1. Chapter 3: Information and Decision-Making
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Business Leadership: Management Fundamentals John R. Schermerhorn, Jr., Barry Wright, and Lorie Guest
© John Wiley & Sons Canada, Ltd.

2. Planning Ahead — Chapter 3 Learning Goals
Understand the role of information in the management process
Understand how managers use information to make decisions
Use the steps in the decision-making process
Understand the current issues in managerial decision-making

3. Information and Knowledge— basic linkages
Knowledge and knowledge workers provide a decisive competitive factor in today’s economy
Knowledge worker:
Someone whose value to the organization rests with intellect, not physical capabilities
Intellectual capital:
Shared knowledge of a workforce that can be used to create wealth

4. Information and knowledge — basic linkages (cont.)
Knowledge and intellectual capital are irreplaceable organizational resources
The productivity of knowledge and knowledge workers depends on:
Computer competency
Information competency

5. What is useful information?
Data
Raw facts and observations
Information
Data made useful for decision-making
Information drives management functions
Characteristics of useful information:
Timely
High quality
Complete
Relevant
Understandable

6. What is information technology?
Helps to acquire, store, process and transmit information

7. Figure 3.1 Internal and external information needs of an organization

8. Implications of IT within organizations
Facilitation of communication and information sharing
Operating with fewer middle managers
Flattening of organizational structures
Faster decision making
Increased coordination and control

9. Implications of IT for relationships with external environment
Helps with customer relationship management
Helps organizations with supply chain management
Helps in monitoring outsourcing and other business contracts

10. Implications of IT for relationships with Internal environment
Quick decision-making at lower levels translate into higher profit margins
Top level management well informed

11. Ceo john chambers (harvard Business)
Teamwork and Collaboration, Harvard Business Publishing Series
(external link)
Teamwork and Collaboration from the Harvard Business Publishing series
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12. Information needs of organizations
Information exchanges with the external environment:
Gather intelligence information
Provide public information
Information exchanges within the organization:
Facilitate decision-making
Facilitate problem solving

13. Basic information system concepts
Use of the latest IT to collect, organize, and distribute data for use in decision-making
Management Information System (MIS)
Specifically designed to meet the information needs of managers in daily decision-making

14. Figure 3.3 Information technology is breaking barriers and changing organizations.
Management 2e - Chapter 13

15. Managerial advantages of IT utilization
Planning advantages:
Better and more timely access to useful information
Involving more people in planning
Organizing advantages:
More ongoing and informed communication among all parts of the organization
Improved co-ordination and integration

16. Managerial advantages of IT utilization (cont.)
Leading advantages:
Improved communication with staff and stakeholders
Keeping objectives clear
Controlling advantages:
More immediate measures of performance results
Allows real-time solutions to performance problems

17. Figure 3.4 The manager as an information-processing nerve centre
Management 2e - Chapter 13

18. Managers as problem-solvers
Problem solving:
The process of identifying a discrepancy between actual and desired performance and taking action to resolve it
A decision:
A choice among possible alternative course of action
A performance deficiency:
Actual performance being less than desired performance
A performance opportunity:
Actual performance being better than desired performance

19. Problem-solving approaches or styles
Problem avoiders: Inactive in information gathering and solving problems
Problem solvers: Reactive in gathering information and solving problems
Problem seekers: Proactive in anticipating problems and opportunities and taking appropriate action to gain an advantage

20. Types of thinking Systematic Thinkers Rational step-by-step analytical
breaks problems into smaller components
Intuitive Thinkers
Rely on hunches and feelings
Flexible and spontaneous
See “big picture”
Multidimensional Thinkers
Multidimensional thinking applies both intuitive and systematic thinking
Effective multidimensional thinking requires skill at strategic opportunism

21. Cognitive styles
Sensation Thinkers emphasize the impersonal rather than the personal and take a realistic approach to problem solving.
Intuitive Thinkers are comfortable with abstraction and tend to be idealistic. Have a spontaneous fashion.
Intuitive Feelers prefer broad and global issues and are comfortable with intangibles.
Sensation Feelers emphasize analysis and human relations and tend to be realistic and prefer facts.

