This document provides an overview of decision making for managers. It discusses key concepts in decision making including: 1) Managers face different types of decisions from simple to non-routine decisions including strategic decisions. The document outlines factors to consider in decision making including organizational culture, legal issues, finances, markets, and customers. 2) It also discusses concepts like uncertainty in decision making, intuition versus analysis approaches, and interactive decision making models like the Prisoner's Dilemma. 3) The objectives of the training are to help managers understand different approaches to decision making including integrating intuition and analysis, understanding decision technologies, and planning decision implementation.

1. Decision Making for Managers

2. Decision Making
Facing Uncertainty?
• The only certain thing in life is
Death

3. Decision Making
Facing Uncertainty?
• Irreducible uncertainty leads to
• Inevitable error leads to
• Unavoidable injustice
Jack Dowie& Ken Hammond

4. Course Objectives
After this training course, attendants will be able to:
• Recognize the background factors that managers
need to take into consideration in formulating their
decisions
• Understand the intuition/analysis approach to
decision making
• Understand interactive decision making

5. Course Objectives
• Understand the role of knowledge technology
and value technology in decision technology in
health related matters
• Develop the logical process of decision
analysis and analytical decision making
• Plan and Oversee decision implementation

6. Decision Making
Decisions facing managers:
• Simple decisions: only one possible course of
action
• Routine decisions: way to proceed set out in
organization’s rules or protocols
• Non-routine decisions: more complex with no
existing policy to determine what to do

7. Decision Making
Strategic Decisions:
• Corporate strategy what should we be doing
• Business strategy: how to compete in the
market as a provider
• Functional strategy : how to operationalize
corporate and business strategic decisions

8. How Do You Make Decisions?
Exercise

9. How Do You Make Decisions?
• Precedent
• Abdicate responsibility
• Pick what seems best
• Cost and hassle manager!!
• Move away but problems never go away
• “paper over the cracks” approach
• Discuss ? With whom

10. Decision Making; Background
• Organizational vision, mission, values and
prevailing culture
• Legal and statutory considerations
• Economic and financial considerations
• The market
• The customer

11. Decision Making; Background
• Global considerations
• Environment and ecology
• Authority, resistance and change
• Communication aspects
• The use of IT in decision making
• Emotions in decision making

12. Vision, Mission, Values and
Organizational Culture
Vision:
– the answer to the question “what do we want to
become?”
– The inspiration
– The general direction
– Guides in decision making

13. Mission, Values and Culture
• Mission:
– describes what our business is and distinguishes the
organization from others
• Values:
– Describes what the organization stands for and its ethical ,
moral and social values
• Culture:
– Describes the norms prevailing in the organization

14. Legal and Statutory Considerations
• Laws
• Established practice
• Regulatory bodies
• Professional associations
• Organizational protocols
• Exercise:
Review the documents provided and outline relevant regulations
that you were not aware of

15. Economic , Financial and Risk
Considerations
• Economy basics:
– Inflation/recession cycles
– Base rates
– Currency markets
• Financial statements:
– Balance sheet
– Income statement
– Cash flow statement
• Forecasts
• Risk analysis

16. Market Considerations
• State of the market: market research
• Market basics:
– The law of supply and demand
• Product life-cycle:
– Growth
– Maturity
– Decline

17. The Customer
• External customer:
– Needs
– Wants
– Financial abilities
• Internal customer
– Competence
– willingness

18. Global Considerations
• Freedom of information
• Drive for quality and standards
• International competition
• GATT
• TRIPS
• Ease of travel!!!

