1 CRITICAL DECISION-MAKING TECHNIQUES

2 DECISION MAKING

3 1. What is Decision Making? A. Developing a mtminetmoc to some course of action

4 A. Developing a commitment to some course of action B. cshenuh and titiunino 1. What is Decision Making?

5 A. Developing a commitment to some course of action B. Hunches and intuition C. pxereniece 1. What is Decision Making?

6 A. Developing a commitment to some course of action B. Hunches and intuition C. Experience 1. What is Decision Making?

7 2. What are the Steps of Decision Making? A. A stymtcisae approach of problem solving

8 2. What are the Steps of Decision Making? A. A systematic approach of problem solving B. yifntedi and fedine the specific problem

9 2. What are the Steps of Decision Making? C. Generation of lentvsatraie A. A systematic approach of problem solving B. Identify and define the specific problem

10 2. What are the Steps of Decision Making? D. eauiaegvlnt alternatives. A. A systematic approach of problem solving B. Identify and define the specific problem C. Generation of alternatives

11 2. What are the Steps of Decision Making? E. ticeglens a noitulos A. A systematic approach of problem solving B. Identify and define the specific problem C. Generation of alternatives D. Evaluating alternatives

12 2. What are the Steps of Decision Making? F. mintepeglimn the solution A. A systematic approach of problem solving B. Identify and define the specific problem C. Generation of alternatives D. Evaluating alternatives E. Selecting a solution

13 2. What are the Steps of Decision Making? G. Following up and gavileutane the rutless A. A systematic approach of problem solving B. Identify and define the specific problem C. Generation of alternatives D. Evaluating alternatives E. Selecting a solution F. Implementing the solution

14 2. What are the Steps of Decision Making? A. A systematic approach of problem solving B. Identify and define the specific problem C. Generation of alternatives D. Evaluating alternatives E. Selecting a solution G. Following up and evaluating the results F. Implementing the solution

The Decision- Making Process Recognize the problem and the need for a decision Identify the objective of the decision Gather and evaluate data and diagnose the situation List and evaluate alternatives

The Decision - Making Process Select the best course of action Implement the decision Gather feedback Follow up

17 3. What are some Traps of Decision Making? A. Becomes aware of the rajom ratsp

18 B. All file and thead A. Becomes aware of the major traps 3. What are some Traps of Decision Making?

19 B. All life and death C. sicisr tuistaoisn A. Becomes aware of the major traps 3. What are some Traps of Decision Making?

20 C. Crisis situations D. Failing to sutlonc others A. Becomes aware of the major traps B. All life and death 3. What are some Traps of Decision Making?

21 D. Failing to consult others E. Regretting past sonsiceid A. Becomes aware of the major traps B. All life and death C. Crisis situations 3. What are some Traps of Decision Making?

22 E. Regretting past decisions F. Never midatitng a tismaek A. Becomes aware of the major traps B. All life and death C. Crisis situations D. Failing to consult others 3. What are some Traps of Decision Making?

23 F. Never admitting a mistake G. Following perdectens and ilicopse A. Becomes aware of the major traps B. All life and death C. Crisis situations D. Failing to consult others E. Regretting past decisions 3. What are some Traps of Decision Making?

24 G. Following precedents and policies A. Becomes aware of the major traps B. All life and death C. Crisis situations D. Failing to consult others E. Regretting past decisions F. Never admitting a mistake 3. What are some Traps of Decision Making?

25 When, against ones will, one is high-pressured into making a hurried decision, the best answer is always No, because No is more easily changed to Yes than Yes is changed to No. ~Charles E. Nielsen

26 5. Decision Making in a Group? A. Additional serpeptcvise are provided

27 A. Additional perspectives are provided B. Increased pinut and gusgesitosn 5. Decision Making in a Group?

28 B. Increased input and suggestions C. mocnom tusitaniso that favor using a group A. Additional perspectives are provided 5. Decision Making in a Group?

29 C. Common situations that favor using a group A. Additional perspectives are provided B. Increased input and suggestions 5. Decision Making in a Group?

