Decision Making and Creativity

The Behavioral Style:

Highly People-Oriented Decision Makers Low tolerance ambiguity

The Delphi Technique

The Delphi technique is a group process that generates anonymous ideas or judgments from physically dispersed experts in multiple rounds of brainstorming.

Anchoring Bias

occurs when decision makers are influenced by the first information they receive about a decision, even if it is irrelevant.

Distributive Negotiation

A distributive negotiation usually concerns a single issue—a "fixed pie"—in which one person gains at the expense of another.

The Analytical Style:

Careful and Slow Decision Makers Who Like Lots of Information High tolerance for Ambiguity

Biases

Confirmation bias Overconfidence bias Availability bias Representativeness bias Anchoring bias Hindsight bias Framing bias Escalation of commitment bias

4 Common Denominators of Organiations

Coordination of effort, aligned goals, division of labor, and hierarchy of authority are four common denominators of all organizations.

4 Steps in making rational decisions

Four steps in making rational decisions are (1) identify the problem, (2) generate alternative solutions, (3) evaluate alternatives and select a solution, and (4) implement and evaluate the solution. Examples of nonrational models include (1) satisficing and (2) intuition.

Simons Normative Model

Herbert Simon proposed the normative model to describe the process that managers actually use when making decisions. This process is guided by a decision maker's bounded rationality. Bounded rationality represents the notion that decision makers are "bounded" or restricted by a variety of constraints when making decisions. Lack of information is a prime example of a decision-making constraint.

2 Kinds of Thinking

In his book Thinking, Fast and Slow, Daniel Kahneman, a professor who received the 2002 Nobel Prize in economics, described two kinds of thinking, which he labeled System 1 and System 2.13 System 1—Intuitive and Largely Unconscious Thought System 1 is our automatic, instinctive, and emotional mode of decision making. It is fast because it relies on mental shortcuts that create intuitive solutions to problems as they come up, as when we hit the brakes at the sight of another car's brake lights or pause when we detect anger i n someone's voice. System 2—Analytical and Conscious Thought System 2 is our slow, logical, deliberate mode of decision making. It helps us identify when our intuition is wrong or when our emotions are clouding our judgment. It requires more cognitive effort than System 1 and is used when contemplating a discrete task such as parallel parking or how to best climb a tree. Both Systems Have Value There are pros and cons to both systems of thinking. For example, System 1 can lead to poor follow-through on plans because it focuses on concrete, immediate payoffs, which distract us from considering the long-term implications of decisions. System 2 can be too time consuming and is ineffective when we don't have the cognitive or emotional energy needed to drive this mode of thinking.14

The Conceptual Style:

Intuitive Decision Makers Who Involve Others in Long-Term Thinking High tolerance for ambiguity

Judgmental Hueristics

Judgmental Hueristics are cognitive shortcuts or biases that are used to simplify the process of making decisions.

Directive Decision Making Style

Low tolerance ambiguity. People with a directive style have a low tolerance for ambiguity and are oriented toward task and technical concerns when making decisions. They are efficient, logical, practical, and systematic in their approach to solving problems. Directive decision makers are action oriented and decisive and like to focus on facts. In their pursuit of speed and results, however, they tend to be autocratic, exercise power and control, and focus on the short run.

5 Contingency Factors when making decisions about organisational design

Managers should consider five key contingency factors when making decisions about organizational design: strategy and goals, market uncertainty, decision-making processes, technology, and size.

Non Rational Model

Nonrational models of decision making explain how managers actually make decisions. These models typically build on assumptions that decision making is uncertain, that decision makers do not possess complete information, and that managers struggle to make optimal decisions. The choice to text while driving is an example of nonrational decision making.

