Presentation on theme: "Decision Making and Creative Problem Solving"— Presentation transcript:
1 Decision Making and Creative Problem Solving Chapter EightDecision Making and Creative Problem Solving
2 Chapter ObjectivesSpecify at least five sources of decision complexity for modern managers.Explain what a condition of risk is and what managers can do to cope with it.Define and discuss the three decision traps: framing, escalation of commitment, and overconfidence.Discuss why programmed and nonprogrammed decisions require different decision-making procedures and distinguish between the two types of knowledge in knowledge management.
3 Chapter Objectives (cont’d) Explain the need for a contingency approach to group-aided decision making.Identify and describe five of the ten “mental locks” that can inhibit creativity.List and explain the four basic steps in the creative problem-solving process.Describe how causes of problems can be tracked down with fishbone diagrams.
4 Challenges for Decision Makers Decision MakingDecision making is the process of identifying and choosing alternative courses of action to meet the demands of a situation.Judgment and discretion are fundamental to decision making.Trends in Decision MakingAccelerating: Managers report making more decisions and having less time to make them.
5 Challenges for Decision Makers (cont’d) Dealing with Complex Streams of DecisionsMultiple criteria to be satisfied by a decisionIntangibles that often determine decision alternativesRisk and uncertainty about decision alternativesLong-term implications of the effects of the choice of a particular alternativeInterdisciplinary input, which increases the number of persons to be consulted before a decision is made
6 Challenges for Decision Makers (cont’d) Dealing with Complex Streams of Decisions (cont’d)Pooled decision making increases the number of persons playing a part in the decision process.Value judgments by differing participants in the process create disagreement over whether a decision is right or wrong, good or bad, and ethical or unethical.Unintended consequences occur because the results of purposeful actions cannot always be predicted.
7 Figure 8.1: Sources of Complexity for Today’s Managerial Decision Makers
8 Coping with Uncertainty Types (Conditions) of UncertaintyCertainty: Exists when a solid factual basis allows prediction of a decision’s outcomeRisk: Exists when a decision is made on the basis of incomplete but reliable informationObjective probabilities are based on reliable data.Subjective probabilities are based on judgment.Uncertainty: Exists when no reliable data exist on which to base a decision
9 Figure 8.2: The Relationship Between Uncertainty and Confidence
10 Information Process Styles Thinking StyleBeing deliberative, logical, precise, and objective when making a decisionSuited to routine tasks requiring attention to detail and systematic implementationIntuitive StyleBeing creative, following hunches and visions in decision makingBest for rapidly changing situations requiring creativity and intuition
12 Avoiding Perceptual and Behavioral Decision Traps Framing ErrorThe way in which information is presented influences one’s interpretation of it, which, in turn, may alter a decision based on the information.Escalation of CommitmentContinuing on a course of action can lock a person into a losing position (“throwing good money after bad”).OverconfidenceBelieving too much in one’s own capabilities is a trap.
13 Figure 8.3: Why Escalation of Commitment Is So Common Source: Adapted from discussion in Barry M. Shaw and Jerry Ross, “Understanding Behavior in Escalation Situation,” Science, 246 (October 13, 1989):
14 Making Decisions Types of Decisions Programmed decisions: repetitive and routine decisionsA decision rule identifies the situation and specifies how the decision will be made.Useful for establishing solutions (in “if-then” terms) to standard, recurring problems that are solved only onceSpeed up decisions by removing requirement to go through comprehensive problem solving over and over again
15 Making Decisions (cont’d) Types of Decisions (cont’d)Nonprogrammed decisionsDecisions made in complex and nonroutine situationsQuestions to ask:What decision needs to be made?When does it have to be made?Who will decide?Who needs to be consulted?Who will ratify or veto the decision?Who will need to be informed?
16 A General Decision-Making Model Rational (Logical) Decision Model StepsScan the situation; identify a signal that a decision should be made.Receipt of authoritative communications from superiorsCases referred for decision by subordinatesCases originating from the managerClassify the decision. If it is routine, apply the appropriate decision rule; if it is not, generate a nonprogrammed decision through problem solving.Monitor and follow-up as necessary.
