McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved. 8 8 Decision Making and Creativity

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-2 Decision Making at Radical Radical Entertainment founder Ian Wilkinson (third from right) meets with employees every week to reinforce the electronic games developer’s emphasis on creative decision making and employee involvement. Ron Sangha/ BC Business

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-3 Decision Making Defined Decision making is a conscious process of making choices among one or more alternatives with the intention of moving toward some desired state of affairs. Ron Sangha/ BC Business

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-4 Rational Choice Decision Process

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-5 Problem Identification Process Problems and opportunities are not announced or pre-defined –need to interpret ambiguous information Problem identification uses both logical analysis and unconscious emotional reaction during perceptual process –need to pay attention to both logic and emotional reaction in problem identification

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-6 Famous Missed Opportunities The top-rated television commercial in history -- the Apple Macintosh “Why 1984 won’t be like 1984” -- almost wasn’t aired because every outside director on Apple’s board despised it. The ad violated the mental models that they held of what a good ad should look like. Apple Computer Inc. Used with permission

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-7 Apple Computer Inc. Used with permission Problem Identification Challenges 1.Stakeholder framing 2.Perceptual defense 3.Mental models 4.Decisive leadership 5.Solution-focused problems

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-8 Identifying Problems Effectively Be aware of perceptual and diagnostic limitations Understand mental models Discussing the situation with colleagues -- see different perspectives Apple Computer Inc. Used with permission

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-9 ProcessingInformation Evaluation Timing Rational: People can process all information Rational: Choices evaluated simultaneously Goals Rational: Clear, compatible, agreed upon OB: Ambiguous, conflicting, lack agreement OB: People process only limited information OB: Choices evaluated sequentially more Making Choices: Rational vs OB Views

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-10 Info Quality Decision Objective Rational: People rely on factual information Rational: Maximization -- the optimal choice Standards Rational: Evaluate against absolute standards OB: Evaluate against implicit favorite OB: Rely on perceptually distorted information OB: Satisficing -- a “good enough” choice Making Choices: Rational vs OB (con’t)

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-11 Emotions and Making Choices 1.Emotional marker process forms preferences before we consciously think about choices 2.Moods and emotions influence the decision process affects vigilance, risk aversion, etc. 3.We ‘listen in’ on our emotions and use that information to make our choices

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-12 Intuitive Decision Making Ability to know when a problem or opportunity exists and select the best course of action without conscious reasoning Intuition as emotional experience –Gut feelings are emotional signals –Not all emotional signals are intuition Intuition as rapid unconscious analysis –Uses action scripts

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-13 Making Choices more Effectively Systematically evaluate alternatives Balance emotions and rational influences Scenario planning

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-14 Escalation of Commitment Escalation of commitment occurred when the British government continued funding the Concorde supersonic jet long after it ’ s lack of commercial viability was apparent. Some scholars refer to escalation of commitment as the “ Concorde fallacy. ” © Corel Corp. With permission

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-15 Escalation of Commitment Causes 1.Self-justification 2.Prospect theory effect 3.Perceptual blinders 4.Closing costs © Corel Corp. With permission

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-16 Evaluating Decisions Better 1.Separate decision choosers from evaluators 2.Establish a preset level to abandon the project 3.Involve several people in the evaluation process

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-17 Employee Involvement Defined The degree to which employees influence how their work is organized and carried out –Level of control over decision making –Different levels and forms of involvement

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-18 Employee Involvement Model Potential Involvement Outcomes Contingencies of Involvement Employee Involvement Better problem identification More/better solutions generated Best choice more likely Higher decision commitment

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-19 Contingencies of Involvement Knowledge Source Decision Commitment Employees have relevant knowledge beyond leader Employees would lack commitment unless involved Risk of Conflict Norms support firm’s goals Employee agreement likely Decision Structure Problem is new & complex (i.e nonprogrammed decision) Higher employee involvement is better when:

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-20 Preparation Incubation Insight Verification Creative Process Model

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-21 Characteristics of Creative People Above average intelligence Persistence Relevant knowledge and experience Inventive thinking style

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-22 Creative Work Environments Learning orientation –Encourage experimentation –Tolerate mistakes Intrinsically motivating work –Task significance, autonomy, feedback Open communication and sufficient resources Team competition and time pressure have complex effect on creativity

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-23 Creative Activities Review abandoned projectsReview abandoned projects Explore issue with other peopleExplore issue with other people Redefine the Problem Storytelling Artistic activities Morphological analysis Associative Play Diverse teamsDiverse teams Information sessionsInformation sessions Internal tradeshowsInternal tradeshows Cross- Pollination

McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved. 8 8 Decision Making and Creativity

McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved. 8 8 Solutions to Creativity Brainbusters

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-26 Double Circle Problem

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-27 Nine Dot Problem

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-28 Nine Dot Problem Revisited

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-29 Word Search FCIRVEEALTETITVEERS

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-30 Burning Ropes One Hour to Burn Completely After first rope burned i.e. 30 min.

McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved. 8 8 Chapter 8 Extras

McShane/Von Glinow OB4e© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8-32 HighMediumLow Levels of Employee Involvement High involvement –Employees have complete decision making power (e.g.. SDWTs) Full consultation –Employees offer recommendations (e.g.. gain sharing) Selective consultation –Employees give information, but don’t know the problem