1. Chapter 5 Planning and Decision Making
MGMT3
Chuck Williams
Designed & Prepared by B-books, Ltd.

2. Planning discuss the benefits and pitfalls of planning.
After reading these sections, you should be able to:
discuss the benefits and pitfalls of planning.
describe how to make a plan that works.
discuss how companies can use plans at all management levels, from top to bottom.

3. Planning
Planning
Choosing a goal and developing a method of strategy to achieve that goal
Planning is choosing a goal and developing a method or strategy to achieve that goal.
Are you one of those naturally organized people who always makes a daily to-do list, who always writes everything down so you won’t forget, and who never misses a deadline because you keep track of everything with your handy time-management notebook or your palm pc? Or are you one of those flexible, creative, go-with-the-flow people who dislike planning and organizing because it restricts your freedom, energy, and performance? Some people are natural planners. They love it and can only see the benefits of planning. However, others dislike planning, and can only see its disadvantages. It turns out that both views are correct. Planning has advantages and disadvantages. 1

4. Benefits of Planning Benefits of Planning Creation of Task Strategies
Intensified Effort
Direction
Persistence
Planning offers benefits, as shown on this slide.
First, managers and employees put forth greater effort when following a plan. Take two workers. Instruct one to do his or her best to increase production, and instruct the other to achieve a 2 percent increase in production each month. Research shows that the one with the specific plan will work harder.
Second, planning leads to persistence, that is, working hard for long periods. In fact, planning encourages persistence even when there may be little chance of short-term success.
The third benefit of planning is direction. Plans encourage managers and employees to direct their persistent efforts toward activities that help accomplish their goals and away from activities that don’t.
The fourth benefit of planning is that it encourages the development of task strategies. After selecting a goal, it’s natural to ask, “How can it be achieved?”
Finally, perhaps the most compelling benefit of planning is that it has been proven to work for both companies and individuals. On average, companies with plans have larger profits and grow much faster than companies that don’t. The same holds true for individual managers and employees. There is no better way to improve the performance of the people who work in a company than to have them set goals and develop strategies for achieving those goals.
1.1

5. Pitfalls of Planning Pitfalls of Planning Detachment of Planners
Impedes Change and Adaptation
False Sense of Certainty
Despite the significant benefits associated with planning, planning is not a cure-all. Plans won’t fix all organizational problems. In fact, many management authors and consultants believe that planning can harm companies in several ways.
The first pitfall of planning is that it can impede change and prevent or slow needed adaptation. Sometimes companies become so committed to achieving the goals set forth in their plans, or they can become so intent on following the strategies and tactics spelled out in them, that they fail to see that their plans aren’t working or that their goals need to change.
The second pitfall of planning is that it can create a false sense of certainty. Planners sometimes feel that they know exactly what the future holds for their competitors, their suppliers, and their companies. However, all plans are based on assumptions.
The third pitfall of planning is the detachment of planners. In theory, strategic planners and top-level managers are supposed to focus on the big picture and not concern themselves with the details of implementation, that is, carrying out the plan. According to management professor Henry Mintzberg, detachment leads planners to plan for things they don’t understand. Plans are not meant to be abstract theories. They are meant to be guidelines for action.
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6. How to Make a Plan That Works
Set Goals
Develop Commitment
Develop Effective
Action
Plans
Track Progress
Toward
Goal
Achievement
Maintain Flexibility
Revise existing plan or Begin new planning process
Planning consists of the steps listed on this slide. 2

7. Setting Goals S.M.A.R.T. Specific Measurable Attainable Realistic
Timely
Step 1: Set Goals
The first step in planning is to set goals. Goals need to be specific and challenging, to provide a target for which to aim and a standard against which to measure to success.
One way of writing effective goals is to use the S.M.A.R.T. guidelines.
2.1