22. Figure 3.6 different cognitive styles in decision-making

23. Programmed decisions
Apply solutions that are readily available from past experiences to solve structured problems
Structured problems are ones that are familiar, straightforward, and clear with respect to information needs
Best applied to routine problems that can be anticipated

24. Nonprogrammed decisions
Develop novel solutions to meet the demands of unique situation that present unstructured problems
Unstructured problems are ones that are full of ambiguities and information deficiencies
Commonly faced by higher-level management

25. Crisis decision-making
A crisis involves an unexpected problem that can lead to disaster if not resolved quickly and appropriately
Rules for crisis management:
Figure out what is going on
Remember that speed matters
Remember that slow counts, too
Respect the danger of the unfamiliar
Value the skeptic
Be ready to “fight fire with fire”

26. Decision environments
Certain environments:
Offer complete information about possible action alternatives and their outcomes
Risk environments:
Lack complete information about action alternatives and their consequences, but offer some estimates of probabilities of outcomes for possible action alternatives
Uncertain environments:
Information is so poor that probabilities cannot be assigned to likely outcomes of known action alternatives

27. Figure 3.7 Three environments for managerial decision-making and problem solving

28. Five-step decision-making process
Identify and define the problem
Generate and evaluate possible solutions
Make decision and conduct ethics double check
Implement the decision
Evaluate results

29. Figure 3.8 Steps in managerial decision- making and problem solving

30. Decision-making process
Step 1: Identify and define the problem
Focuses on information gathering, information processing, and deliberation
Decision objectives should be established
Common mistakes in defining problems:
Defining the problem too broadly or too narrowly
Focusing on symptoms instead of causes
Choosing the wrong problem

31. Decision-making process
Step 2: Generate and evaluate possible solutions
Potential solutions are formulated and more information is gathered, data are analyzed , the advantages and disadvantages of alternative solutions are identified
Approaches for evaluating alternatives:
Stakeholder analysis
Cost-benefit analysis

32. decision-making process
Step 2: Generate and evaluate possible solutions (cont.)
Criteria for evaluating alternatives:
Benefits
Costs
Timeliness
Acceptability
Ethical soundness
Common mistakes:
Selecting a particular solution too quickly
Choosing a convenient alternative that may have damaging side effects or may not be as good as other alternatives

33. Decision-making process
Step 3: Decide on a preferred course of action
Classical decision model
Managers act rationally in a certain world
Managers face clearly defined problems and have complete knowledge of all possible alternatives and their consequences
Results in an optimizing decision

34. Decision-making process
Step 3: Decide on a preferred course of action (cont.)
Behavioural decision model
Managers act in terms of what they perceive about a given situation
Recognizes limits to human information-processing capabilities
Cognitive limitations
Bounded rationality
Results in a satisficing decision

35. Figure 3.9 Differences in the classical and behavioural models of managerial decision making

36. Decision-making process
Step 4: Implement the decision solution
Involves taking action to make sure the solution decided upon becomes a reality
Managers need to have willingness and ability to implement action plans
Lack-of-participation error should be avoided

37. Decision-making process
Step 5: Evaluate results
Involves comparing actual and desired results
Positive and negative consequences of chosen course of action should be examined
If actual results fall short of desired results, the manager returns to earlier steps in the decision-making process

38. Creativity in decision-making
The generation of a novel idea or unique approach that solves a problem to take advantage of an opportunity
More likely:
Task expertise – something one is good at or knows about
Task motivated – people work exceptionally hard to resolve a problem or exploit and opportunity
Organizations should create an environment that supports and encourages creativity

39. Video: CNBC video on Lonnie Johnson and the Super Soaker
Super Soaker inventor, Lonnie Johnson
(external link)
Link

40. - Darryl F. Zanuck, Head of 2oth Century Fox, 1946
“Television won’t be able to hold onto any market it captures after the first six months. People will soon get tired of the staring into a box every night.”
- Darryl F. Zanuck, Head of 2oth Century Fox, 1946

