Chapter 6

Even the best manager will make __________, but managers can increase their percentage of _______ decisions by understanding some of the ________ that cause people to make bad ones. Most bad decisions are errors in _______________ that originate in the human mind's limited capacity and in the natural ________ managers display during decision making.

mistakes; good; factors; judgement; biases

The political model closely resembles the...

real environment in which most managers and decision makers operate.

People who tend toward a conceptual style also like...

to consider a broad amount of information.

With an analytical style, managers like...

to consider complex solutions based on as much data as they can gather.

An important key to better decision making under conditions of uncertainty is...

to encourage a rigorous debate of the issue at hand. Good managers recognize that constructive conflict based on... different points of view can focus a problem, clarify ideas, and stimulate creative thinking.

Most managers have a ___________ decision style. The most _____________ managers are able to shift among styles as needed to meet the ___________.

dominant; effective; situation

Using evidence can help take emotion out of decision-making process, preventing managers relying on...

faulty assumptions or point of view.

A decision is...

a choice made from available alternatives.

A technique many companies have adopted from the U.S. Army to encourage examination of the evidence and continuous learning is the after-action review...

a disciplined procedure whereby managers invest time to review the results of decision on a regular basis and learn from them. After implementing the decision, managers meet to evaluate what worked, what didn't, and how to do things better. Many problems are solved by trial and error.

Intuition represents...

a quick apprehension of a decision situation based on past experience but without conscious thought. Intuitive decision making is not arbitrary or irrational because... it is based on years of practice and hands‑on experience.

Uncertainty means managers know which goals they wish to __________, but information about alternatives and future outcomes is _______________. Factors that may affect a ___________, such as price, production costs, volume, or future interest rates, are difficult to _________ and predict. Managers may have to come up with creative approaches to alternatives and use __________ judgment to determine which alternative is best. Many decisions made under uncertainty do not produce the _________ results, but managers face uncertainty every day.

achieve; incomplete; decision; analyze; personal; desired

Intuition is another aspect of...

administrative decision making.

Certainty means that...

all the information the decision maker needs is fully available.

High ______________ circumstances can create a wicked decision problem, with _________ over goals and decision alternatives, rapidly changing circumstances, fuzzy information, and unclear linkages among decision elements. Managers have a ___________ time coming to grips with the issues and must conjure up reasonable scenarios in the __________ of clear information. _____________ is by far the most difficult decision situation.

ambiguous; conflicts; difficult; absence; Ambiguity

A coalition is...

an informal alliance among managers who support a specific goal.

One of the best known techniques for rapidly generating creative alternatives is...

brainstorming.

Electronic brainstorming, called brainwriting...

brings people together in an interactive group over a computer network. Recent studies show that electronic brainstorming generates about 40 percent more ideas than individual brainstorming alone and 25 to 200 percent more than groups.

One difference between programmed and non-programmed decisions relates to the degree of...

certainty or uncertainty that managers deal with in making the decision. In a perfect world, managers have all the information necessary for making decisions. In reality, some things are unknowable and some decisions will fail. Every decision situation can be organized on a scale according to the availability of information and the possibility of failure.

The four positions on the scale are...

certainty, risk, uncertainty, and ambiguity.

Risk means a decision has ___________ objectives and good information available. The _________ outcomes associated with each alternative are subject to _________; however, enough information is available to allow the probability of a ______________ outcome for each alternative to be ______________.

clear-cut; future; failure; successful; estimated

Escalating ______________ means that organizations often continue to invest time and money in a solution despite strong evidence that it is not _______________ to do so. Managers might block or distort negative __________________ because they don't want to be ______________ for a bad decision, or might not accept that their decision is wrong.

commitment; appropriate; information; responsible

Feedback is important because decision making is a ________________, never-ending process. Feedback provides decision makers with ____________ that can start a new __________ cycle.

continuous; information; decision

In the evaluation step,...

decision makers gather information or feedback to determine how well the decision was implemented and whether it achieved its goals.

Awareness of a problem or opportunity is the first step in the ___________________ sequence and requires surveillance of the internal and external ______________ for issues that merit executive attention. Recognizing decision requirements is difficult because it often means integrating _______________ in novel ways.

decision-making; environment; information

Not all managers make ___________ in the same way. These differences can be explained by the concept of _____________ decision styles. Personal decision style refers to _____________ between people with respect to how they ___________ problems and make decisions.

decisions; personal; differences; perceive

The administrative model is considered to be ________________, meaning that it describes how managers actually make decisions rather than how they should make them. __________ ____ _______ proposed two concepts instrumental in shaping the administrative model: ______________ ___________ and _____________.

descriptive; Herbert A. Simon; bounded rationality; satisficing

Non-programmed decisions require...

developing new courses of action that will meet the needs of the company.