Rational Model of Decision Making

Rational Model of decision making explains how managers should make decisions. It assumes that managers are completely objective and possess all information for their decisions. In this model, decisions thus demonstrate excellent logic and promote the organization's best interests. Pros That said, there are three benefits of trying to follow a rational process as closely as is realistically possible: Quality. The quality of decisions may be enhanced, in the sense that they follow more logically from all available knowledge and expertise. Transparency. Rationality makes the reasoning behind a decision transparent and available to scrutiny. Responsibility. The rational model discourages decision makers from acting on suspect considerations (such as personal advancement or avoidance of bureaucratic embarrassment) and therefore encourages more responsible decisions It outlines a logical process managers should use, assuming they are optimizing when making decisions. Optimizing means solving problems by producing the best possible solution based on a set of highly desirable conditions

Representative Bias

Representativeness bias leads us to look for information that supports previously formed stereotypes

Rational Model of Decision Making Steps

Stage 1: Identify the Problem or Opportunity—Determining the Actual versus the Desirable By now you know that problem identification is the first step in solving any type of problem. In addition to making decisions to solve problems, however, managers also have to make decisions about optimizing opportunities. An opportunity is a situation in which results that exceed goals and expectations are possible. Stage 2 Generate Alternative Solutions—Both the Obvious and the Creative Brainstorming, for instance, is a common technique (discussed later in the chapter) that both individuals and groups use to generate potential solutions. A research study of 400 strategic decisions revealed that managers struggled during brainstorming because of three key decision-making blunders:16 Rushing to judgment. Managers simply make decisions too quickly without considering all relevant information. Selecting readily available ideas or solutions. Managers take the easy solution without rigorously considering alternatives. This can happen when emotions about the problem are running high. Making poor allocation of resources to study alternate solutions. Managers don't invest the resources to properly study the problem and the alternate courses of action. Decision makers thus are encouraged to slow down and use System 2 thinking (analytical and conscious) when making decisions. This should lead them to identify a broader set of alternatives and potential solutions.17 Stage 3 Evaluate Alternatives and Select a Solution—Ethics, Feasibility, and Effectiveness In the third stage, evaluate your alternatives on several criteria. Costs and quality are important, but you should also consider the following questions: (1) Is it ethical? (If not, don't consider it.) (2) Is it feasible? (If time is an issue, costs are high, resources are limited, new technology is needed, or customers are resistant, for instance, then the alternative is not feasible.) (3) Will it remove the causes and solve the problem? Stage 4 Stage 4: Implement and Evaluate the Solution Chosen

Lewin Model of Change

Unfreezing The focus of the unfreezing stage is to create the motivation to change. The most common, but not necessarily the most effective, way of communicating a convincing reason to change is to demonstrate that current practices are less than ideal. Data related to employee or customer satisfaction or showing market share gains made by competitors is often used. The process of unfreezing, moving, and refreezing occurred at Facebook. Changing Changing is where the rubber meets the road. Because change calls for learning and doing things differently, this stage entails providing employees with new information, new behavioral models, new processes or procedures, new equipment, new technology, or new ways of getting the job done. How does management know what to change? There is no simple answer to this question. Organizational change can be aimed at improvement or growth, or it can focus on solving a problem such as poor customer service or low productivity. Change also can be targeted at different levels in an organization. The point to keep in mind is that change should be targeted at some type of desired end result. The Organizing Framework for Understanding and Applying OB is a good tool to use for identifying particular targets or purposes for change. Refreezing The goal of refreezing is to support and reinforce the change. Managers support change by helping employees integrate the new behavior or attitude into their accustomed way of doing things. They can first give employees a chance to exhibit the new behaviors or attitudes. Once this happens, positive reinforcement can encourage the desired change. More specifically, continuous reinforcement with extrinsic rewards (recognition, feedback, bonuses) is useful early in the change process. This helps establish clear links between the desired new behaviors and the reinforcing reward or recognition. And don't forget role modeling. Walking the talk of change is arguably the most powerful way to get others to follow.

Integrative Negotiation

integrative negotiation, in which a host of interests are considered, resulting in an agreement that is satisfactory for both parties

Three Levels of Organizational Culture

observable artifacts, espoused values, and basic underlying assumptions. Espoused values are the explicitly stated values and norms an organization prefers. Enacted values, in contrast, are the values and norms we actually see in employee behavior. Four functions of organizational culture are to establish organizational identity, encourage collective commitment, ensure social system stability, and act as a device for sense-making.

Framing Bias

relates to the manner in which a question is posed or framed. It leads us to change the way we interpret alternatives. For example, customers have been found to prefer meat that is framed as "85 percent lean" instead of "15 percent fat," although, of course, the two mean the same thing

Group Think

s "a mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when members' strivings for unanimity override their motivation to realistically appraise alternative courses of action.