41. “That’s an amazing invention, but who would ever want to use one of them.”
- US President Rutherford B. Hayes, after participating In a trial telephone conversation between Washington And Philadelphia, 1876

42. Thomas J. Watson Sr., Chairman of IBM, 1943
“I think there is a world market for about five computers.”
Thomas J. Watson Sr., Chairman of IBM, 1943
1899 – Charles Duell, director of the US Patent Office, suggested that the government close the office because everything that could be invented had been invented.
1923 – Robert Millikan, noted physicist and winner of the Nobel Prize, said that there was absolutely no likelihood that man could harness the power of the atom.
Phillip Reiss, a German, invented a machine that could transmit music in He was days away from inventing the telephone. Every communication expert in Germany persuaded him there was no market for such a device, as the telegraph was good enough. Fifteen years later, Alexander Graham Bell invented the telephone and become a multimillionaire.
Chester Carlson invented xerography in Virtually every major corporation, including IBM and Kodak, scoffed at his idea and turned him down. They claimed that since carbon paper was cheap and plentiful, no one in their right mind would buy an expensive copier.
Fred Smith, while at Yale, came up with the concept of Federal Express. The US postal service, UPS and his own business professor and every delivery expert in the US predicted his enterprise would fail.

43. Right Brain vs. Left Brain
Imagination
Intuition
Spontaneity
Emotion
Logic
Order
Method
Analysis

44. Characteristics of creative people
Work with high energy
Identify problems, plan, make decisions
Hold ground in face of criticism
Accept responsibility for what happens
Be resourceful, even in difficult situations
Use both systematic and intuitive in problem-solving
Think “outside the box”
Synthesize and find correct answers
Look at divers ways to solve problems
Transfer learning from one setting to others
Be objective, willing to “step back” and question assumptions

45. Albert Einstein’s Needle in the Haystack
Question: “What is the difference between you and the average person?”
Response: “If you asked the average person to find a needle in the haystack, the person would stop when he or she found a needle. I, on the other hand, would tear through the entire haystack looking for all the possible needles."

46. What is one-half of thirteen?
Activity
What is one-half of thirteen?

47. Activity (cont.) 6.5 Six and one-half
Thir & teen = 4 (4 letters on each side)
13 = 1,3
XI II = 11, 2
XIII = 8, 8 (Halving horizontally gives us 8 on the top and 8 on the bottom)

48. Creativity Exercise
Most people see a pattern as a square composed of smaller squares or circles, or as alternate rows of squares and circles.
It isn’t easily seen as columns of alternate squares and circles. Once pointed out, it is visible.

49. Activity 1
The diagram represents twelve matchsticks positioned to represent a square made up of four equal squares. Can you, by moving only three of these sides, make three equal-sized squares?

50. Solution 1 2 3

51. Activity 2
Add one line to the following to make it into a 6.
I X

52. Solution
S I X

53. Group Decisions Advantages:
Greater amounts of information, knowledge and expertise are available
Expand number of alternatives
Avoids tunnel vision
Increase understanding and acceptance of outcomes
Increase commitments of members to work hard
Disadvantages:
Social pressures to conform
Minority domination may occur
Decision making takes longer thus more costly

54. When group decision-making works best
Individual lacks expertise or information
Problem is unclear and hard to define
Acceptance by others needed for effective implementation
Time is sufficient for group involvement

55. Ethical decision making
Any decision should meet “ethics double check” mentioned in step 3 of the decision-making process
How would I feel if my family found out about this decision?
How would I feel if this decision were published in the local newspaper or on the Internet?
Think of a person you know or know of (in real life or fiction) who has the strongest character and best ethical judgement. Then ask yourself – what would that person do in your situation?
Any discomfort in answering these questions indicates the decision has ethical shortcomings.

56. Ethical decision making (cont.)
Considering the ethics of a proposed decision may result in better decisions and prevention of costly litigation
Ethical decisions satisfy the following criteria:
Utility
Rights
Justice
Caring

57. COPYRIGHT
Copyright © 2013 John Wiley & Sons Canada, Ltd. All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein. 57