8. Examples of S.M.A.R.T. Goals?
Walgreens: “Second is to hire a significant number of people with disabilities in our South Carolina distribution center, scheduled to open in 2007, and achieve 20% productivity gains there.”
UPS: “65% of drivers will have access to the new technology (implemented in 2004) by the end of 2005.” and “In 2005, we will increase operating profit in each of our 3 key businesses: domestic, int’l, supply chain.”
Wrigley: “In 2005, the company will decrease the long-term rate of return assumption for the assets of its U.S. (pension) plans from 8.75 % to 8.5%.”
Halliburton: “We estimate that 74% of the backlog existing on 12/31 will be eliminated the following fiscal year.”
Martha Stewart Living Omnimedia: “In 2004 we will discontinue the Catalog for Living and its online product options, and sell remaining inventory in early fiscal 2005.”
Starbucks: “In fiscal 2006, we plan to open approximately 1,800 net new stores globally.”
These phrases were all pulled from annual reports of the companies listed. How do they measure up as S.M.A.R.T. goals?

9. Developing Commitment to Goals
The determination to achieve a goal is increased by…
setting goals collectively.
making goals reasonable.
making goals public.
obtaining top management support.
Step 2: Goal commitment is the determination to achieve a goal. Commitment to achieve a goal is not automatic. Managers and workers must choose to commit themselves to a goal.
So how can managers bring about goal commitment? The most popular approach is to set goals collectively, as a team. Rather than assigning goals to workers (“Johnson, you’ve got ‘til Tuesday of next week to redesign the flex capacitor so it gives us 10 percent more output”), managers and employees choose goals together. The goals are more likely to be realistic and attainable if employees participate in setting them.
Another technique for gaining commitment to a goal is to make the goal public.
Still another way to increase goal commitment is to obtain top management’s support. Top management can show support for a plan or program by providing funds, speaking publicly about the plan, or participating in the plan itself.
2.2

10. Developing Effective Action Plans
An Action Plan Lists…
Specific Steps
People
Resources
Time Period
2.3

11. Tracking Progress Set… Gather and provide… Performance Feedback
Proximal Goals
Performance Feedback
Distal Goals
The fourth step in planning is to track progress toward goal achievement. There are two accepted methods of tracking progress. The first is to set proximal goals and distal goals. Proximal goals are short-term goals or subgoals, whereas distal goals are long-term or primary goals. The idea behind setting proximal goals is that they may be more motivating and rewarding than waiting to achieve far-off distal goals.
The second method of tracking progress is to gather and provide performance feedback. Regular, frequent performance feedback allows workers and managers to track their progress toward goal achievement and make adjustments in effort, direction, and strategies.
2.4

12. Maintaining Flexibility
Option-based planning
keep options open by making simultaneous investments
invest more in promising options
maintains slack resources
Because action plans are sometimes poorly conceived and goals sometimes turn out to not be achievable, the last step in developing an effective plan is to maintain flexibility.
One method of maintaining flexibility while planning is to adopt an options-based approach. The goal of options-based planning is to keep options open by making small, simultaneous investments in many options or plans. Then when one or a few of these plans emerge as likely winners, you investment even more in these plans while discontinuing or reducing investment in the others. In part, options-based planning is the opposite of traditional planning. Whereas the purpose of an action plan is to commit people and resources to a particular course of action, the purpose of options-based planning is to leave those commitments open. Holding options open gives you choices and choices give you flexibility.
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13. Planning or Doing? Beyond the Book
Planning takes many hours and much effort, time and effort that could be spent doing something. Is time spent planning time lost? No.
If planning involves predicting where an industry is going, and these predictions are merely guesses, as some managers think, what’s to be gained from planning?
Time spent planning is time spent learning.
Learning what?
To get better and faster at predicting industry outcomes and setting standards.
Source: “Planning Not to Learn,” Fast Company, available online at

