OB - Decision Making

Partially based on the Kreitner/Kinicki (2009, McGraw Hill/Irwin) textbook with updated data from a variety of cited sources.

1. Ch 12 – Decision Making BUSA 220 – Wallace – Spring 2012

2. Problem – gap between an actual and desired situation. A rental car company notices a dip in revenue from 12 months ago. The branch is located in a very congested area and hybrid vehicles can travel in express lanes. Customers complain that they would like environmentally-friendly cars to choose from to rent. Problem Solving

3. Historical Cues – Trends? Scenario Technique – Multiple futures. Stakeholder (not stockholder) Perceptions Problem Solving Methods Graphic Source: geraldnunn.files.wordpress.com

4. Decision making – Identifying and choosing solutions that lead to a desired end result First, determine responses or actions necessary to alleviate a problem Second, choose the best alternative Decision Making Graphic Source : http://www.secondaryrti.com/problemSolving/psModel

5. Rational Model logical approach to decision making Identifying the problem Generating alternative solutions Selecting solution Implementing and E valuating Models Graphic Source: www.the-happy-manager.com

6. Do decision makers actually make decisions this way? What goal does the rational model assume the decision maker has? What assumptions does the rational decision making model make? Rational Model http://www.unc.edu/~nielsen/soci410/nm11/m11001.gif

7. Based on premise that decision making is not rational Assume that: Decision making is uncertain Not all information is available or known Making optimal decisions is difficult Simon’s Normative Model Garbage Can Model Non-Rational Models

8. Decision makers are guided by bounded rationality constraints that restrict decision making Decision making is characterized by Limited information processing Satisficing Choosing a standard that meets a minimum standard of acceptance Simon’s Normative Model

9. Decision making is sloppy and haphazard Decisions are made as a result of the interaction between: Problems, solutions, participants, and choice opportunities What are the implications of the Garbage Can model? Garbage Can Model http://www.unc.edu/~nielsen/soci410/nm11/m11006.gif

10. Source: www.dilbert.com

11. Integrating Normative & Rational

12. Availability heuristic – use information readily available in memory Representativeness heuristic – using similar situations to predict the occurrence of an event Confirmation bias – decide before investigating then seek confirming evidence Anchoring bias – decisions are influenced by initial information, data, stereotypes Decision Making Bias

13. Overconfidence bias – tendency to be overconfident about estimates or forecasts Hindsight bias – knowledge of an outcome influences our belief about the probability that we could have predicted the outcome earlier Framing bias – tendency to consider risks about gains differently than risks about losses Escalation of commitment bias – tendency to stick to an ineffective course of action when it is unlikely that the bad situation can be reversed Decision Making Bias

14. Which of the following will reduce escalation of commitment? (A=Reduce, B=Won’t reduce) Set minimum targets for performance, and have decision makers compare their performance with these targets Have the same person have decision making authority over all aspects of an on-going project Tie the person’s reputation to the success of the project Provide more frequent feedback about project completion and costs Make decision makers aware of costs of persistence What Do You Think?

15. Knowledge Management Implementing systems and practices that increase the sharing of knowledge and information throughout an organization. What specific actions can organizations take to facilitate knowledge management ? Decision Making Dynamics

16. Troy is very effective at conducting client meetings. He knows what to say when and manages the discussion to maximize the impact of the meeting for all parties . (TACIT) Sandra has established a process for efficiently and accurately conducting financial analyses. She has established a spreadsheet accompanied with a set of instructions . (EXPLICIT) Which of the following types of information would be easier to share or capture? Why? Knowledge Forms

17. Two dimensions of individual style: Value Orientation Task vs. People/Social Tolerance for Ambiguity High vs. Low Your text has a questionnaire to determine your style Decision Making Styles

18. Decision Making Styles Analytical Conceptual Directive Behavioral Tasks and Technical Concerns People and Social Concerns Value Orientation Low High Tolerance for Ambiguity

19. People often use more than one decision making style. Is one style better than another? What is the benefit to you to understanding different decision making styles? What Do You Think?

20. Intuition

21. Ethical Decision Tree

22. Which of the following research findings are true? (A-True, B-False) Groups are more efficient than individuals. Groups are more confident in their choices than individuals. The larger the group, the poorer the decision quality . What Do You Think?

23. If additional information would increase the quality of the decision If acceptance is important If people can be developed through their participation When to use Groups vs. Individuals

24. A process to generate a quantity of ideas Quantity is more important than quality Criticism is withheld Build on others ideas Create status-free environment Brainstorming

25. Graphic Source: www.bioteams.com

26. Graphic Source: www.bioteams.com

27. Group meets to discuss a problem Individuals generate ideas independently Everyone shares an idea from his/her list and they are recorded but not discussed Group discusses all ideas Group members vote for their top choices Nominal Group Technique Graphic Source: www.mindspring.com

28. Manager identifies an issue to investigate Questionnaire is sent to others and returned to manager Manager summarizes responds and sends feedback to participants Participants send their feedback and comments Cycle repeats until issue is resolve or all relevant information is gathered . Delphi Technique Graphic Source: Canada Institutes of Health Research

29. CREATIVITY is thinking up new things. INNOVATION is doing new things. ~ Theodore Levitt Process of developing something new or unique Three types… Creation: entirely new Synthesis: combines existing Modification: improvement Creativity and Innovation

30. Creativity Model

31. http://www.excelsior-learning.com/igniteyourimagination.html

32. Which of the following will foster creativity? (A-Yes, B-No) Punishing mistakes or ideas that fail Allowing time for fun and playing around Holding people accountable for creative ideas Emphasize the importance of taking action or generating output Encouraging discussion of “half-baked” ideas Rewarding creativity Establishing a rigid, hierarchical corporate culture What do You Think?

33. Design Thinking Source: Design Thinking, Harvard Business Review , June 2008

34. Design Thinking Source: Design Thinking, Harvard Business Review , June 2008

35. You can’t find the right answers if you’re asking the wrong questions. By John C Maxwell