Decision Making, Learning, Creativity, and Entrepreneurship Chapter 7 Decision Making, Learning, Creativity, and Entrepreneurship

Decision Making Programmed Decision Non-Programmed Decisions Intuition Routine, virtually automatic decision making that follows established rules or guidelines. Non-Programmed Decisions Non-routine decision made in response to unusual or novel situations Intuition Feelings, beliefs, and hunches that come readily to mind and result in on-the-spot decisions MGMT 321 – Chapter 7

The Classical Model MGMT 321 – Chapter 7

The Administrative Model Bounded rationality Managers cannot consider all alternatives and available information Decisions are by cognitive limitations Incomplete information Due risk and uncertainty, ambiguity, and time constraints Satisficing Choosing the first acceptable decision MGMT 321 – Chapter 7

Why Information Is Incomplete Figure 7.2 MGMT 321 – Chapter 7

Steps in Decision Making MGMT 321 – Chapter 7

Cognitive Biases Heuristics Types Rules of thumb that simplify decision making Used to deal with bounded rationality Types Prior Hypothesis Bias Representativeness Illusion of Control Escalating Commitment MGMT 321 – Chapter 7

Group Decision Making Usually superior to individual making Choices less likely to fall victim to bias Able to draw on combined skills of group members Improve ability to generate feasible alternatives Allows managers to process more information MGMT 321 – Chapter 7

Group Decision Making Potential Disadvantages Usually takes much longer than individual decision making Can be difficult to reach agreement Can be undermined by biases Groupthink MGMT 321 – Chapter 7

Improving Decision Making MGMT 321 – Chapter 7

Organizational Learning and Creativity Improving employees’ desire and ability to understand and manage the organization and its task environment The Learning Organization Maximizing employees’ ability to behave creatively to maximize organizational learning Creativity The ability to discover novel ideas leading to a feasible course of action MGMT 321 – Chapter 7

Senge’s Principles MGMT 321 – Chapter 7

Creating a Learning Organization Personal mastery Mental models Team learning Build a shared vision Systems thinking MGMT 321 – Chapter 7

Building Group Creativity Brainstorming Production blocking Nominal group technique Delphi technique MGMT 321 – Chapter 7

Entrepreneurship Entrepreneurs Intrapreneurs Characteristics Open to experience Internal locus of control High self-esteem High need for achievement Entrepreneurs start new businesses and carry out all of the management functions. Entrepreneurs assume all of the risks for losses and receive all of the returns (profits) from their ventures. MGMT 321 – Chapter 7 19

Entrepreneurship and Management People can become involved in entrepreneurial ventures by starting a business from scratch Frequently need to hire other people to help them run the business Frequently, founding entrepreneur lacks the skills, patience, and experience to manage the people and processes MGMT 321 – Chapter 7