14. Biz Flix: Inside Man Beyond the Book
Does this scene show strategic or tactical planning?
What pieces of the planning type does it specifically show? Give examples from the scene.
Take Two Video
Click
The 2006 crime thriller Inside Man features Denzel Washington as a tough NYPD hostage negotiator. He finds himself in a high-stakes cat-and-mouse game with a clever bank robber (Clive Owen), who confuses and outwits the police at every turn. Bank robber Dalton Russell is holding 50 people hostage in the vault of the Manhattan Trust Bank building, and Detective Frazier is determined to get them out alive. In this scene, Captain John Darius (Willem Dafoe) updates Detective Frazier on what is happening inside the bank.
1. Does this scene show strategic or tactical planning?
2. What pieces of the planning type does it specifically show? Give examples from the scene.
3. Do you expect this plan to succeed? Why or why not?

15. Planning from Top to Bottom3

16. Starting at the Top
Strategic Plans
Clarify how the company will serve customers and position itself against competitors (2-5 years)
Purpose
Statement
An inspirational statement of an organization’s purpose (2 sentences)
Strategic
Objective
Overall goal that unifies efforts, stretches
and challenges, and possesses a finish
line and time frame. Flows from purpose.
Top management is responsible for developing long-term strategic plans. Strategic planning begins with the creation of an organizational vision or purpose.
A purpose statement is a statement of a company’s purpose or reason for existing. Purpose statements should be brief—no more than two sentences. They should also be enduring, inspirational, clear, and consistent with widely shared company beliefs and values. The strategic objective, which flows from the vision, is a more specific goal that unifies company-wide efforts, stretches and challenges the organization, and possesses a finish line and a time frame.
3.1

17. Planning Time Lines Years 1 2 3 4 5 6 Plans Strategic Tactical1 2 3 4 5 6
Plans
Strategic
Tactical
Operational
5 Years
2 years
30 days
6 months
2 Years

18. Management by Objectives MBO is a four-step process
Bending in the Middle
Tactical Plans
Specify how a company will use resources, budgets, and people to accomplish goals related to its strategic
objective.
Management by Objectives
Develop and carry out tactical plans
MBO is a four-step process
Middle management is responsible for developing and carrying out tactical plans to accomplish the organization’s strategic objective. Tactical plans specify how a company will use resources, budgets, and people to accomplish specific goals related to its strategic objective. Whereas strategic plans and objectives are used to focus company efforts over the next two to five years, tactical plans are used to direct behavior, efforts, and attention over the next six months to two years.
Management by objectives is a management technique often used to develop and carry out tactical plans. Management by objectives, or MBO, is a four-step process in which managers and their employees (1) discuss possible goals; (2) participatively select goals that are challenging, attainable, and consistent with the company’s overall goals; (3) jointly develop tactical plans that lead to accomplishment of tactical goal; and (4) meet regularly to review progress toward accomplishment of those goals.
3.2

19. Management by Objectives
Steps to Management by Objectives:
Discuss possible goals
Select goals that are challenging, attainable and consistent with the company’s overall goals
Jointly develop tactical plans that lead to the accomplishment of tactical goals and objectives
Meet regularly to review progress

20. Finishing at the Bottom
Operational Plans
Day-to-day plans for producing or delivering products and services over a period of 30 days to 6 months
Lower-level managers are responsible for developing and carrying out operational plans, which are the day-to-day plans for producing or delivering the organization’s products and services. These plans direct the behavior, efforts, and priorities of operative employees for periods ranging from 30 days to six months. The three kinds of operational plans are described on the next slide.
3.3

21. Kinds of Operational Plans
Single-Use Plans
Plans that cover unique, one-time-only events
Standing Plans
Plans used repeatedly to handle frequently recurring events.
Three kinds are: policies, procedures, and rules and regulations.
Budgets
Quantitative planning to decide how to allocate money to accomplish company goals
Kinds of Operational Plans:
Single-use plans deal with unique, one-time-only events.
Unlike single-use plans that are created, carried out, and then never used again, standing plans save managers time, because they are created once and then used repeatedly to handle frequently recurring events. If you encounter a problem that you’ve seen before, someone in your company has probably written a standing plan that explains how to address it. There are three kinds of standing plans: policies, procedures, and rules and regulations.
Budgets are the third kind of operational plan. Budgeting is quantitative planning, because it forces managers to decide how to allocate available money to best accomplish company goals.
3.3