The behavioral style is characterized by...

having a deep concern for others as individuals.

The Political Model...

is for nonprogrammed decisions when conditions are uncertain, information is limited, and there is disagreement about the goals to pursue or the action to take. Managers often engage in coalition building for making complex organizational decisions.

Evidence-based decision making means a commitment to make...

more informed and intelligent decisions based on the best available facts and evidence. Managers should be alert to potential biases, past assumptions, or intuitions and seek and exam the evidence with rigor, thus making careful and thoughtful decision.

The classical model represents an ______ model of decision making that is often ________________ by real people in real organizations. It works best when applied to _______________ decisions and to decisions characterized by ____________ or risk because relevant information is available and probabilities can be calculated.

"ideal"; unattainable; programmed; uncertainty

A similar technique was applied by managers at Lenovo called fu pan, which means...

"replaying the chess board,' reviewing every move to improve the next one.

Awareness of the following six biases can help managers make more enlightened choices:...

Being influenced by initial impressions, Justifying past decisions, Seeing what you want to see, Perpetuating the status quo, Being influenced by emotions, Overconfidence

According to the administrative model:...

Decision goals often are vague, conflicting, and lack consensus among managers; Rational procedures are not always used, and when they are, they are confined to a simplistic view of the problem that does not capture the complexity of real events; Managers' searches for alternatives are limited because of human, information, and resource constraints.

The classical model is...

normative, defining how a decision maker should make decisions, and providing guidelines for reaching an ideal outcome for the organization. The value of the classical model has been to help decision makers be more rational.

Recognition of Decision Requirement...

Managers confront a decision requirement in the form of either a problem or an opportunity. A problem occurs when organizational accomplishment is less than established goals. Some aspect of performance is unsatisfactory. An opportunity exists when managers see potential accomplishments that exceed current goals.

Being influenced by emotions...

Managers make better decision when—to the extent possible—they take emotions out of the decision-making process.

Perpetuating the status quo...

Managers may base decisions on what has worked in the past and fail to explore new options, dig for additional information, or investigate new technologies.

Overconfidence...

Most people overestimate their ability to predict uncertain outcomes. Before making a decision, managers have unrealistic expectations of their ability to understand the risk and make the right choice.

Development of Alternatives...

Once the problem or opportunity has been recognized and analyzed, decision makers begin to consider taking action. The next step is to develop possible alternative solutions that will respond to the needs of the situation and correct the underlying causes.

It can also create a broader understanding of issues and alternatives, and improve broader decision quality. There are several ways to stimulate rigorous debate...

One way is by ensuring diversity in terms of age and gender, functional area of expertise, hierarchical level, and experience with the business; Some groups assign a devil's advocate, who has the role of challenging the assumptions and assertions made by the group; Another approach is to have group members develop as many alternatives as they can as quickly as they can; Another approach is technique called point-counterpoint, a technique in which two subgroups assigned competing points of view.

The political model begins with four basic assumptions...

Organizations are made up of groups with diverse interests, goals, and values; Information is ambiguous and incomplete; Managers do not have time, resources, or mental capacity to identify all dimensions of the problem and process all relevant information; Managers engage in the push and pull of debate to decide goals and discuss alternatives.

Justifying past decisions...

People don't like to make mistakes, so they continue to support a flawed decision in an effort to justify or correct the past.

Seeing what you want to see...

People frequently look for information that supports their existing instinct or point of view and avoid information that contradicts it, affecting where they look for information as well as how they interpret the information they find.

Whether a decision is programmed or nonprogrammed, and regardless of whether the manager follows the classical, political or administrative model of decision making, six steps typically are associated with effective decision-making processes. These six steps are:...

Recognition of Decision Requirement, Diagnosis & Analysis of Causes, Development of Alternatives, Selection of Desired Alternative, Implementation of Chosen Alternative, Evaluation & Feedback

Selection of the Desired Alternative...

The best alternative is one in which the solution best fits the firm's overall goals and values and achieves the desired results using the fewest resources. The manager tries to select the choice with the least amount of risk and uncertainty. Making choices also depends on managers' personality factors and willingness to accept risk and uncertainty. Risk propensity is the willingness to undertake risk with the opportunity of gaining an increased payoff.