18 A General Decision-Making Model (cont’d) Knowledge ManagementDeveloping a system to improve the creation and sharing of knowledge critical for decision makingTacit knowledge: Personal, intuitive, and undocumented private informationExplicit knowledge: Readily sharable public information in verbal, textual, visual, or numerical form
19 Figure 8.5: Key Dimensions of Knowledge Management (KM)
20 A General Decision-Making Model (cont’d) Improving the Flow of KnowledgeThe flow of constructive tacit knowledge between coworkers is a priority.Knowing what you know, what you don’t know, and how to find what you know yields better and more timely decisions.
21 A General Decision-Making Model (cont’d) Improving the Flow of Knowledge (cont’d)Organizational learningOrganization culturesTrainingCommunicationEmpowermentParticipative managementVirtual trainingCommunication
22 Group-Aided Decision Making: A Contingency Perspective Collaborative ComputingTeaming up to make decisions via a computer network programmed with groupwareGroup Involvement in DecisionsAnalyzing the problemIdentifying components of the situationEstimating components of the situationDesigning alternativesChoosing an alternative
23 Group-Aided Decision Making: A Contingency Perspective (cont’d) The Problem of Dispersed AccountabilityGroup-aided decision making: The group does everything except make the decision.Group decision making: The group actually makes the final decision collectively.Results in loss of personal/individual accountabilityIndividual accountability is required when:The decision will have significant organizational impact.The decision has legal ramifications.A competitive award is tied to the decision.
25 A Contingency Approach Is Necessary Individuals Versus GroupsGroups do better quantitatively and qualitatively than the average individual.Exceptional individuals tend to outperform the group.Group decision-making performance does not always exceed individual performance, making a contingency approach to decision making advisable.
26 Figure 8.6: Individual Versus Group Performance: Contingency Management Insights from 61 Years of Research
27 Managerial Creativity What Is Creativity?The reorganization of experience into new configurationsThree domains of creativity:ArtDiscoveryHumor
28 Managerial Creativity Mental LocksFear and avoiding publicityForgetting how to playBecoming too specializedNot wanting to look foolishSaying “I’m not creative”Looking for the “right” answerAlways trying to be logicalStrictly following the rulesInsisting on being practicalAvoiding ambiguity
29 Creative Problem Solving Steps in Creative Problem SolvingIdentifying the problemGenerating alternative solutionsSelecting a solutionImplementing and evaluating
30 Creative Problem Solving (cont’d) Identifying the ProblemWhat is a problem?Defined by the gap between the actual and the desired state of affairsStumbling Blocks for Problem FindersDefining the problem according to a possible solutionFocusing on narrow, low-priority areasDiagnosing problems in terms of their symptoms
31 Creative Problem Solving (cont’d) Pinpointing Causes with Fishbone DiagramsA TQM process improvement tool that shows possible problem causes and their interactive relationshipsGenerating Alternative SolutionsBrainstormingFree associationEdisonian methodAttribute listingScientific methodCreative Leap
32 Creative Problem Solving (cont’d) Selecting a SolutionResolving the problemSatisfice: To settle for a solution that is good enough rather than the best possibleSolving the problemOptimize: Systematically identifying the solution with the best combination of benefitsDissolving the problemChanging the situation in which the problem occurs so that the problem (and the conditions that cause it) no longer exists
33 Creative Problem Solving (cont’d) Implementing and Evaluating the SolutionEffective and efficient resolution removes the gap between actual and desired states.If problem persists, recycling through the problem-solving steps becomes necessary.Trying other feasible solutionsRedefining the problem and beginning the problem-solving cycle again
34 Terms to Understand Decision making Law of unintended consequences Condition of certaintyCondition of riskObjective probabilitiesSubjective probabilitiesCondition of uncertaintyFraming errorEscalation of commitmentProgrammed decisionsDecision ruleNonprogrammed decisionsKnowledge of managementTacit knowledgeExplicit knowledgeCollaborative computingCreativityProblem solvingProblemCausesSatisficeOptimizeIdealize