22. What Is Rational Decision Making?
After reading these sections, you should be able to:
explain the steps and limits to rational decision making.
explain how group decisions and group decision-making techniques can improve decision-making.
Decision making is the process of choosing a solution from available alternatives. We begin the chapter by reviewing rational decision making, a systematic process in which managers define problems, evaluate alternatives, and choose optimal solutions that provide maximum benefits to their organizations.

23. What Is Rational Decision Making?
The process of choosing a solution from available alternatives.
Rational Decision Making
A systematic process of defining problems, evaluating alternatives, and choosing optimal solutions. 4

24. Steps to Rational Decision Making
Define the problem
Identify decision criteria
Weight the criteria
Generate alternative courses of action
Evaluate each alternative
Compute the optimal decision 1 2 3 4 5 6
The first step in decision making is identifying and defining the problem. A problem exists when there is a gap between a desired state (what managers want) and an existing state (the situation that managers are facing).
Decision criteria are the standards used to guide judgments and decisions. Typically, the more criteria that a potential solution meets, the better that solution should be.
After identifying decision criteria, the next step is deciding which criteria are more or less important.
After identifying and weighting the criteria that will guide the decision-making process, the next step is to identify possible courses of action that could solve the problem. In general, at this step, the idea is to generate as many alternatives as possible.
The next step is to systematically evaluate each alternative against each criterion. Because of the amount of information that must be collected, this step can take much longer and be much more expensive than other steps in the decision-making process.
The final step in the decision-making process is to compute the optimal decision by determining each alternative’s weighted average. This is done by multiplying the rating for each criterion (step 5) by the weight for that criterion (step 3) and then summing those scores for each alternative course of action that you generated (Step 4). 4

25. Starting From Scratch Beyond the Book
When making a decision, sometimes it’s ok to start over or change direction. Mattel was struggling financially when Bob Eckert first became CEO. They’d been paying a 36¢ per share dividend for several years, but they had started having to borrow from banks to continue the payout. Eckert and his CFO realized that given a blank slate, they wouldn’t be paying the dividend, so they decided to cut it to 5¢. The day that they announced the cut, the stock price actually went up.
Source: B. Eckert, “The Best Advice I Ever Got: Try Starting From Scratch”, Fortune, 31 August

26. Steps to Rational Decision Making1
Define the problem
A problem exists when there is a gap between a desired state and an existing state
To make decisions about problems, managers must…
be aware of the gap.
be motivated to reduce the gap.
have the knowledge, skills, abilities, and resources to fix the problem.
The first step in decision making is identifying and defining the problem. A problem exists when there is a gap between a desired state (what managers want) and an existing state (the situation that the managers are facing).
The existence of a gap between an existing state and a desired state is no guarantee that managers will make decisions to solve problems. Three things must occur for this to happen. First, managers have to be aware of the gap. They have to know there is a problem before they can begin solving it.
Second, being aware of the gap between a desired state and an existing state isn’t enough to begin the decision-making process. You also have to be motivated to reduce the gap.
Finally, it’s not enough to be aware of a problem and be motivated to solve it. You must also have the knowledge, skills, abilities, and resources to fix the problem.
4.1

27. Steps to Rational Decision Making2
Identify decision criteria
Standards used to guide judgments and decisions
The more criteria a potential solution meets, the better that solution should be
4.2

28. Steps to Rational Decision Making3
Weight the criteria
Absolute comparisons
each criterion is compared to a standard or ranked on its own merits
Relative comparisons
each criterion is compared directly to every other criterion
After identifying decision criteria, the next step is deciding which criteria are more or less important. Although there are numerous math models for weighting decision criteria, all require the decision maker to provide an initial ranking of the decision criteria. Two methods are absolute and relative comparisons.
4.3