The four assumptions of classical model include:...

The decision maker operates to accomplish goals that are known and agreed upon; The decision maker strives for conditions of certainty, gathering complete information; Criteria for evaluating alternatives are known; The decision maker is rational and uses logic to assign values, order preferences, evaluate alternatives, and make the decision to maximize goals.

Being influenced by initial impressions...

The mind often gives disproportionate weight to the first information it receives when considering decisions. These initial impressions act as an anchor to subsequent thoughts and judgments. Past events and trends also act as anchors. Giving too much weight to the past can lead to poor forecasts and misguided decisions.

For a programmed decision, feasible alternatives are...

often available within the organization's rules and procedures.

Programmed decisions involve situations that have occurred...

often enough to enable decision rules to be developed and applied in the future. Once managers formulate decision rules, subordinates and others can make decisions freeing managers for other tasks.

The classical model of decision making is based...

on assumptions that managers should make logical decisions that will be in the organization's best economic interests.

By learning from decision mistakes, managers can turn problems into...

opportunities.

Bounded rationality means...

people have limits, or boundaries, on the amount of information they can process in making a decision. Because managers do not have the time or cognitive ability to process complete information about complex decisions, they must sacrifice.

The directive style is used by...

people who prefer simple, clear-cut solutions to problems.

Recent research has found rational, classical procedures to be associated with high _________________ for organizations in _______ environments. Administrative and political decision-making procedures and intuition have been associated with high performance in _________ environments when decisions must be made _______.

performance; stable; unstable; rapidly

Intuition begins with ______________; when people build a depth of experience and knowledge in a particular area, the right decision often comes quickly and effortlessly. Research on the ________ of intuition in decision making is ________________, suggesting that managers should take a __________ approach to it, applying intuition only under the right circumstances and in the right way.

recognition; validity; inconclusive; cautious

Few decisions are certain in the real world. Most contain...

risk or uncertainty.

In a fast-paced environment, good manager encourages...

risk taking and learning from mistakes, it also teaches a person to know when to pull the plug on something that isn't working.

Brainstorming uses a face-to-face group to ____________________ suggest a broad range of alternatives for decision making. The keys to effective brainstorming are that people can _______ on one another's ideas, all ideas are ________________ no matter how crazy they seem, and ___________ and evaluation are not allowed. The goal is to generate as many _______ as possible.

spontaneously; build; acceptable; criticism; ideas

Decisions are usually made using...

the classical, the administrative, or the political decision making model. The choice of model used depends on the manager's personal preference, whether the decision is programmed or nonprogrammed, and the degree of uncertainty associated with the decision.

Satisficing means that decision makers choose...

the first solution alternative that satisfies minimal decision criteria. Rather than pursue all alternatives, managers will opt for the first solution that appears to solve the problem. The decision maker cannot justify the time and expense of obtaining complete information.

Coalition building is...

the process of forming alliances among managers. The inability of managers to build coalitions often makes it difficult or impossible for them to get their decisions implemented.

Decision making is...

the process of identifying problems and opportunities and then resolving them; involves effort both before and after the actual choice.

Diagnosis is...

the step in which managers analyze the underlying causal factors associated with the decision situation. Managers make a big mistake if they jump right into generating alternatives without first exploring the cause of the problem more deeply. Studies recommend that managers ask a series of questions to specify underlying causes.

Avoiding groupthink helps groups make better decisions. Groupthink refers to...

the tendency of people in groups to suppress contrary opinions. When people slip into it, the desire for harmony outweighs concerns over decision quality. Group members emphasize maintaining unity rather than realistically challenging problems and alternatives. Some disagreement and conflict is much healthier than blind agreement.

Point-counterpoint....

the two groups then develop and exchange proposals and discuss the various options until they arrive at a common set of understandings and recommendations.

The implementation stage involves...

the use of managerial, administrative, and persuasive abilities to ensure that the chosen alternative is carried out. The success of the chosen alternative depends on whether or not it is translated into action. Sometimes an alternative never becomes reality because managers lack resources or energy needed to make things happen. Communication, motivation, and leadership skills must be used to see that the decision is carried out.

To improve decision making, managers need...

to reflect and learn from every decision they make.

Ambiguity means that the goals to be achieved or the problem to be solved is...

unclear, alternatives are difficult to define, and information about outcomes is unavailable.

Non-programmed decisions are made in response to situations that are...

unique, poorly defined, largely unstructured, and likely to have important consequences for the organization; often involve strategic planning because uncertainty is great and decisions are complex.