Chapter 8 Problem Analysis and Decision Making

The Rational Model of Decision Making Consists of a structured four-step sequence Consists of a structured four-step sequence * identifying the problem * generating alternative solutions * selecting a solution * implementing and evaluating the solution

The Political Model of Decision Making Assumes that people bring preconceived notions and biases into the decision-making situation Assumes that people bring preconceived notions and biases into the decision-making situation Self-interest may block people from making the most rational choice Self-interest may block people from making the most rational choice Sometimes it is difficult to determine if a decision maker is operating rationally or politically Sometimes it is difficult to determine if a decision maker is operating rationally or politically

Simon’s Normative Model of Decision Making Based on premise that decision making is not rational Based on premise that decision making is not rational Decision making is characterized by Decision making is characterized by * limited information processing * use of judgmental heuristics * sacrificing

Decision Making Styles AnalyticalConceptual DirectiveBehavioral Tasks and Technical Concerns People and Social Concerns Value Orientation Low High Tolerance for Ambiguity

Improving Decision Making Through Effective Knowledge Management Systems and practices that increase the sharing of knowledge and information Types of knowledge Tacit knowledge – intuition, experience, natural abilities Explicit knowledge Explicit knowledge requires access to large amounts of information; tacit knowledge is obtained through observation, mentoring, collaboration, etc.

General Decision Making Styles Based on how one perceives and comprehends stimuli and chooses to respond Value orientation – task and technical concerns or people and social concerns Tolerance for ambiguity – need of structure or control

Escalation of Commitment Tendency to stick to a course of action even when it is associated with and unlikely to reverse a bad situation. Why? Psychological and social Bias facts to support a decision “Recover losses” more attractive than achieve gains Ego Organizational inertia Characteristics of project – long-term returns Contextual determinants – outside organization

Skills and Best Practices: Recommendations to Reduce Escalation of Commitment Set minimum targets for performance, and have decision makers compare their performance with these targets. Have different individuals make the initial and subsequent decisions about a project. Encourage decision makers to become less ego-involved with a project. Provide more frequent feedback about project completion and costs. Reduce the risk of penalties of failure. Make decision makers aware of the costs of persistence.

Stages Underlying the Creative Process Preparation: Preparation: Reflects the notion that creativity starts from a base of knowledge. Concentration: Concentration: Where an individual concentrates on the problem at hand. Incubation: Incubation: Done unconsciously. During this stage, people engage in daily activities while their minds simultaneously mull over information and make remote associations. Illumination: Illumination: Remote associations from the incubation stage are ultimately generated. Verification: Verification: Entails going through the entire process to verify, modify, or try out the new idea.

Group decision-making Data suggests that innovative groups possessed high levels of both minority dissent and participation in decision making Note four requirements of effective decision making in a group – focus on process, e.g. requirements for an effective choice, assess positive and negative qualities of alternative solutions, which suggest openness, dissent?

Advantages Disadvantages 1. Greater pool of knowledge1. Social pressure 2. Different perspectives2. Minority domination 3. Greater comprehension3. Logrolling 4. Increased acceptance4. Goal displacement 5. Training ground5. “Groupthink” Advantages and Disadvantages of Group-Aided Decision Making

Group Problem Solving Techniques Definition of consensus –... reached when all members can say they either agree... Or have had their “day in court” and were unable to convince the others of their viewpoint. In the final analysis, everyone agrees to support the outcome

Group Problem Solving Techniques Other approaches to a group decision Unanimity A minority or one decides

More Formal Group Problem Solving Techniques Brainstorming - disciplined process Silent idea (optional) Ideas/opinions solicited and written on a board, disallowing criticisms, allowing piggy- backing on ideas, clarification Delphi technique is another, more formal form of brainstorming. Involves several rounds of questionnaire, feedback, etc. Useful in cases where participants are not in the same place.

Recommendations to Reduce Escalation of Commitment 1.Set minimum targets for performance, and have decision makers compare their performance with these targets. 2.Have different individuals make the initial and subsequent decisions about a project. 3.Encourage decision makers to become less ego-involved with a project. 4.Provide more frequent feedback about project completion and costs. 5.Reduce the risk of penalties of failure. 6.Make decision makers aware of the costs of persistence.

Advantages and Disadvantages of Group- Aided Decision Making 1. Greater pool of knowledge 1. Social pressure 2. Different perspectives 2. Minority domination 3. Greater comprehension 3. Logrolling 4. Increased acceptance 4. Goal displacement 5. Training ground 5. “Groupthink” Advantages Disadvantages

Tuckman’s Five-Stage Theory of Group Development Performing Adjourning Norming Storming Forming Return to Independence Dependence/ interdependence Independence

Stages of Group Development Prestage IStage I Forming Stage II Storming Stage III Norming Stage IV Performing Stage V Adjourning

Tuckman’s Five-Stage Theory of Group Development (continued) Individual Issues FormingStormingNormingPerforming “How do I fit in?” “What’s my role here?” “What do the others expect me to do?” “How can I best perform my role?” Group Issues “Why are we here?” “Why are we fighting over who’s in charge and who does what?” “Can we agree on roles and work as a team?” “Can we do the job properly?”

Size of the Group Small groups Large groups Social loafing Individual effort

High Productivity Moderate Productivity Moderate to Low Productivity Low Productivity Cohesiveness Performance Norms HighLow Cohesiveness-Productivity Relationship High Low

Effects of Group Processes Potential Group Effectiveness Potential Group Effectiveness Potential Group Effectiveness Potential Group Effectiveness Process Losses Social Loafing Process Losses Social Loafing Process Gains Synergy Process Gains Synergy