29. Steps to Rational Decision Making
Absolute Weighting of Decision Criteria
for a Car Purchase
4.3

30. Steps to Rational Decision Making
Relative Comparison of Home Characteristics
4.3

31. Steps to Rational Decision Making4
Generate alternative courses of action
The idea is to generate as many alternatives as possible
Step 4 is to identify possible courses of action that could solve the problem. In general, the idea is to generate as many alternatives as possible.
4.4

32. Buck Knives Considers Its Options
Beyond the Book
Buck Knives Considers Its Options
In 2004, C.J. Buck moved his company Buck Knives from its 62 year-old headquarters in San Diego, California to Post Falls, Idaho. As its clients had shifted from small specialty stores to larger accounts like Wal-Mart and JCPenney, order volumes had risen but price competition was hurting margins. Buck concluded they could move assembly to Mexico, become a marketing company and outsource all production, or move the company. To maintain the integrity of the brand and maintain quality control, Buck wanted to keep production close to the headquarters. Buck chose to move because Idaho provided a more business friendly environment.
Source: B. Eckert, “The Best Advice I Ever Got: Try Starting From Scratch”, Fortune, 31 August

33. Steps to Rational Decision Making5
Evaluate each alternative
This step can take much longer and be more expensive than other steps in the process
In Step 5, each alternative is systematically evaluated against each criterion.
4.5

34. Steps to Rational Decision Making6
Compute the optimal decision
Multiply the rating for each criterion by the weight for that criterion
Sum the scores for each alternative course of action
Computing the optimal decision is done by multiplying the rating for each criterion (Step 5) by the weight for that criterion (Step 3) and then summing those scores for each alternate course of action (Step 4). Those weights are then multiplied by the ratings in each category.
4.6

35. Limits to Rational Decision Making
Maximize
Satisfice
In theory, fully rational decision makers maximize decisions by choosing the optimal solution. In practice, limited resources make it impossible for managers to maximize decisions. Consequently, most managers “satisfice.” Satisficing is choosing a “good enough” alternative.
4.7

36. Using Groups to Improve Decision Making
Structured Conflict
Nominal Group Technique
Delphi
Technique
Electronic Brainstorming
According to a study reported in Fortune magazine, 91 percent of U.S. companies use teams and groups to solve specific problems (i.e., make decisions).
When done properly, group decision making can lead to much better decisions than individual decision making. In fact, numerous studies show that groups consistently outperform individuals on complex tasks. Let’s explore the advantages and pitfalls of group decision making, and learn about the following group decision making methods—structured conflict, the nominal group technique, the Delphi technique, and electronic brainstorming. 5

37. Group Decision Making View problems from multiple perspectives
Advantages
View problems from multiple perspectives
Find and access more information
Generate more alternative solutions
More committed to making chosen solutions work
Groups can do a much better job than individuals in two important steps of the decision-making process: defining the problem and generating alternative solutions. Four reasons explain why.
First, because group members usually possess different knowledge, skills, abilities, and experiences, groups will be able to view problems from multiple perspectives.
Second, groups can find and access much more information than can individuals.
Third, the increased knowledge and information available to groups make it easier for them to generate more alternative solutions. Studies show that generating lots of alternative solutions is a critical part of improving the quality of decisions.
Fourth, if groups are involved in the decision-making process, group members will be more committed to making chosen solutions work.
5.1