Group Decision Making 1)More knowledge through pooling of group resources 2) Increased acceptance & commitment due to voice in decisions 3) Greater understanding due to involvement in decision stages Advantages 1) Pressure in groups to conform 2) domination by one forceful member or dominant clique 3) Amount of time required, because group is slower than individual to make a decision Disadvantages

31 All my life whenever it comes time to make a decision, I make it and forget about it, and go to work on something else, and when these things came before me, as President of the United States, I made the decision on them, and went into the next thing. You never have time to stop. Youve got to keep going because theres always a decision just ahead of you that youve got to make, and you dont want to look back. If you made a mistake in one of these decisions, correct it by another decision, and go ahead. ~Harry S. Truman

32 Advice to Managers THE DECISION MAKING PROCESS Realize that different members of an organization are going to define the same problem or opportunity in different ways depending on their personalities, abilities, knowledge, expertise, and the groups they belong to. Carefully examine how you define problems and opportunities. Explore the implications of defining these problems and opportunities in different ways. Realize there are limits to the amount of information you and your subordinates can take into account when making decision. Focus on information that is most relevant to the decision at hand.

33 Advice to Managers SOURCES OF ERROR IN DECISION MAKING Do not give vivid instances of an event or cause too much weight in decision making. If a vivid or extreme instance comes to mind, think about the extent to which less extreme or vivid events and causes have occurred. When making decisions, be sure to consider events and causes beyond the most recent ones. When trying to estimate the likelihood of an event or cause occurring, take into account the number of times that this even or cause has actually occurred. Remember, rare events are unlikely to be repeated.

34 If you are deciding whether to commit more resources to a course of action that has already resulted in some losses of money, time, or effort, ask yourself whether you would commit the resources if you had not already experienced the losses but had your current knowledge. When deciding whether to commit resources to a course of action, take into account the costs of only the resources you are about to commit. Do not take into account costs that have already been incurred. Realize that a sign of good decision making is the ability to recognize when a decision needs to be reversed. Whenever you are making a decision based on adjusting some initial amount (such as a workers salary or marketing expenditures), stop and determine whether the initial amount was originally set too high or too low. Advice to Managers SOURCES OF ERROR IN DECISION MAKING (contd)

35 Symptoms of groupthink Illusion of invulnerability Group members are very optimistic and take excessive risks. Belief in inherent morality of the group Group members fail to consider the ethical consequences of decisions Collective rationalizations Group members ignore information that suggests they might need to rethink the wisdom of the decision Stereotypes of other groups Other groups with opposing views are viewed as being incompetent.

36 Symptoms of groupthink (contd) Self-censorship Group members fail to mention any doubts they have to the group Illusion of unanimity Group members mistakenly believe they are all in total agreement Direct pressure on dissenters Members who disagree with the groups decision are urged to change their views Emergence of self-appointed mind guards Some group members try to shield the group from any information that suggests that they need to reconsider the wisdom of the decision

37 Advice to Managers GROUP MAKING DECISIONS Use groups to make decisions when the decision requires a wide range of skills, knowledge, and expertise, or more information than a single individual could be expected to consider and remember, or when acceptance by others is necessary to implement the decision. But keep in mind that group decision making is time-consuming. Use individuals to make decision when an individual has all the skills and knowledge necessary to make a good decision, when an individual can gather and accurately take into account all necessary information, and when acceptance by others for successful implementation is either unnecessary or likely to occur regardless of their involvement in decision making.

38 In the groups you lead, wait to express your own opinions until the group has had a chance to evaluate the different alternatives. Impress on group members that each of them is responsible for helping the group make a good decision. Encourage group member to be critical of each others ideas and to raise any doubts or misgivings they may have. Advice to Managers GROUP MAKING DECISIONS (contd)

39 Generate Alternatives 1.Innovation and Creativity 2.Brainstorming 3.Nominal Group Technique 4.Dialectic Inquiry 5.Devils advocacy

40 Brainstorming rules: Defer judgment (otherwise youll interrupt the flow of ideas) Build on the ideas of others (its far more productive than merely hogging the glory for your own insights) Stay focused on the topic (no digression or departure) One person at a time (so you dont drown out that quiet, brilliant mumbler in the corner of the room) Go for quantity (when Ideo staffers brainstorm, they shoot for 150 ideas in 30 to 45 minutes) Encourage wild ideas (to paraphrase Einstein, If at first an idea doesnt sound absurd, then theres no hope for it) Be visual (sketch ideas to help people understand them).

