Chapter 9Decision Making and CreativityYou have to make good.docx

Chapter 9
Decision Making and Creativity
You have to make good choices
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Chapter 9 Study Questions
What is involved in the decision-making process?
What are the alternative decision-making models?
What are key decision-making traps and issues?
What can be done to stimulate creativity in decision making?
Copyright © 2014 John Wiley & Sons, Inc.
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Decision-making
The process of choosing a course of action for dealing with a
problem or opportunity.
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In our personal lives, at work, within teams, and in management
in general, a continuing stream of information, data, problems,
and opportunities fuel decision making.
Steps in Decision Making
Recognize and define the problem
Identify and analyze alternative courses of action.
Choose a preferred course of action
Implement the preferred course of action
Lack-of-participation error – occurs when important people are
excluded from the decision-making process.
Evaluate the results and follow-up as necessary.
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Rational decision model
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Caution: Not too broad or narrow
Caution: focus on problem, not symptom
Analyze Alter-natives
Determine exact information needed
ID effect on stakeholders
Make a Choice
Consider time, cost, impact, and ethics
Who makes the decision? (team or leader)
Take Action
Evaluate Results
Caution: ID the right problem

Ensure that all affected parties have have input
Necessary to secure ‘buy in’ from all
Have desired outcomes been attained?
Has team performance been effective?
Define Problem

Ethics
The philosophical study of morality or standards regarding good
character and conduct.
Moral problem
One that poses major ethical consequences for the decision
maker or for others.
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When we apply ethical reasoning to decisions made by
individuals and teams in organizations, the focus is
on moral problems and dilemmas that are associated with the
decision-making process.
It is possible to address a personal, management, or business
problem and not properly consider any moral problems
that might be associated with it. A preferred approach is to
carefully examine the consequences of each alternative for all
decision stakeholders, and make choices that minimize negative
impact and maximize respect for everyone’s rights.
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Moral dilemma
Decision maker faces two or more ethically uncomfortable
alternatives.

Either alternative is potentially beneficial and harmful.
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Because moral dilemmas can be difficult to resolve, ethical
reasoning helps ensure that the decisions will be made with
rigor
and thoughtful consideration. Indeed, a willingness to pause to
examine the ethics of a proposed decision may well result in a
better decision, preservation of respect and reputation for one’s
self and the organization, and prevention of
costly litigation and even jail.
Figure 9.1 The decision-making process and ethical reasoning
model
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Figure 9.1
The figure links the steps in the decision-making process with
corresponding issues of ethical reasoning. The figure suggests,
we are advocating that an ethical reasoning approach be
followed when decisions are made and that this
approach be linked with each step in the decision-making
process. In other words, decision making is incomplete without
ethical analysis.

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Ethical double checks
Criteria
Utility – all stakeholders satisfied?
Rights – are all rights and duties respected?
Justice – is it consistent with cannons of justice?
Caring – is it consistent with responsibility to care?
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The ethical double checks is a way of testing to make sure our
decisions at least meet personal moral standards. The
recommended ethics double-checks are accomplished by asking
and answering two sets of questions—criteria questions and
spotlight questions.
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Ethical Double Checks
Spotlight Questions
How would I feel if my family found out about this decision?
How would I feel if the decision was published?
What would the person you know or know of who has the
strongest character do in this situation?
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Spotlight questions basically expose a decision to public
scrutiny and forces us to consider it in the context of full
transparency. They are especially powerful when a person
comes from a morally scrupulous family background or
social structure and prospects for shame would be very
upsetting.
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Programmed decisions
Made as standardized responses to recurring situations and
routine problems.
Nonprogrammed decisions
Specifically crafted or tailored to fit a unique situation.
Crisis decision – unexpected problem threatens major harm and
disaster if not resolved quickly and appropriately.
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Programmed decisions implement alternatives that are known to
be appropriate for situations that occur somewhat frequently.
Examples might include teams that review compensation or
human resource policies for equity and justice,
or those that manage recurring projects.
Higher-level management teams generally spend a greater