38. Group Decision Making
Susceptible to groupthink and to considering a limited number of solutions
Takes considerable time
One or two people can dominate group discussion
Members don’t feel personally accountable for decisions and actions
Disadvantages
Although groups can do a better job of defining problems and generating alternative solutions, group decision making is subject to pitfalls. One possible pitfall is groupthink, which occurs in highly cohesive groups when group members feel intense pressure to agree with each other.
A second potential problem with group decision making is that it takes considerable time. It takes time to reconcile schedules (so that group members can meet). Furthermore, it’s the rare group that consistently holds productive task-oriented meetings to effectively work through the decision process. Some of the most common complaints about meetings (and thus decision making) are that the meeting’s purpose is unclear, meeting participants are unprepared, critical people are absent or late, conversation doesn’t stay focused on the problem, and no one follows up on the decisions that were made.
A third possible pitfall is that sometimes just one or two people dominate group discussion, restricting consideration of different problem definitions and alternative solutions. Another possible problem is that, unlike their own decisions and actions, group members often don’t feel accountable for the decisions made and actions taken by the group.
While these pitfalls can lead to poor decision making, this doesn’t mean that managers should avoid using groups to make decisions. When done properly, group decision making can lead to much better decisions. The pitfalls of group decision making are not inevitable. Most of them can be overcome through good management. Let’s see how structured conflict, the nominal group technique, the Delphi technique, and electronic brainstorming help managers improve group decision making.
5.1

39. Groupthink is likely to occur when…
the group is insulated from others with different perspectives.
the group leader expresses a strong preference for a particular decision.
there is no established procedure for defining problems and exploring alternatives.
group members have similar backgrounds.
Groupthink is likely to occur when…
Groupthink occurs in highly cohesive groups when group members feel intense pressure not to disagree with each other so that the group can approve a proposed solution. Because groupthink leads to consideration of a limited number of solutions, and because it restricts discussion of any considered solutions, it usually results in poor decisions. Groupthink is most likely to occur under the following conditions:
the group is insulated from others who might have different perspectives
the group leader begins by expressing strong preference for a particular decision
there is no established procedure for systematically defining problems and exploring alternatives
group members have similar backgrounds and experiences
5.1

40. Structured Conflict C-Type Conflict A-Type Conflict
Cognitive conflict Disagreement that focuses on problem- and issue-related differences of opinion
A-Type Conflict
Affective conflict
Disagreement that focuses on individuals or personal issues
Most people view conflict negatively. However, the right kind of conflict can lead to much better group decision making. C-type conflict, or cognitive conflict, focuses on problem- and issue-related differences of opinion. In c-type conflict, group members disagree because their different experiences and areas of expertise lead them to view the problem and its potential solutions differently. C-type conflict is also characterized by a willingness to examine, compare, and reconcile those differences to produce the best possible solution.
By contrast, a-type conflict, or affective conflict, refers to the emotional reactions that can occur when disagreements become personal rather than professional. A-type conflict often results in hostility, anger, resentment, distrust, cynicism, and apathy. So, unlike c-type conflict, a-type conflict undermines team effectiveness. Examples of a-type conflict statements would be, “your idea," “our idea,” "my department," "you don't know what you are talking about," and "you don't understand our situation." Rather than focusing on issues and ideas, these statements focus on individuals.
5.2

41. Steps to Establish a Devil’s Advocacy Program
Generate a potential solution
Assign a devil’s advocate to criticize and question
Present the critique of the solution to key decision makers
Gather additional information
Decide whether to use, change, or not use the originally proposed solution
Devil’s advocacy creates c-type conflict by assigning an individual or a subgroup the role of critic. The five steps shown on this slide establish a devil’s advocacy program.
5.2

42. Steps to Establish a Dialectical Inquiry Process
Beyond the Book
Steps to Establish a Dialectical Inquiry Process
Generate a potential solution
Identify the assumptions underlying the potential solution
Generate a conflicting counterproposal based on opposite assumptions
Have advocates of each position present their arguments and engage in a debate in front of decision makers
Decide whether to use, change, or not use the originally proposed solution
Dialectical inquiry creates c-type conflict by forcing decision makers to state the assumptions of a proposed solution (a thesis) and to then generate a solution that is the opposite (antithesis) of the proposed solution.