19. Environmental Considerations
• Protection of the environment
• Safe waste disposal
• Drive towards natural ingredients
• Product safety
• Work-force safety and rights
• Customer safety and rights

20. Authority, Resistance and Change
• Leadership commitment
• Anticipated resistance: how to deal with
• Adapting to Change
In today’s business environment the only constant is
change.Successful organizations effectively manage
change,continuously adapting their bureaucracies,
strategies, systems , products , and cultures to survive the
shocks and prosper from the forces that decimate the
competition.
Robert Waterman

21. Communication Aspects
• Communication is key to successful decision making
• Managers as communicators:
– Successful managers spend 70-80% of their time
communicating
• Channels of communication within the organization:
– Formal
– informal

22. IT and decision making
• Factual approach to decision making
• Data collection, and validation
• Data analysis
• Information
• The use of data bases
• Internet resources

23. Emotions and Decision Making
• “When a man is prey to his emotions, he is
not his own master,but lies at the mercy of
fortune.”
Spinoza.
• It is human nature to make decisions based on
emotion rather than fact. But nothing could
be more illogical.
Toshiba corporation.

24. Decision Making and Emotions
Make decisions with your heart, and what you
will end up with is heart disease
Harvey Mackay&William Marrow
• “Emotions are magical transformations of the
world”
Sartre

25. Decision Making and Emotions
• Emotions distort
Sartre
• Emotions provide valuable information
Nietzsche
• Emotions have a cognitive component: two
judgments:something good or bad about to
happen+appropriate way to deal with
Aristotle

26. Decision Making and Emotions
• If you ignore emotions in decision making you
risk:
– Missing out their informational value
– Allowing them to distort our view of the situation,
the problem, what matters, our options and our
ability to implement decisions

27. Emotions, the Rules:
• Before making decisions ask yourself :
– What are your emotions e.g. fear , anxiety
– What are they about?
– Are they appropriate?
– What information the emotions are providing?
– What the emotions imply we should do?

28. Decision Making
Part II

29. Decision Making
• Rationality:
– Decisions are made in a consistent manner to
maximize benefit ( utility)
– Human beings are absolutely rational in their
economic choices
– Choice is made based on maximum benefit
– Absolutely rational behavior is more predictable
than irrational behavior

30. Interactive Decision Making
• Introduced by John von Neuman in the book
The Theory of Games and Economic Behavior
• Studies interactive decision making; what
happens when agents with different goals interact,
each making decisions on basis on what’s best for
itself, while taking into account that the others are
doing the same

31. The Game Theory
• Game is a scientific metaphor for a wide range of
human interactions where outcome depends on
interactive strategies of two or more persons with
different motives
• Provides a theory of economic and strategic behavior
when people interact directly rather than through
the market
• Involved in economics, mathematics, strategy,
psychology , behavioral and social sciences

32. The Prisoners’ Dilemma
• Invented by Tucker in 1950 as a classical
example of interactive decision making
• The game, set in one paper, has been the most
influential one page in social sciences in 2nd
half of the 20th century
• The Game: refer to the exercise

33. The Prisoners’ Dilemma
The manager has asked Mohsen Dorgham and Mohamed Moharam to pay a field visit
to the site of a new prospective project and do on site assessment for feasibility.
Dorgham convinced Moharam that they can get the information over phone, cook
the report and enjoy the days off. Reading the report, the manager suspected the
plot, called them separately and faced each with his suspicions. He offered each
the following deal:
– If they both confess to report fabrication each will get 15 days salary cut
– If one confesses and the other denies, the one who confesses will be
pardoned while the other who denies will be fired
– If both deny they will get 5 days salary cut each
The offers are made to each of them separately, both are kept in separate rooms
till they meet the director for further investigation
Discuss their possible strategies

34. The Prisoners’ Dilemma
• Dominant Strategy: when each player in the game
evaluates separately each strategy combinations and
for each combination chooses from his own
strategies the one that gives the best pay-off
• Dominant strategy equilibrium: when each player in
the game plays the dominant strategy,the
combination of dominant strategies and
corresponding payoffs constitute the dominant
strategy equilibrium for the game

35. The Prisoners’ Dilemma
The Aftermath
Individually rational action results in both
persons being made worse off in terms of
their own self-interested purposes