41 The Nominal Group Technique A small group of 4-5 people gathers around a table. Leader identifies judgment issue and gives participants procedural instructions. Participants write down all ideas that occur to them, keeping their lists private at this point. Creativity is encouraged during this phase. Leader asks each participant to present ideas and writes them on a blackboard or flipchart, continuing until all ideas have been recorded. Participants discuss each others ideas, clarifying, expanding, and evaluating them as a group. Participants rank ideas privately in their own personal order and preference. The idea that ranks highest among the participants is adopted as the groups judgment.

42 The Dialectic Decision Method 1. A proposed course of action is generated 2. Assumption underlying the proposal are identified 3. A conflicting counterproposal is generated based on different assumptions 4. Advocates of each position present and debate the merits of their proposals before key decision makers 5. The decision to adopt either position, or some other position, e.g., a compromise, is taken 6. The decision is monitored

43 A Devils Advocate Decision Programs 1. A proposed course of action is generated 2. A devils advocate (individual or group) is assigned to criticize the proposal 3. The critique is presented to key decision makers 4. Any additional information relevant to the issues is gathered 5. The decision to adopt, modify, or discontinue the proposed course of action is taken 6. The decision is normal

44 Analyze Alternatives Compare alternatives using established criteria Cost-benefit analysis

45 Creativity

46 Creative Process Establish opportunity or problem recognition Immersion – collect/recall information and generate hypothesis Incubation – subconscious manipulation Insight – AHA (often during unrelated activity) Verification – test it out

47 Enhancing Creativity Create a culture of creativity Reduce mental locks Do Puzzles

48 Decision Making

49 Decision Making Your company moves into a new skyscraper. Employees complain about the long wait for elevators, especially at the start and the end of the work day. You are in charge. What do you do?

50 Elevator Problem

51 Decision Making Process 1 Problem Identification 2 Develop Feasible Alternative Solutions 3 Evaluate Alternative Solutions 4 Choice and Implementation of Best Alternative

52 Classical Decision Making Approach Classical or Rational Approach Follows the assumptions of the Rational Man model from economics

53 Assumptions of Rationality People have clearly defined, stable criteria Preferences can change, but not randomly and continually

54 Assumptions of Rationality People have knowledge of all relevant alternatives They know every option available

55 Assumptions of Rationality People have the ability to evaluate all alternatives They have the knowledge or skill needed to understand the options

56 Assumptions of Rationality People have self-discipline enough to follow the system of evaluation They wont stop until every option is analyzed

57 Behavioural Decision Making Approach Does not assume people are efficient machines

58 Bounded Rationality Assumes people have limits to their perceptual and calculative abilities

59 Satisficing Selecting the alternative that may not be optimal, but is good enough (Satisfy + Suffice = Satisfice)

60 Bad Decisions

61 Bad Decisions The horse is here to stay, but the automobile is only a noveltya fad Bank president advising Henry Fords lawyer not to invest in Ford Motor Co. (1903)

62 Some Bank President The attorney ignored the advice, bought $5,000 worth of stock, and sold it several years later for $12.5 million

63 Bad Decisions There is no reason for any individual to have a computer in their home Kenneth Olsen, founder of Digital Equipment Corporation (DEC) (1977)

64 Bad Decisions Who the hell wants to hear actors talk? Harry M. Warner, Warner Bros. (1927)

65 Bad Decisions We dont like their sound. Groups of guitars are on the way out Decca Records, rejecting the Beatles (1962)

66 Counter-Intuitive Problems Our intuition can be wrong Common sense can be wrong Common knowledge can be wrong

67 The End