43. Nominal Group Technique
Steps to Establish Nominal Group Technique
During a quiet time, group members write down as many problems and solutions as possible.
Each member shares one idea at a time.
Ideas are posted on flipcharts until all ideas are shared.
Group discusses advantages/disadvantages.
Ideas are ranked during a second quiet time.
Members read rankings aloud, and the idea with the highest average rank is selected.
Nominal means “in name only.” Accordingly, the nominal group technique received its name because it begins with quiet time, in which group members independently write down as many problem definitions and alternative solutions as possible. In other words, the nominal group technique begins by having group members act as individuals. After the quiet time, the group leader asks each group member to share one idea at a time with the group. As they are read aloud, ideas are posted on flip charts or wall boards for all to see. This step continues until all ideas have been shared. The next step involves a discussion of the advantages and disadvantages of these ideas. The nominal group technique closes with a second quiet time in which group members independently rank the ideas presented. Group members then read their rankings aloud, and the idea with the highest average rank is selected.
The nominal group technique improves group decision making by decreasing a-type conflict. However, in doing so, it also restricts c-type conflict. Consequently, the nominal group technique typically produces poorer-quality decisions than do the devil’s advocacy or dialectical inquiry approaches. Nonetheless, more than 80 studies have found that nominal groups produce better-quality ideas than traditional group decisions.
5.3

44. Steps to Establish Delphi Technique
Assemble a panel of experts.
Create a questionnaire of open-ended questions.
Summarize the responses and feed back to the panel until the members reach agreement.
Create a brief report and send to the panel members for agreement/disagreement.
Continue the feedback process until panel reaches agreement.
The Delphi technique is a decision-making method in which a panel of experts respond to questions and to each other until reaching agreement on an issue. The first step is to assemble a panel of experts. However, unlike other approaches to group decision making, it isn’t necessary to bring the panel together in one place. Since the Delphi technique does not require the experts to leave their offices or disrupt their schedules, they are more likely to participate in the process. The anonymity also helps deter the negative effects of groups on this process.
The second step is to create a questionnaire consisting of a series of open-ended questions for the experts.
In step 3, panel members’ written responses are analyzed, summarized, and fed back to the panel for reactions until panel members reach agreement. Then, their written responses were summarized and typed into a brief report (no more than 2 pages).
Asking why they agreed or disagreed is important, because it helps uncover panel members’ unstated assumptions and beliefs. Again, this process of summarizing panel feedback and obtaining reactions to that feedback continues until panel members reach agreement.
The Delphi technique is not an approach that managers should use for common decisions. Because it is a time-consuming, labor-intensive, and expensive process, the Delphi technique is best reserved for important long-term issues and problems. Nonetheless, the judgments and conclusions obtained from it are typically better than those you would get from one expert.
5.4

45. Stepladder Technique Beyond the Book Step 3 Step 2 Step 1 Member 1
Shares thoughts, ideas, recommendations
Member 2
Discussion is Held and Tentative Group Decision is Made
Member 3 Joins Group Shares thoughts, ideas, recommendations
Members 1 & 2
Share previous thoughts, ideas, recommendations
Member 4 Joins Group Shares thoughts, ideas, recommendations
Members 1, 2, & 3 Share previous thoughts, ideas, recommendations
Step 1
Step 2
Step 3
The stepladder technique begins with discussion between two group members, each of whom presents to the other their thoughts, ideas, and recommendations before jointly making a tentative decision. At each step, as other group members are added to the discussion one at a time (i.e., like a stepladder), the existing group members take the time to listen to each new member’s thoughts, ideas, and recommendations. The group then shares the ideas and suggestions that it had already considered, discusses the new and old ideas, and then makes a tentative decision about what to do. This process (new member’s ideas are heard, group shares previous ideas and suggestion, discussion is held, tentative group decision is made) continues until each group member’s ideas have been discussed.
For the stepladder technique to work, group members must have enough time to consider the problem or decision on their own, to present their ideas to the group, and to thoroughly discuss all ideas and alternatives with the group at each step. Rushing through each step destroys the advantages of this technique. Also, groups must make sure that subsequent group members are completely unaware of previous discussions and suggestions. This will ensure that each member who joins the group brings truly independent thoughts and suggestions, thus, greatly increasing the chances of making better decisions.

