Chapter 3 Creative Problem Solving and Decision Making

Importance of These Skills Problem solving and decision making are crucial skills for effective managers. The sport industry is not immune to bad decisions—witness the Starter Corporation.

The Starter Corporation Starter was the leading provider of licensed sport apparel in the 1980s and 1990s. Starter failed to expand their merchandise line from licensed sport apparel to a branded apparel line. Nike decided to take a branded approach and emphasized their name instead of their licenses with professional leagues. Fans who were turned off by labor problems in the MLB, NHL, and NBA turned to athletic brands such as Nike and Fila as well as fashion designer brands such as Tommy Hilfiger, Nautica, and the Gap.

Daily Decision Making Some researchers claim that managers typically make about 80 decisions daily, or one every 5 or 6 minutes; others claim that daily decisions number in the hundreds.

Problems A problem exists whenever company or team objectives are not being met.

Problem Solving Versus Decision Making Problem solving is the process of taking corrective action to meet objectives. Decision making is the process of selecting a course of action that will solve a problem.

Decisions at Adidas Adidas has not yet been able to capitalize on efficiencies within its divisions. Adidas thus faces important decisions—how best to share skills, abilities, and resources. Adidas wants a new vision of a corporate culture that works together as one team across the globe... and a company that people love to work for again.

Decision Styles Reflexive style: Shoot from the hip—that is, make snap decisions without taking the time to get all the information needed and without considering alternatives. Reflective style: Take plenty of time to decide, gathering considerable information and analyzing numerous alternatives. Consistent style: Don’t rush and don’t waste time. Know when more information is needed and when it’s time to stop analyzing and get moving.

Decision Making for Officials One of the biggest errors that officials fall into is making calls too quickly. Each decision has two phases: 1.Read and analyze the play. 2.Make the call. When things happen in a split second, it’s tempting to throw a penalty flag before knowing what happened. Officials need to work in cruise control.

Six Steps of Effective Decision Making 1.Define the problem or opportunity 2.Set objectives and criteria 3.Generate alternatives 4.Select the most feasible alternative 5.Implement the decision 6.Control the results

Figure 3.1

Step 1: Define the Problem or Opportunity With programmed decisions (recurring or routine situations) decision makers use decision rules, or organizational policies and procedures, to make the decision. A typical decision rule: Order X number of golf balls every time stock reaches level Y. With nonprogrammed decisions (significant and nonrecurring and nonroutine situations) decision makers use the six-step decision process.

Step 2: Set Objectives and Criteria Objectives state what the individual, group, or organization intends to accomplish. Objectives can address a problem of long or short standing, or they can address opportunities in the marketplace. Criteria are the standards that must be met to accomplish the objective.

Step 3: Generate Alternatives You will often find that there are many ways to solve a problem. An innovation alters what is established by introducing something new. Creativity is a way of thinking that generates new solutions to problems and new ways to approach opportunities.

Figure 3.5

Figure 3.7

Step 4: Select the Most Feasible Alternative Generating and evaluating alternatives at the same time often lead to sacrificing and wasting time on poorly developed alternatives. Break-even analysis calculates the volume of sales or revenue that will result in a profit. It involves forecasting the volume of sales and the cost of production. The break-even point occurs at the level where no profit or loss results.

Step 5: Implement the Decision How you implement your plan is crucial to its success or failure. Adidas, for example, developed a plan to sell TaylorMade golf clubs, a plan to advertise them, and a plan to distribute the clubs at the retail level.

Step 6: Control the Results Control methods should be developed during planning. Establish checkpoints to determine whether the chosen alternative is solving the problem. If not, consider corrective action. More important, if the implementation continues to go poorly, don’t remain married to your decision—that is, don’t rule out a “divorce.”

Solomon Skis Adidas ended up making a poor, nonprogrammed decision to buy Solomon Skis. The skis just didn’t mesh well with the rest of the Adidas product line. Adidas sold the Solomon company to Amer Sports of Finland.

Reebok That doesn’t mean Adidas should stop making nonprogrammed decisions. In August 2005, Adidas bought the outstanding shares of Reebok for $59 per share in cash, a 34 percent premium to Reebok's closing share price. AdiBok (nickname) is still learning to coordinate the two massive companies.