The document discusses decision making skills and models. It provides steps for making decisions, including defining the problem, generating alternatives, evaluating alternatives based on factors like legality and practicality, choosing an alternative, implementing it, and learning from feedback. Group decision making can reduce biases but also risks groupthink. Ways to improve group decisions include devil's advocacy and dialectical inquiry. Building a learning organization and encouraging creativity can also improve decision making.

2. DECISION MAKING SKILLS

3. DECISION MAKING
A DECISION IS ONE WHEN THERE ARE DIFFERENT THINGS YOU CAN
DO AND YOU PICK ONE OF THEM. YOU MAKE LOTS OF DECISIONS
EVERYDAY!

4. RELATED QUOTES
“BE SURE YOU ARE RIGHT -- THEN GO AHEAD.”
DAVY CROCKET.
“Doing what's right isn't hard -- Knowing what's right is.”
Lyndon B. Johnson.
“Mine own applause is the only applause which matters.”
Cicero.
“Once you've made your mark, watch out for erasers!”
Will Rogers.

5. SOME DECISIONS ARE EASY LIKE.......
WHAT TO EAT IN BREAKFAST????

6. WHAT TO WEAR????

7. SOME DECISIONS ARE DIFFICULT LIKE.......
CHOOSING A CAREER

8. CHOOSING GOOD FRIENDS

9. CHANGING A JOB

10. IN EVERY SITUATION YOU HAVE TO SEARCH
FOR...

11. HOW TO MAKE RIGHT DECISIONS???

12. EXAMPLE
AMY REALLY WANTS A NEW CELL.
UNFORTUNATELY, THE ONE SHE
WANTS COSTS RS. 15000, AND SHE
HAS ONLY RS. 10000. SHE
WONDERS HOW SHE WILL GET THE
REST OF MONEY?

13. STEP 1: RELAX
TAKE A DEEP BREATH AND LET ALL OF THE AIR OUT.
THE FIRST THING AMY SHOULD DO IS RELAX.

14. STEP 2: SAY SOMETHING POSITIVE....I CAN
DO THIS...I CAN DEAL WITH THIS...
THIS GIVES YOU CONFIDENCE AND MAKES YOU FEEL GOOD
ABOUT YOURSELF.

15. STEP 3: SAY SOMETHING POSITIVE
NOW ITS TIME FOR AMY TO GIVE HERSELF CONFIDENCE.

16. STEP 4: IDENTIFY THE PROBLEM
TRY TO SEARCH OUT ACTUAL PROBLEM.

17. STEP 4: IDENTIFY THE PROBLEM
AMY DOES NOT HAVE ENOUGH
MONEY
TO BUY THE PHONE.

18. STEP 5: WHAT ARE YOUR CHOICES??
THINK OF ALL THE POSSIBLE

19. STEP 5: WHAT ARE YOUR CHOICES??
COME UP WITH LIST OF POSSIBLE SOLUTIONS:
SAVE HER MONEY UNTIL SHE’S HAS GOT ENOUGH
MONEY.
BORROW MONEY FROM HER PARENTS OR FRIENDS.

20. STEP 6: CONSIDER THE CONSEQUENCES OF
YOUR SOLUTIONS.
LIST BOTH THE NEGATIVE AND POSITIVE CONSEQUENCES.

21. SAVE HER MONEY UNTIL SHE’S HAS GOT ENOUGH
MONEY.
+VE: SHE WILL FEEL PROUD ABOUT HER
ACCOMPLISHMENTS; SHE WILL GET THE PHONE SHE
REALLY WANTS.
STEP 6: CONSIDER THE CONSEQUENCES OF
YOUR SOLUTIONS.

22. STEP 6: CONSIDER THE CONSEQUENCES OF
YOUR SOLUTIONS.
BORROW MONEY FROM HER PARENTS OR FRIENDS.
+VE: AMY WILL GET THE PHONE RIGHT AWAY.
-VE: SHE WON’T FEEL INDEPENDENT; FRIENDS OR PARENTS
MIGHT SAY “NO” TO HER.

23. STEP 6: CONSIDER THE CONSEQUENCES OF
YOUR SOLUTIONS.
BUY A CHEAPER PHONE
+VE: AMY WILL GET THE PHONE RIGHT AWAY.
-VE: AMY WON’T GET THE PHONE THE PHONE SHE
REALLY WANTS.

24. STEP 7: WHAT IS IMPORTANT TO YOU???

25. STEP 7: WHAT IS IMPORTANT TO YOU???
WHAT IS IMPORTANT FOR AMY??
....GETTING THE PHONE SHE REALLY WANTS???
.... GETTING THE PHONE RIGHT AWAY???
....NOT BORROWING MONEY???
AFTER CHOOSING WHAT IS IMPORTANT, CROSS OUT OTHER
SOLUTIONS

26. STEP 8: MAKE THE DECISION

27. STEP 8: MAKE THE DECISION
AMY DECIDED TO WAIT IN ORDER TO SAVE SOME MORE MONEY
FOR PHONE.

28. MAKING EFFECTIVE DECISIONS
 Perception.
 Priority.
 Acceptability.
 Risk.
 Resources.
Factors:
 Goals.
 Values.
 Demands.
 Style.
 Judgement.