proportion of their decision-making time on nonroutine
problems, but teams at all levels face them as well. An example
is a marketing team that has to respond to the introduction of a
new product by a foreign competitor. Although past experience
may help deal with this competitive threat, the immediate
decision requires a creative solution based on the unique
characteristics of the present market situation.
Decisions are made in the context of three general
environments.
Certainty
Risk
Uncertainty
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A decision environment is certain
When information is sufficient to predict the results of each
alternative in advance of implementation.
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Certainty is an ideal condition for managerial problem solving
and decision making. The challenge is simply to locate the
alternative that offers the best or ideal solution.
A decision environment is risky
When decision makers lack complete certainty regarding the
outcomes of various courses of action, but they are aware of the
probabilities associated with their occurrence.
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Probabilities can be assigned through objective statistical
procedures or through personal intuition. For
instance, managers can make statistical estimates of quality
rejects in production runs, or a senior production manager can
make similar estimates based on past experience. Risk is a
common decision environment in today’s organizations.
A decision environment is uncertain
When managers have so little information on hand that they
cannot even assign probabilities to various alternatives and their
possible outcomes.
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This is the most difficult of the three decision environments.
Uncertainty forces decision makers to rely heavily on individual
and group creativity to succeed in problem solving. It requires
unique, novel, and often totally innovative alternatives to
existing patterns of behavior. Responses to uncertainty are often
heavily influenced by intuition, educated guesses, and
hunches.
Figure 9.2 Combinations of decision environments and types of
decisions
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Risk Management
Involves anticipating risks and factoring them into decision
making.
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The recent financial crisis has shown once again the fact that
many decisions are made in risk and uncertain environments. It
has also prompted renewed interest in risk management,
something often associated with insurance and finance. We use

the term in general management as well, focusing on
anticipating risk in situations and factoring risk alternatives into
the decision-making process.
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Figure 9.3 Decision making viewed from the classical and
behavioral perspectives
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Figure 9.3
The classical decision model views people acting in a world of
complete certainty, whereas the behavioral decision model
accepts the notion of bounded rationality and suggests that
people act only in terms of what they perceive about a given
situation.
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What are the alternative
decision-making models?
Classical decision model assumes a manager:
Acts rationally and in a fully informed manner.
Faces a clearly defined problem.
Knows all possible action alternatives and their consequences.
Chooses the optimum solution that give the
absolute best solution to the problem.
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This classical decision model fits the five-step decision-making
process described earlier. It is an ideal situation of complete
information where the decision maker moves through the steps
one by one in a logical fashion. And it nicely lends itself to
various forms of quantitative decision analysis as well as to
computer-based applications.
What are the alternative
decision-making models?
Behavior decision model
Suggests that people act only in terms of their perceptions,
which are frequently imperfect.
Satisficing decisions
Decision makers choose the first alternative that appears to give
an acceptable or satisfactory resolution of the problem.
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Behavioral scientists recognize that the human mind is a
wonderful creation, capable of infinite achievements. But they
also recognize that human beings have cognitive limitations—
literally limits on what we are able to know at any point in
time—that restrict our information-processing capabilities.
The result is that information deficiencies and overloads
compromise the ability of decision makers to achieve complete
certainty and otherwise operate according to the classical
model. They end up acting with bounded rationality in which

things are interpreted and made sense of as perceptions and only
within the context of the situation. They engage in decision
making “within the box” of a simplified view of a more
complex reality.
What are the alternative decision-making models?
Systematic
Problem approach utilizing a rational, analytic thinking.
Intuitive
Problem approach that is flexible and spontaneous.
A key element of decision-making under risky and uncertainty
conditions.
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Teams engage in two cognitive processes:
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We expect teams engaged in systematic thinking to make a plan
before taking action, and to search for information and
proceed with problem solving in a fact-based and step-by-step
fashion.
We think of intuition as the ability to know or recognize quickly
and readily the possibilities of a given situation. Its presence
adds personality and spontaneity to decision making and, as a
result, also offers the potential for creativity and innovation.
Especially in conditions of risk and uncertainty, decisions in
organizations rely on impressions; people involved in them are
more likely to synthesize than to analyze data as they search for
the “big picture” in order to redefine problems and link
problems with a variety of solutions.

Things have to be done fast, a variety of things have to be done,
and the people doing all this are frequently interrupted. When
there isn’t a lot of time to think, plan, or make decisions
systematically, we should be confident in tapping our own or a
team’s intuitive skills.
What are key decision-making traps and issues?
Judgmental heuristics
Simplifying strategies or shortcuts used to make decisions.
Make it easier to deal with uncertainty and limited information
common to problem situations.
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Judgment, or the use of one’s intellect, is important in all
aspects of decision making. When we question the ethics of a
decision, for example, we are questioning the judgment of the
person making it. Research shows that people are prone to
mistakes using biases that often interfere with the quality of
decision making.
What are key decision making traps and issues?
Availability heuristic
Involves assessing a current event based on past occurrences
that are easily available in one’s memory.
Representativeness heuristic

