Basic Decision making ModelsPresentation Transcript
The Basic Decision Making Models Administrative Process John Pisapia www.TheStrategicL;eader.org John Pisapia Administrative Processes
The work of managers, of scientists, of engineers, of lawyers--the work that steers the course of society and its economic and governmental organizations--is largely work of making decisions and solving problems. It is work of choosing issues that require attention, setting goals, finding or designing suitable courses of action, and evaluating and choosing among alternative actions.
The first three of these activities--fixing agendas, setting goals, and designing actions--are usually called problem solving ; the last, evaluating and choosing, is usually called decision making .
Herbert Simon, Nobel Laureate 1988
We all face decision making situations Life of leaders – decisions, decisions, decisions, …
DecisionMaking Problem Solving
Key concepts: BARRIERS TO EFFECTIVE DECDISIONMAKING
Factors that influence decisions
Choice shift – group discussion, exaggeration, extremes
Groupthink – cohesive group seeks consensus, clouds objectivity
Escalation of commitment – continued commitment of resources to a failing course of action
Common decision biases
Anchoring and adjusting
Activity #1 Match the quote with the concept
Anchoring and adjusting
Escalation of commitment
The first answer is the only answer and there is no other!”
“ I’m sticking to my idea!”
“ Go with the flow.”
“ It won’t fail this time if we try harder.”
“ If it looks like this, then it will happen like this!”
“ This is more important because I remember it!”
“ I’m always right!”
“ That’s not relevant to me, so forget it!”
“ My friends always have great ideas!”“My enemies always have terrible ideas!”
“ If it was a good idea, then it was my idea!”“If it was a bad idea, then it wasn’t my fault!”
Rational Decision Process
Recognition Primed Decision (RPD)
What? Theory - The Basic Models:
The Rational Model
Theory - People are restricted in the information needed to make a decision. Bounded rationality is present therefore select the first alternative that is minimally acceptable.
Definition of situation and available - information is incomplete and inadequate
Have limited information needed for decision
Engage in limited search for solutions
Settle for less optimal solutions
Actions : Managers
are comfortable in making decision without first examining all alternatives
accept a “good enough” decision because cost are too great otherwise – bounded discretion
Theory - Muddling is a method of successive limited comparisons; a strategy of evolution.
2 types - Objectives are not necessary; objectives are necessary
Trial and error--small incremental changes--until noise subsides.
Make changes, compare to existing state, then decide next move .
Small, limited set of alternatives is considered: all options are similar to the existing situation.
The decision maker decides on an option, considers the consequences, and if reasonable, then moves down that path.
If the difficulties subside, continue on that path
If the difficulties persist, then a different option is pursued and the direction changed.
Recognition Primed Decision Model (RPD) )
Theory – Future oriented decision making model Quick decisions in Complex situations- Based on pattern recognition cues
Assumptions – able to:
Recognize salient features of problem
Generate possible course –
Compare to constraints of situation
Select first course of action that is not rejected.
If Then - - Recognize situation as typical – and know course of action - effective with experienced users
IF??? . .Then - more concerned with situation rather than CA - sees patterns that are not relevant
IF - Then ??? - more concerned with action and reaction
the user’s experience is too focused in one area or has been distorted by uncommon results
IF??? – Then??? - the user lacks experience in general
What decision -making model should I use? Adapted from Hoy, 2003 Decision Opportunity No No No No No No No Yes Yes Yes Yes Yes Yes Yes Sufficient Information? Important? Sufficient Time? Important? Important? Important? RPD Muddling Satisficing RPD Muddling Sufficient Time? Muddling Satisficing Rational How?
Every decision has a price (a.k.a. consequences)
In many cases price is obscure
Do it if you are willing to pay the price
Process is Important
When decisions affect others – impossible to please all
Whatever decision you make – some people will be happy and some will not
Build and maintain a trusting decision making environment – will keep the zone of acceptance broad
Better to make a decision that is informed and satisfies your conscience
Different approaches for different situations
Osland, J., Kolb, D., Rubin, I., Turner, M. (2007). Organizational Behavior: An Experiential Approach (8th ed) pp. 468-488. Upper Saddle River, NJ: Pearson Education Inc.
Pisapia, J. (1998). Decision Making and Problem Solving . Working paper.
Trout, J. (1999). The Power of Simplicity. New York: McGraw Hill, Inc.