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- 1. Copyright © 2009by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Decision Making and Creativity Chapter Six
- 2. 6-2 Decision Making atRadical Radical Entertainment founder Ian Wilkinson (third from right) meets with employees every week to reinforce the electronic games developer’s emphasis on creative decision making and employee involvement. Ron Sangha/ BC Business
- 3. 6-3 Decision Making Defined Decisionmaking is a conscious process of making choices among one or more alternatives with the intention of moving toward some desired state of affairs. Ron Sangha/ BC Business
- 4. 6-4 Rational Choice DecisionProcess
- 5. 6-5 Rational Choice DecisionProcess Identify problem/opportunity Problem is a gap between the current and the desired ‘what is’ and ‘what ought to be’ Choose decision process Involves how to process the decision -- e.g. are we facing a routine/programmed decision that requires a standard operating procedure? Or a unique/ nonprogrammed decision that requires working through all steps in the decision process? Develop (and identify) alternatives Searching for ready-made solution which have worked well in similar situations, or otherwise designing a custom-made solution Choose best alternative Rational choice view: choosing an alternative that maximizes payoff Implement choice Evaluate choice
- 6. 6-6 Problem Identification Process Problemsand opportunities are not announced or pre- defined Managers need to interpret ambiguous information and to find out what the problem or opportunity is This discovery process uses both logical analysis and unconscious emotional reaction during perceptual process We evaluate information as soon as we perceive it by attaching emotional makers (worry, afraid, angry, …etc.) to that information. These rapid emotional responses together with logical analysis, determine whether you perceive something as a problem, opportunity, or irrelevant
- 7. 6-7 No Problem, Houston? NASA’sspace shuttle Columbia disintegrated during re-entry, killing all seven crewmembers. A special accident investigation board concluded that NASA’s middle management continually resisted attempts to recognize that the Columbia was in trouble, and therefore made no attempt to prevent loss of life.
- 8. 6-8 Problem Identification Challenges Followingare four of the most recognized challenges: 1. Stakeholder framing • Stakeholders try to frame the situation by persuading the decision maker that the available information points a problem, opportunity or irrelevance which tend to influence decision maker’s assessment of the situation 2. Perceptual defense • People sometimes reject or avoid bad news (negative info) especially when they lack control overt the situation 3. Mental models • Cognitive perceptions or images that produce assumptions or expectations that prevent us from seeing unique problem 4. Decisive leadership • Decisive leaders tend to dominate situations which limits careful analysis of facts and producing less effective decisions
- 9. 6-9 Evaluating and ChoosingAlternatives When evaluating and choosing alternatives people engage in bounded rationality because they process limited and imperfect information and rarely select the best choice Bounded rationality: processing limited and imperfect information and satisficing rather than maximizing when choosing between alternatives Satisficing: Try to get hold of a workable solution and not wait for the best solution to appear
- 10. 6-10 Processing Information Evaluation Timing Rational: People canprocess all information Rational: Choices evaluated simultaneously Goals Rational: Clear, compatible, agreed upon OB: Ambiguous, conflicting, lack agreement OB: People process only limited information OB: Choices evaluated sequentially more Making Choices: Rational vs OB Views
- 11. 6-11 Info Quality Decision Objective Rational: Peoplerely on factual information Rational: Maximization -- the optimal choice Standards Rational: Evaluate against absolute standards OB: Evaluate against implicit favorite OB: Rely on perceptually distorted information OB: Satisficing -- a “good enough” choice Making Choices: Rational vs OB (con’t)
- 12. 6-12 Emotions and MakingChoices Emotional marker process forms preferences before we consciously think about choices Moods and emotions influence the decision process affects vigilance, risk aversion, etc. We ‘listen in’ on our emotions and use that information to make our choices
- 13. 6-13 Intuitive Decision Making Abilityto know when a problem or opportunity exists and select the best course of action without conscious reasoning Intuition as emotional experience Gut feelings are emotional signals Not all emotional signals are intuition Intuition as rapid unconscious analysis Uses action scripts
- 14. 6-14 Making Choices moreEffectively Systematically evaluate alternatives Balance emotions and rational influences Scenario planning Decision making is better when leaders are contemplative and not decisive. Leaders reduce the effect of implicit favorite
- 15. 6-15 Escalation of Commitment Thetendency to repeat an apparently bad decision or allocate more resources to a failing course of action Four main causes of escalation: Self-justification Prospect theory effect Perceptual blinders Closing costs
- 16. 6-16 Evaluating Decisions Better Separatedecision choosers from evaluators Establish a preset level to abandon the project Involve several people in the evaluation process
- 17. Copyright © 2009by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Employee Involvement Decision Making and Creativity
- 18. 6-18 Employee Involvement atThai Carbon Black Thai Cabon Black, the Thai-Indian joint venture, relies on employee involvement to boost productivity and quality. Employees submit hundreds of suggestions in little red boxes located around the site Participatory management meetings are held every month
- 19. 6-19 Employee Involvement Defined Thedegree to which employees influence how their work is organized and carried out Different levels and forms of involvement
- 20. 6-20 Employee Involvement Model PotentialInvolvement Outcomes Contingencies of Involvement Employee Involvement Better problem identification Synergy produces more/better solutions Better at picking the best choice Higher decision commitment
- 21. 6-21 Contingencies of Involvement Knowledge Source Decision Commitment •Employees have relevant knowledge beyond leader • Employees would lack commitment unless involved Risk of Conflict 1. Norms support firm’s goals 2. Employee agreement likely Decision Structure • Problem is new & complex (i.e nonprogrammed decision) Higher employee involvement is better when:
- 22. Copyright © 2009by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Creativity in Decision Making Decision Making and Creativity
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- 24. 6-24 Characteristics of CreativePeople Above average intelligence Persistence Relevant knowledge and experience Inventive thinking style
- 25. 6-25 Creative Work Environments Learningorientation Encourage experimentation Tolerate mistakes Intrinsically motivating work Task significance, autonomy, feedback Open communication and sufficient resources Team competition and time pressure have complex effect on creativity
- 26. 6-26 Creative Activities • Review abandoned projects •Explore issue with other people Redefine the Problem • Storytelling • Artistic activities • Morphological analysis Associative Play • Diverse teams • Information sessions • Internal tradeshows Cross- Pollination
- 27. Copyright © 2009by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Solutions to Creativity Brainbusters Decision Making and Creativity
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- 30. 6-30 Nine Dot ProblemRevisited
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- 32. 6-32 Burning Ropes One Hourto Burn Completely After first rope burned i.e. 30 min.
- 33. Copyright © 2009by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Decision Making and Creativity Chapter Six