Decision Making to improve performance.pptx

Decision Making to improve performance

1. DE C IS I O N MA K I N G us ing Ana l y t ica l T hink ing T h i n k lo g i call y t o g a th e r a n d a n aly z e information R e co g ni z e , a r t ic u la t e , a n d so l v e b ot h intricate and fundamental problems Ma k e d e c i s i o n s u si n g v a r i o u s t oo l s a n d techniques Design and test solutions to the problems and formulate action plan

2. STEPS IN DECISION MAKING

3. TYPES OF DECISION MAKING MODELS RATIONAL DECISION MAKING BOUNDED RATIONALITY JUDEMENTAL HEURISTICS GARBAGE CAN SATISFICE

4. RATIONAL DECISION MAKING This model makes optimal choices by adhering to a number of steps that help to ensure rationality & entails a sequential progression through 7 steps: Identify the problem. Establish decision criteria, and allocate weights to the criteria. Search for relevant information. Develop alternative solutions to the problem. Evaluate alternative solutions. Choose the best solution. Implement and monitor chosen solution.

5. It is important to note that this model contains a number of assumptions: The problem is clear and specific and unambiguous. It also assumes that the decision maker has complete information. Known options : This assumes that the decision maker is able to identify the criteria and viable alternatives & can understand the possible consequences of each alternative. Clear preference : I t is assumed that criteria and alternatives can be ranked and weighted to reflect their importance. Stability : The model assumes that decision criteria are constant and that the weights given to the criteria are stable over time. Minimal time and cost constraints : This assumption enables the decision maker to obtain full information about the criteria and alternatives. Maximum payoff : It is assumed that the rational decision maker will choose the alternative that yields the highest perceived value.

6. Herbert Simon won a Nobel Prize for his theory of bounded rationality, which argues that people do make decisions with restricted information, and therefore the decisions tend to be less than ideal. Bounded rationality is based on four primary assumptions: Decision makers tend to ‘satisfice’: select the first alternative that is satisfactory. Often decision makers establish a problem statement or understanding of a problem without full or even adequate information. Decisions are often made without a comprehensive evaluation of alternatives. Decision makers rely on heuristics, or judgment shortcuts, to simplify the decision-making process. BOUNDED RATIONALITY

7. JUDGEMENTAL HEURISTICS Heuristics are defined as the simplification of strategies, or using ‘rules of thumb’ to make decisions. A variety of heuristics exists: Availability heuristic: exists when we use experiences to shape our current and future decisions. Representativeness heuristic: This is sort of like the halo effect – in that we base our understanding and confidence of a specific decision based on very limited information. Anchoring and adjustment heuristic: This involves identifying a ‘yardstick’ of measurement, based again, on limited information. Confirmation trap: In this instance, we are specifically seeking the information and statistics that will confirm that we are making an appropriate decision. Hindsight trap: This refers to the ‘I should have seen that coming’ syndrome.

8. GARBAGE CAN These are all mixed up together in the garbage can of the organisation. In other words, the decision-making process is rather chaotic, partly because that might be the decision-making culture of the organisation, but also because a linear, rational approach to problem solving might not be a viable option. Often we can match specific solutions to specific problems, but under this model, that is not possible. It is likely that this environment faces rapid change; you might try to establish solutions to problems that are very ill-defined (the culture is weak, and the politics are pervasive, and many departments have hidden agendas) and therefore hire a consultant to come in and attempt to manage the problems and challenges objectively. In this model, decision-making is haphazard and chaotic, and in fact sometimes depends largely on luck!.

9. S A T I S F IC E Satisficing is a decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution. Instead of putting maximum exertion toward attaining the ideal outcome, satisficing focuses on pragmatic effort when confronted with tasks.

10. TOOLS & TECHNIQUES OF DECISION MAKING SWOT DECISION MAKING MAPS STRATEGY MAPS DECISION MATRIX PARETO ANAYSIS CAUSE EFFECT ANALYSIS FORCE FIELD ANALYSIS BREAK EVEN ANALYSIS RATIO ANALYSIS PUGH MATRIX

11. SW O T SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT Diagram is an important management application that helps any organization to assess its current situation. It works as a basic guide for strategic planning.

12. DECISION MAKING MAPS :LUCID CHART.com Decision making diagrams are graphs that enable you to map out the decision you have taken. It is one of the best decision making methods that helps you to estimate eventual actions based on the outcomes and risks. You can use this diagram for planning team strategy.

13. STRATEGY MAPS Strategy map is a diagram that can be used to document strategic business goals. This map is created during the planning process of business. It is used as a primary material to check-in and review meetings.

14. STRATEGY MAPS

15. DECISION MATRIX A decision matrix is a technique that contains values that helps you to identify and analyze the performance of the system. The elements of a decision matrix show results depend on specific criteria.

16. PARETO ANALYSIS Pareto Analysis is a method for decision-making. It is also known as 80/20 rule meaning, 20% of your activities will account for 80% of your results. It is used for prioritizing possible changes by identifying the problems and resolve them.

17. Cause and Effect or Ishikawa Diagram Cause and Effect or Ishikawa Diagram shows the causes of a particular event. It can be used for product design and to check its quality to identify possible factors causing an overall effect. You can group causes into categories to find sources of variation.

18. FORCE FIELD ANALYSIS Force Field Analysis enables you to examine your project. It provides a framework for looking at the factors that influence a particular situation. This analysis helps you to understand the process of any organization in a better way.

19. BREAK EVEN ANALYSIS A break-even analysis helps you to determine at what stage a new business product will be profitable. It’s an economic calculation used to determine the number of products or services you need to sell to cover your costs. Tool to create break-even analysis: Good Calculators Good Calculators provides a calculator that enables you to make better business decisions and calculate the break-even point. You can utilize this tool by just entering fixed and variable costs, selling price per unit, etc. It enables you to calculate it with just a single mouse click.

20. RATIO ANALYSIS Ratio analysis is a term used for comparison of items available in the financial statements of a business. It used to evaluate a number of problems with an entity, like its liquidity, efficiency of operation, and more. Tool to create Ratio Analysis: Finstanon Finstanon is a solution for financial analysis. It helps you to interpret profit ratio, liquid ratio, debt ratio, and more. This tool enables you to analyze more than 15 different types of metrices. Finstanon generates data in tables and diagrams. Link: https:// www.finstanon.com

21. PUGH MATRIX Pugh Matrix is a diagram that is used to evaluate alternative solutions for business. It helps you to determine which solutions are more valuable than the others. This method does not require a massive amount of quantitative data. Tool to create Pugh Matrix: Psychologia Psychologia is a tool that provides a score for every option you have entered. This app enables you to find the highest score. It helps individuals to find the importance of specific criteria over others. Link: https://psychologia.co/pugh-matrix/