36. Decision Making
• Integrating intuition and analysis;
– Not an either or situation
– Decision making should be based on integrating
intuition and analysis in decision making
– Intuition is important in situations of great
uncertainty and little precedent and when
choosing among several plausible alternatives

37. Decision Making
Intuition Vs Analysis
“ I believe in intuition and
inspiration. At times I feel
certain that I am right
without knowing the reason.
Imagination is more
important than knowledge,
because knowledge is
limited while imagination
embraces the entire world”
Albert
Einstein

38. Decision Making
Intuition
• Rapid unconscious
processing of data
• Combined by simple
averaging principle
• Low consistency
• Moderate accuracy but low
potential for major errors
Analysis
• Slow conscious processing
of data
• Combined using more
complex principles
• High consistency
• High accuracy, greater
potential for major
errors,more easily
identifiable

39. Decision Analysis
(Decision Theory)
• It is “the attempt to assess utilities and
probabilities of outcome, in order to calculate
the expected utility of decision options”.
(Baron, 1988)
• It involves:
– First searching for options
– Then evaluating them in terms of likelihood and
utilities of consequences

40. Decision Analysis
Possible
Consequences
Options
Best Outcome Worst
Outcome
Option 1
Option 2

41. Knowledge, Value and Decision
• To produce knowledge, elicit knowledge and
evaluate knowledge claims we need a
knowledge technology
• To establish what values are held and elicit value
judgments we need a
Valuation technology
• To make decisions we need a
Decision technology
• DT needs inputs from KT and VT

42. Value Elements in Health Decision
Making
• Health versus non-health
• Life expectancy versus health related quality
of life
• Components of HRQOL (morbidity, self-
care,pain, discomfort,activities etc)
• Time preference
• Risk preference

43. Decision Making
Part III

44. Decision Making;the Process
The hats of decision making:
• Creative thinking (green hat)
• Critical thinking (black hat)
• Information (white hat)
• Emotions & Intuition ( red hat)
• Process (blue hat)

45. Critical Thinking
• “ A process, the goal of which is to make
reasonable decisions about what to believe
and what to do”
Ennis,1996
• Two common approaches to critical thinking:
– The fallacies approach
– The good reasoning approach

46. Critical Thinking, the Fallacies
Approach
• Common fallacies:
– Attacking the person rather than the relevant
argument
– Attacking something because it has been held by
someone evil or stupid
– Rash generalizations
– Caricaturing opponent’s view making it more
implausible than it really is

47. The Fallacies Approach
• Identifies fallacies i.e bad reasons for decisions
• Provides no account of what makes a good
decision
• The major source of fallacious reasoning is
vividness and emotional language

48. Critical Thinking; the Good
Reasoning Approach
• Decisions based on the pros and cons for each
option
• Based on analysis of the characteristics of a
good reason:
– Acceptable (true reason)
– Relevant to the conclusion
– Strong (important)

49. Critical Thinking
• Apply critical thinking approaches to the
following decision situations:
– I advise all silent gall stones patients to have
cholecystectomy because of the risk of serious
complications
– I can not believe that the board would accept the
proposal of such an incompetent loser.

50. Creative Thinking
• The generation of thoughts, ideas, decisions
and actions, often by novel and unexpected
means
• Common techniques include:
– Brain storming
– Lateral thinking
– Win/win thinking

51. Creative Thinking;Brain Storming
• Stages:
1. State and discuss the problem
2. Restate the problem “ How to”
3. Write down problem statement
4. Warm up session
5. Brainstorm, record suggestions on flip chart
6. Finish with wildest ideas

52. Brain Storming
• Guidelines for brainstorming:
– Suspend judgment
– Freewheel
– Value quantity
– Cross-fertilize
• Brainstorming helps to generate options

53. Brain Storming;Exercise
• You want to attend Enrique Iglesias concert
but you don’t have the 200 pounds you need
to buy the cheapest ticket.
Use brainstorming technique to generate
options