Involves assessing the likelihood that an event will occur based
on its similarity to one’s stereotypes of similar occurrences
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Availability heuristic: An example is the product development
specialist who decides not to launch a new product because of
her recent failure with another product offering. In this case, the
existence of a past product failure has negatively, and perhaps
inappropriately, biased her judgment regarding how best to
handle the new product.
Representativeness heuristic: An example is the team leader
who selects a new member, not because of any special qualities
of the person, but only because the individual comes from a
department known to have produced high performers in the past.
In this case, the individual’s current place of employment—not
his or her job qualifications—is the basis for the selection
decision.
Anchoring and adjustment heuristic
Involves assessing an event by taking an initial value from
historical precedent or an outside source and then incrementally
adjusting this value to make a current assessment.
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An example is the executive who makes salary increase
recommendations for key personnel by simply adjusting their
current base salaries by a percentage amount. In this case, the
existing base salary becomes an “anchor” that drives subsequent
salary increases. In some situations this anchor may be
inappropriate, such as in the case of an individual whose market
value has become substantially higher than is reflected by the
base salary plus increment approach.
Decision Bias
Confirmation error – only seeking cues in a situation that
support a preexisting opinion.
Hindsight error– overestimate the degree to which an event that
has already taken place could have been predicted .
Framing error - tendency to evaluate and resolve a problem in
the context in which it is perceived – either positive or
negative.
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What are the key decision-making traps and issues?
In choosing problems to address, try the following checklist:
What really matters?
Might the problem resolve itself?
Is this my or our problem?

Will time spent make a difference?
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Not only do decision makers have to be on guard against errors
caused by heuristics and biases, but they also have to manage
the decision-making process itself by making the right decisions
in the right way at the right. One of the first
issues is whether to actually address a decision situation. Most
people are too busy and have too many valuable things to do
with their time to personally make decisions on every problem
or opportunity that comes their way.
The effective manager and team leader knows when to delegate
decisions to others, how to set priorities, and when to abstain
from acting altogether. When faced with the dilemma of
whether or not to deal with a specific problem, asking and
answering the four questions can sometimes help.
Authority decisions
Manager or team leader uses information that he or she
possesses and decides what to do without involving others.
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Consultative decisions
Manager or team leader solicits input from other people and
then, based on this information, the decision maker arrives at a
final choice.
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Team decisions
Group members work together to make the final choice.
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True group decisions can be made by both consulting with
others and allowing them to help make the final choice.
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Figure 9.4 Vroom-Jago Decision -Making Model
Figure 9.4
Decision tree developed for managers by Vroom, Yetton, and
Jago. It provides a framework that managers can refer to.
makes the decision alone, using information available at that
time.
ion from
team members then decides on the problem’s solution. The team
members provide the necessary information from team members
and then decides on the problem’s solution. Team members
provide the necessary information but do not generate or
evaluate alternatives.
with team members individually, getting their ideas and
suggestions without brining them all together. The manager then
makes the final decision.
oblem with team members,
collectively obtaining their ideas and suggestions. The manager
then makes a decisions.
Team decisions: Classified as “G”, (team or consensus decision)
– manager shares the problem with team members as a total
group and engages them in consensus seeking to arrive at a final
decision.
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Escalating commitment
Continuation and renewed effort on a previously chosen course
of action, even though it is not working.
Avoid by:
Setting limits on your involvement and commitment.
Making your own decisions.
Determining reasons for continuing a course of action.
Considering costs of a course of action.
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Escalating commitments are a form of decision entrapment that
leads people to do things that the facts of a situation do not
justify. We should be proactive in spotting “failures” and more
open to reversing decisions or dropping plans that
do not appear to be working. But again, this is easier said than
done.
The tendency to escalate commitments often outweighs the
willingness to disengage from them. Decision makers may
rationalize negative feedback as a temporary condition, protect
their egos by not admitting that the original decision
was a mistake, or characterize any negative results as a
“learning experience” that can be overcome with added future
effort.

What can be done to stimulate creativity in decision-making?
Creativity
Involves the generation of a novel idea or unique approach to
solving performance problems or exploiting performance
opportunities.
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In a dynamic environment full of novel and challenging
problems as well as vague but intriguing opportunities,
creativity in crafting decisions often determines how well
people, teams, and organizations do in response to complex
challenges.
Figure 9.5 Individual and Team Creativity Drivers
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Figure 9.5
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Personal creativity drivers
Task expertise
Task motivation
Creativity skill set

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Team creativity drivers
Decision techniques
Creative membership
External support
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Some of the other techniques used when teams are trying to
become more creative in decision making include:
• Associative play—making up and telling stories, engaging in
art projects, and
building toy models that come to mind when dealing with a
problem.
• Cross pollination—switching members among teams to gain
insights from
diverse interests, backgrounds, and experiences when working
on problems.
• Analogies and metaphors—using analogies and metaphors to
describe a

problem and open pathways to creative thinking.
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In your experience
An interesting site with simulations and training on creative
techniques and ways to enhance your own individual creativity.
Brainstorming.co.uk
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