problem and possible alternatives for solving it. Managers using a conceptual style consider many broad alternatives, rely on information from both people and systems, and like to solve problems creatively.

satisficing

Refers to choosing the first alternative that satisfies minimal decision criteria, regardless of whether better solutions are presumed to exist.

escalating commitment

Refers to continuing to invest time and money in a decision despite evidence that it is failing.

classical model

Research into decision-making procedures has found rational, "________" procedures to be associated with high performance for organizations in stable environments.

Decision Choice -best solution to problem

Situation -programmed/nonprogrammed -classical, administrative, political -decision steps + Personal Decision Style -directive -analytical -conceptual -behavioral = "______________"

political model

The "________ _______" takes into consideration that many decisions require debate, discussion, and coalition building.

classical model

The "__________ _______" of decision making is considered to be normative, which means that it defines how a decision maker should make decisions. It does not describe how managers actually make decisions so much as it provides guidelines on how to reach an ideal outcome for the organization.

personal decision style: behavioral style

The "________________" is often the style adopted by managers having a deep concern for others as individuals. Managers using this style like to talk to people one on one, understand their feelings about the problem, and consider the effect of a given decision on them. People with a "______________" usually are concerned with the personal development of others and may make decisions that help others achieve their goals.

decision-making process

The "___________________" typically involves six steps: recognizing the need for a decision, diagnosing causes, developing alternatives, selecting an alternative, implementing the alternative, and evaluating decision effectiveness.

Herbert A. Simon

The administrative model of decision making is based on the work of this man. He proposed two concepts that were instrumental in shaping the administrative model: bounded rationality and satisficing.

the political model

The model begins with four basic assumptions: Organizations are made up of groups with diverse interests, goals, and values. Managers disagree about problem priorities and may not understand or share the goals and interests of other managers. Information is ambiguous and incomplete. The attempt to be rational is limited by the complexity of many problems, as well as personal and organizational constraints. Managers do not have the time, resources, or mental capacity to identify all dimensions of the problem and process all relevant information. Managers talk to each other and exchange viewpoints to gather information and reduce ambiguity. Managers engage in the push and pull of debate to decide goals and discuss alternatives. Decisions are the result of bargaining and discussion among coalition members.

coalition building

The process of forming alliances among managers.

decision making

The process of identifying problems and opportunities and then resolving them.

diagnosis

The step in which managers analyze underlying causal factors associated with the decision situation.

groupthink

The tendency of people in groups to suppress contrary opinions in a desire for harmony.

sunk cost effect

The tendency to continue investing in a failing project in the hope of turning it around.

confirmation bias

The tendency to put too much value on evidence that is consistent with a favored belief or viewpoint and too little on evidence that contradicts it

risk propensity

The willingness to undertake risk with the opportunity of gaining an increased payoff.

evidence-based decision making

Using hard evidence can help take emotion out of the decision-making process, keep people from relying on faulty assumptions, and help to limit confirmation bias, as described previously.

anchoring bias

When a manager allows initial impressions, statistics, or estimates to act as anchors to subsequent thoughts and decisions

quasirationality

a new trend in decision making, "_________", combines intuitive and analytical thought.

four major decision styles

directive, analytical, conceptual, and behavioral

brainstorming

has its share of critics. Some say it prevents the quiet people from participating, and that a group can be too easily influenced by the ideas of some of the dominant players

Abilene paradox

hidden pressures for conformity that can exist in groups

personal decision style: directive style

is used by people who prefer simple, clear-cut solutions to problems. Managers who use this style often make decisions quickly because they do not like to deal with a lot of information and may consider only one or two alternatives. People who prefer the directive style generally are efficient and rational and prefer to rely on existing rules or procedures for making decisions.

bounded rationality

means that people have limits, or boundaries, on how rational they can be.

decision-making models

the classical model, the administrative model, or the political model