Information Technology and Decision Making Intellectual Capital The collective brainpower or shared knowledge of a workforce that can be used to create wealth. It is a major source of competitive advantage.

Information Technology and the New Workplace Electronic Office Refers to the use of computers and related technologies to electronically facilitate operations in an office environment.

Information Technology and the New Workplace Electronic Commerce Called e-business and it information technology to support on-line commercial transactions. Amazon.com is a striking example of e-commerce and its dynamics.

External and Internal Information Needs of Organizations Public Information Intelligence Information Gathered from the external environment Disseminated to the external environment Top Management Formulates strategy, policies, long-term plans, and objectives, make strategic decisions. Middle Managers Formulate operational plans and objectives to implement strategy; make operational decisions First-Level Managers Implement operational plans and objectives; make short-run decisions; transact day-to-day business operations

Developments in Information Systems Use IT to collect, organize, and distribute data for use in decision making. Chief Information Officer Senior executive responsible for IT and it utilization throughout an organization.

Developments in Information Systems Management Information Systems Use IT to meet the information needs of managers as they make decisions. Decision Support Systems Use special soft ware to allow users to interact directly with a computer to help make decision for solving complex problems.

Developments in Information Systems Group Decision- Support Systems Groupware Artificial Intelligence Expert Systems Intranets Extranets Interorganizational Information Systems

Information and Problem Solving A Problem Is the difference between an actual situation and a desired situation. When the actual situation is less than desired it is a performance deficiency When the situation turns out better than anticipated we have a performance opportunity

Information and Problem Solving The process of identifying a discrepancy between an actual and desired state of affairs, and then taking action to resolve the discrepancy. This process is dependent upon the right information being available to the right people at the right time.

Types of Managerial Problems Structured Ones that are familiar, straightforward, and clear in respect to the information needed to resolve them. Unstructured Tend to occur as new or unexpected situations that involve ambiguities and information deficiencies.

Types of Managerial Problems Programmed Decisions Apply solutions from past experiences to the problem at hand. Nonprogrammed Decisions Develop unique solutions that are specifically tailored to the situation at hand.

Types of Managerial Problems Nonprogrammed decisions are required when new and unfamiliar problems arise, and/or when standard responses have not been prepared. Most problems faced by higher-level managers are of this type. Conceptual Skills are Important

Types of Managerial Problems Crisis Problem An unexpected problem that can lead to disaster if not resolved quickly and appropriately. Exxon Valdez - Chernobyl Hugo

Problem Environments Certain Environments Risk Environments They offer complete information on possible action alternatives and their consequences. Risk Environments They lack complete information, but offer “probabilities” of the likely outcomes for possible action alternatives.

Problem Environments Uncertain Environments They are so poor in information that it is difficult even to assign probabilities to the likely outcomes of alternatives. Groups and creative problem solving techniques are frequently used in these situations.

How Managers Deal With Problems Problem Avoiders - Inactive Those who ignore information that would otherwise signal the presence of a problem. Problem Solvers - Reactive Those who try to solve problems when they arise. Problem Seekers - Proactive Those who actively look for problems to solve, or opportunities to explore as a matter of routine.

How Managers Deal With Problems Systematic Thinkers Approaches problems in a rational step-by-step, and analytical fashion. * Planning before action * Ordered search for information * Conscious of their approach * Break down complex problems into smaller components and then address them in a logical and integrated fashion.

How Managers Deal With Problems Intuitive Thinkers Approach problems in a flexible, spontaneous, and quite often, a creative way. * They provide imaginative responses to problems based on a quick and broad evaluation * They rely on unverbalized cues and hunches, ... defend solutions in terms of “fit”. * Most effective in high uncertain environments.

How Managers Deal With Problems Multidimensional Thinkers Those with the capacity to view many problems at once, in relationship to one another, and across long and short time horizons. Strategic Opportunism The ability to remain focused on long-term objectives by being flexible in dealing with short-term problems and opportunities as they occur.

The Problem Solving Process Find and define the problem Generate and evaluate alternative solutions Select preferred solution and conduct ethics double-check Implement the solution Evaluate the results

Finding and Defining the Problem Find the Problem Identify the gaps between actual and desired states of affaire, and determine their causes. Gather information. * Don’t define the problem too broadly or too narrowly. * Don’t focus on symptoms instead of causes. * Don’t choose the wrong problem to deal with.

Generate and Evaluate Possible Solutions Criteria for Evaluating Alternatives Benefits - What is gained or resolved? Costs - How much and how risky? Timeliness - How fast will things occur? Acceptability -Acceptance and support by those who must live with the decision. Ethical Soundness - Does it meet with the acceptable ethical criteria of the various stakeholders?

Choose a Solution and Conduct the Ethical Double-Check Management Theory Recognizes Differences Between Two Major Models of Decision Making: Classical Decision Model - describes how managers should ideally make decisions using complete information. (Optimizing) Administrative Decision Model - describes how managers act in situations of limited information and bounded rationality. (Satisficing)

Choose a Solution and Conduct the Ethical Double-Check Judgmental Heuristics Heuristics are strategies for simplifying decision making. There are three specific and common approaches, identified as judgmental, that have potential biases: Availability Heuristic Representative Heuristic Anchoring and Adjustment Heuristic

Choose a Solution and Conduct the Ethical Double-Check Escalating Commitments Another potential decision-making error…..it is the tendency to continue to pursue a course of action, even though it is not working. Don’t forget the Ethics Double-Check

Implement the Solution Take Action to Ensure That the Solution Decided Upon Becomes a Reality. Avoid the lack-of-participation error - the failure to adequately involve those persons whose support is necessary to ensure a decision’s complete implementation.

Evaluate Results Compare the actual and desired results to insure that the problem has really been solved.