29. SIX C'S OF DECISION MAKING (1 OF 3)
 1. CONSTRUCT.
 2. COMPILE.
 3. COLLECT.
 4. COMPARE.
 5. CONSIDER.
 6. COMMIT.

30. SIX C'S OF DECISION MAKING (2 OF 3)
 Construct a clear picture of precisely what must be
decided.
 Compile a list of requirements that must be met.
 Collect information on alternatives that meet the
requirements.

31. SIX C'S OF DECISION MAKING (3 OF 3)
 Compare alternatives that meet the requirements.
 Consider the "what might go wrong" factor with each
alternative.
 Commit to a decision and follow through with it.

32. Traps in Decision making

33. INHERENT PERSONAL TRAPS
 Trying too hard to play it safe.
 Letting fears and biases tilt your thinking and analysis.
 Getting lost in the minutia can cause trouble.
 Craving for unanimous approval.
 Trying to make decisions which are outside your realm of
authority.

34. INHERENT SYSTEM TRAPS
 Willing to begin with too little, inaccurate, or wrong
information.
 Overlook viable alternatives or waste time considering
alternatives which have no realistic prospects.
 Not following the six c's.
 Failure to clearly define the results you expect to achieve.
 Worst of all, failure to reach a decision.

35. MANAGERIAL DECISION MAKING
• Decision making: The process by which managers respond to
opportunities and threats by analyzing options, and making
decisions about goals and courses of action.
• Decisions in response to opportunities: Managers respond to
ways to improve organizational performance.
• Decisions in response to threats: Occurs when managers are
impacted by adverse events to the organization.

36. TYPES OF DECISION MAKING
Programmed decisions: Routine, almost automatic process.
• Managers have made decision many times before.
• There are rules or guidelines to follow.
• Example: deciding to reorder office supplies.
Non-programmed decisions: Unusual situations that have not been often addressed.
• No rules to follow since the decision is new.
• These decisions are made based on information, and a manger’s intuition, and
judgment.
• Example: should the firm invest in a new technology?

38. Models in Decision Making

39. THE CLASSICAL MODEL
Classical model of decision making: A prescriptive model that tells how the
decision should be made.
• Assumes managers have access to all the information needed to reach
a decision.
• Managers can then make the optimum decision by easily ranking their
own preferences among alternatives.
Unfortunately, mangers often do not have all (or even most) required
information.

40. THE CLASSICAL MODEL
Rank each alternative
from low to high
Select best
alternative
List alternatives
& consequences
Assumes all information
is available to manager
Assumes manager can
process information
Assumes manager knows
the best future course of
the organization

41. THE ADMINISTRATIVE MODEL
Administrative model of decision making:
Challenges the classical assumptions that managers have and process all the
information. As a result, decision making is risky.
Bounded rationality: There is a large number of alternatives and information is vast so
that managers cannot consider it all. Decisions are limited by people’s cognitive
abilities.
Incomplete information: Most managers do not see all alternatives and decide based
on incomplete information.

42. WHY INFORMATION IS INCOMPLETE
Uncertainty
& risk
Ambiguous
Information
Time constraints &
information costs
Incomplete
Information

43. DECISION MAKING STEPS
Recognize need for
a decision
Frame the problem Generate & assess
alternatives
Choose among
alternatives
Implement chosen
alternativeLearn from feedback

44. DECISION MAKING STEPS
Recognize need for a decision: Managers must first
realize the need for which a decision must be made.

45. Frame the problem: Managers must frame problem
for which decision is to be made.
DECISION MAKING STEPS

46. Generate alternatives: Managers must develop feasible alternative courses
of action.
• If good alternatives are missed, the resulting decision is poor.
• It is hard to develop creative alternatives, so managers need to
look for new ideas.
Evaluate alternatives: what are the advantages and disadvantages of each
alternative?
• Managers should specify criteria, then evaluate.
DECISION MAKING STEPS

47. DECISION MAKING STEPS
Choose among alternatives: Managers rank alternatives and
decide. While ranking, all information needs to be
considered.

48. Implement choose alternative: Managers must now carry
out the alternative. Often a decision is made and not
implemented.
DECISION MAKING STEPS

49. Learn from feedback: Managers should consider what
went right and wrong with the decision and learn for the
future. Without feedback, managers never learn from
experience and might repeat the same mistake.
DECISION MAKING STEPS

50. EVALUATING ALTERNATIVES
IS THE POSSIBLE COURSE OF ACTION:
Legal?
Ethical ?
Economical?
Practical?

51. EVALUATING ALTERNATIVES
• Is it legal? Managers must first be sure that an alternative is legal both
in this country and abroad for exports.
• Is it ethical? The alternative must be ethical and not hurt stakeholders
unnecessarily.
• Is it economically feasible? Can our organization’s performance goals
sustain this alternative?
• Is it practical? Does the management have the capabilities and resources
to do it?