46. Four Rules of Brainstorming
The more ideas, the better.
All ideas are acceptable, no matter how wild or crazy.
Other group members’ ideas should be used to come up with even more ideas.
Criticism or evaluation of ideas is not allowed.
The key advantage to brainstorming is the creation of possible decision solutions. In traditional decision making, many times people do not freely express their ideas for fear of rebuke or looking stupid. Brainstorming is a process by which criticism of ideas is not allowed. This fact helps free people from the fear of making a stupid comment.
Electronic brainstorming enhances traditional brainstorming by adding greater anonymity and enabling freer expression of ideas.
5.5

47. Electronic Brainstorming
Advantages of Electronic Brainstorming
Overcomes production blocking
technology allows everyone to record their ideas as they are created
no ideas lost while waiting your turn to speak
Overcomes evaluation apprehension
anonymity creates free expression
The first disadvantage that electronic brainstorming overcomes is production blocking, which occurs when you have an idea, but you have to wait to share it because someone else is already describing an idea to the group. This short delay may make you forget your idea or decide that it really wasn’t worth sharing. But with electronic brainstorming, production blocking doesn’t happen. With all group members seated at computers, everyone can type in their ideas whenever they occur. There’s no “waiting your turn” to be heard by the group.
The second disadvantage that electronic brainstorming overcomes is evaluation apprehension, that is, being afraid of what others will think of your ideas. With electronic brainstorming, all ideas are anonymous. When you type in an idea and hit the Enter key to share it with the group, group members see only the idea. Furthermore, many brainstorming software programs also protect anonymity by displaying ideas in random order. So, if you laugh maniacally when you type “Cut top management’s pay by 50 percent!” and then hit the Enter key, it won’t show up immediately on everyone’s screen. This makes it doubly difficult to determine who is responsible for which comments.
Studies show that electronic brainstorming is much more productive than face-to-face brainstorming. Compared to regular 4-person brainstorming groups, the same-sized electronic brainstorming groups produce 25 percent to 50 percent more ideas. Compared to regular twelve-person brainstorming groups, the same-sized electronic brainstorming groups produce 200 percent more ideas!
5.5

48. Electronic Brainstorming
Disadvantages of Electronic Brainstorming
Greater expense
No automatic acceptance of ideas because of one’s position
Some find it difficult to express themselves in writing
Lack of typing skills can frustrate participants
Even though it works much better than traditional brainstorming, electronic brainstorming has disadvantages, too. An obvious problem is the expense of computers, networking, software, etc. However, as these costs continue to drop, electronic brainstorming will become a viable option for more groups.
Another problem is that the anonymity of ideas may bother people who are used to having their ideas accepted by virtue of their position (i.e., the boss). On the other hand, one CEO said, "Because the process is anonymous, the sky's the limit in terms of what you can say, and as a result it is more thought provoking. As a CEO, you'll probably discover things you might not want to hear but need to be aware of."
A third disadvantage is that outgoing individuals who are more comfortable expressing themselves verbally may find it difficult to express themselves in writing. Finally, the most obvious problem is that participants have to be able to type. Those who can’t type and those who type slowly, may be easily frustrated and find themselves at a disadvantage relative to experienced typists.
5.5

49. Brainstorming: Up-close and Personal
Beyond the Book
Brainstorming: Up-close and Personal
Some organizations are trying some radical methods for generating new ideas.
In 2008, Best Buy took four groups of younger sales people and asked them to live together for 10 weeks.
Their goal for the period was to brainstorm and develop new businesses that could be launched quickly and cheaply.
Their efforts produced Best Buy Studio, a service providing Web-design consulting for small businesses.
Source: R. Jana, “Real Life Imitates Real World”, Business Week, 23 & 30 March