54. Creative Thinking; Lateral Thinking
• A special type of creative thinking which
involves “ pattern switching within a
patterning system” ( de Bono,1982)
• Lateral thinking allows getting a fresh
perspective
• Lateral thinking helps reframe the problem
and coming up with new options

55. Lateral Thinking; Exercise
• Your son doesn’t want to join you on your
leave by the seaside unless you take his friend
with you.Your wife insists he should join you
for a family break. Your place by the seaside
doesn’t have an extra space for guests.
Use lateral thinking to provide a fresh
perspective into your dilemma

56. Creative Thinking; Win/Win Thinking
• Win/win means agreements or solutions that
are mutually beneficial, mutually satisfying
Steven Covey,1992
• Win/win thinking helps with generation of
reasons

57. Win/Win Thinking;Exercise
• Apply win/win thinking technique to generate
reasons in the previous example
• The Jerusalem Dilemma!!!

58. Creative and Critical Thinking
• Creative thinking covers limitations of critical
thinking by generation of reasons, reframing
problems and generating options
• Critical thinking skills are needed to evaluate
all options generated by different creative
thinking techniques

59. Decision Making
Part IV

60. Decision Making Process:
The Progress Model
Tim LeBon & David Arnaud

61. 1-Understanding The Situation
(finding the problem)and the
Decision
– Express situation in headlines outlining decision
needed and options already there
– Use critical thinking to evaluate statements
– Identify your emotions and understand what they
tell you
– Rephrase the problem to express your current
understanding

62. 2-Understanding What Matters
– Objectives and values you like to satisfy by the
decision
– Use creative thinking to reveal other things that
really matter
– Think of others who might be involved
– Think long term
– Rate things from 5 to 0

63. 3-Searching for Options:
• Review options identified in stage1
• Review what really matters in stage 2
• Brainstorm possible solutions
• Write down possible decisions for evaluation

64. 4-Evaluation of Options
Objective Strength Option 1 Option 2
1
2
3
4

65. 4-Evaluation of Options
The Weight and Score
• For every objective allocate a weight out of 10
to reflect its importance to you
• For every option give a score from 1 to 3
reflecting how much it satisfies your
objectives
• Develop a decision matrix
• Multiply the weight by score to get a final
score for each option

66. 5-Implementing Decision
• Resources
• Action plan
• Monitoring and evaluation
• Corrective action
• Decision review and evaluation

67. Group Decision Making
• Brain Storming
• The Nominal Group Technique
• The Delphi Technique

68. Group Decision Making
• Advantages:
– More alternatives
– Involve people in implementation
– Reduce uncertainty
• Disadvantages:
– Time
– Group thinking
– Dispersed accountability

69. Quantitative Decision-Making Tools
• Decision trees
• Payback analysis
• Simulations

70. Decision Making; Golden Rules
• Make decisions!!!
• Do your homework but avoid analysis
paralysis
• Listen to your heart (intuition!!)
• Don’t waste time reviving or revisiting what
would have been
Bill Marriot

71. Decision Making; End of the Road
Map
• When a crisis forces choosing among
alternatives, most people will chose the worst
possible one.
Rudin’s Law
• Life is full of lousy options
General P.Kelly

72. Negotiation Skills
• We are constantly negotiating with others in
life
• The art of negotiation:
– Power
– Time
– Information

73. Power
• The ability to get things done
• Whenever you expand your options , you have
more power!!
• Power:
– Power of competition
– Power of legitimacy
– Power of investment
– Power of persistence

74. Power
• Power:
– Power of expertise
– Power of precedent
– Power of risk taking
– Power of knowing the needs
– Power of reward and punishment

75. Time
• Most concessions are made just before
deadline ; remain cool to the end
• Always question : what happens if we missed
a deadline?

76. Information
• The more information you know about
negotiating partner, the better your position
in the negotiation
• Know the real needs of your negotiating
partner, gather and analyze relevant
information

77. Negotiating styles
• Win at all costs ( soviet style)
• Win- win style
• Opposition in negotiations:
– Idea opposition
– Visceral opposition

78. Thank you