52. COGNITIVE BIASES
Suggests decision makers use heuristics to deal with bounded rationality.
• A heuristic is a rule of thumb to deal with complex situations.
• If the heuristic is wrong, however, then poor decisions result from its
use.
Systematic errors can result from use of an incorrect heuristic.
• These errors will appear over and over since the rule used to make
decision is flawed.

53. TYPES OF COGNITIVE BIASES
Prior Hypothesis
Representativeness
Illusion of Control
Escalating Commitment
Cognitive
Biases

54. TYPES OF COGNITIVE BIASES
Prior hypothesis bias: Manager allows strong prior beliefs about a
relationship between variables and makes decisions based on these
beliefs even when evidence shows they are wrong.
Representativeness: Decision maker incorrectly generalizes a decision
from a small sample or one incident.
Illusion of control: Manager over-estimates their ability to control events.
Escalating commitment: Manager has already committed considerable
resource to project and then commits more even after feedback indicates
problems

55. GROUP DECISION MAKING
Many decisions are made in a group setting.
• Groups tend to reduce cognitive biases and can call on combined skills, and
abilities.
There are some disadvantages with groups:
Group think: biased decision making resulting from group members striving for
agreement.
• Usually occurs when group members rally around a central manger’s idea (CEO),
and become blindly committed without considering alternatives.
• The group tends to convince each member that the idea must go forward.

56. IMPROVED GROUP DECISION MAKING
• Devil’s advocacy: one member of the group acts as the devil’s advocate
and critiques the way the group identified alternatives.
• Points out problems with the alternative selection.
• Dialectical inquiry: two different groups are assigned to the problem and
each group evaluates the other group’s alternatives.
• Top managers then hear each group present their alternatives and each
group can critique the other.
• Promote diversity: by increasing the diversity in a group, a wider set of
alternatives may be considered.

57. DEVIL’S ADVOCACY VS DIALECTIC INQUIRY
Devil’s Advocacy
Presentation of
alternative
Critique of
alternative
Reassess
alternative
accept, modify, reject
Dialectic
Inquiry
Alter. 1
Debate the two
alternatives
Reassess
alternatives
accept 1 or 2, combine
Alter. 2

58. ORGANIZATIONAL LEARNING & CREATIVITY
• Organizational learning: managers seek to improve member’s ability to
understand the organization and environment so as to raise effectiveness.
• The learning organization: managers try to improve the people’s ability to behave
creatively to maximize organizational learning .
• Creativity: is the ability of the decision maker to discover novel ideas leading to a
feasible course of action.
• A creative management staff and employees are the key to the learning organization.

59. SENGE’S LEARNING ORGANIZATION
PRINCIPLES
Develop Personal
Mastery
Build Shared
Vision
Build complex,
challenging
mental models
Promote Team
Learning
Encourage
Systems
Thinking

60. CREATING A LEARNING ORGANIZATION
Senge suggests top managers follow several steps to build in learning:
• Personal mastery: managers empower employees and allow them to create and
explore.
• Mental models: challenge employees to find new, better methods to perform a
task.
• Team learning: is more important than individual learning since most decisions
are made in groups.
• Build a shared vision: a people share a common mental model of the firm to
evaluate opportunities.
• Systems thinking: know that actions in one area of the firm impacts all others.

61. INDIVIDUAL CREATIVITY
• Organizations can build an environment supportive of
creativity.
• Many of these issues are the same as for the learning
organization.
• Managers must provide employees with the ability to take
risks.
• If people take risks, they will occasionally fail.
• Thus, to build creativity, periodic failures must be rewarded.
• This idea is hard to accept for some managers.

62. BUILDING GROUP CREATIVITY
• Brainstorming: managers meet face-to-face to generate and debate many alternatives.
• Group members are not allowed to evaluate alternatives until all alternatives
are listed.
• Be creative and radical in stating alternatives.
• When all are listed, then the pros and cons of each are discussed and a short
list created.
• Production blocking is a potential problem with brainstorming.
• Members cannot absorb all information being presented during the session and
can forget their own alternatives.

63. BUILDING GROUP CREATIVITY
• Nominal group technique: provides a more structured way to generate
alternatives in writing.
• Avoids the production blocking problem.
• Similar to brainstorming except that each member is given time
to first write down all alternatives he or she would suggest.
• Alternatives are then read aloud without discussion until all have
been listed.
• Then discussion occurs and alternatives are ranked.

64. BUILDING GROUP CREATIVITY
• Delphi technique: Provides for a written format without having all managers
meet face-to-face.
• Problem is distributed in written form to managers who then generate
written alternatives.
• Responses are received and summarized by top managers.
• These results are sent back to participants for feedback, and ranking.
• The process continues until consensus is reached.
• Delphi allows distant managers to participate.