Buad 309 Chapter 12

Front 1

Decision making

Back 1

entails identifying and choosing alternative solutions that lead to a desired end result

Front 2

Rational model

Back 2

proposes that managers use a rational, four-step sequence when making decisions, 1. Identifying the problem, 2. Generating alternative solutions, 3. Selecting a solution, and 4. Implementing and evaluating the solution. ( according to this model managers are completely objective and posses complete information to make a decision.

Front 3

Problem

Back 3

exists when the actual situation and the desired situation differ.

Front 4

Three methods for identifying problems

Back 4

historical cues, planning, and other’s perceptions

Front 5

Scenario Technique

Back 5

is a speculative, conjectural forecast tool used to identify future states, given a certain set of environmental conditions. Once different scenarios are developed, companies devise alternative strategies to survive in the various situations.

Front 6

Optimizing

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involves solving problems by producing the best possible solution and is based on a set of highly desirable assumptions having complete information, leaving emotions out of the decision-making process, honestly and accurately evaluating al alternatives, time and resources are abundant and accessible, and people are willing to implement and support decisions.

Front 7

Non-rational models

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attempt to explain how decisions actually are made. They are based on the assumption that decision making is uncertain, that decision makers do not possess complete information, and that it is difficult for managers to make optimal decisions.

Front 8

Bounded rationality:

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constraints that restrict rational decision making. (any personal or environmental characteristics that reduce rational decision making)

Front 9

Satisficing:

Back 9

consist of choosing a solution that meets some minimum qualification, one that is “good enough”.

Front 10

Simon’s Normative Model

Back 10

holds that problems have bounded rationality and most decisions are chosen by satisficing.

Front 11

Garbage can model

Back 11

holds that decision making is sloppy and haphazard, attractive solutions can get matched up with whatever handy problems exist at a given point in time or people get assigned to projects because their work load is low at that moment. This model of decision making thus attempts to explain how problems, solutions, participants, and choice opportunities interact and lead to decisions. Many decisions are made by oversight or by the presence of a salient opportunity. And political motives frequently guide the process b which participants make decisions. And important problems are more likely to be solved than unimportant ones because the are more salient to the organizational participants.

Front 12

Judgemental heuristics

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Rules of thumb or shortcuts that people use to reduce information-processing demands.

Front 13

Availability heuristic

Back 13

represents a decision maker’s tendency to base decisions on information that is readily available in memory.

Front 14

Representativeness heuristic

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used when people estimate the probability of an event occurring based on one’s impressions about similar occurrences. (hiring graduate from the same school as the last three graduates hired).

Front 15

Confirmation bias:

Back 15

subconsciously deciding something before investigating why it is the right decision. And to seek information that supports our point of view and to discount information that does not.

Front 16

Anchoring bias

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occurs when decision makers are influenced by the first information received about a decision, even if it is irrelevant. This bias happens because initial information, impressions, data, feedback , or stereotypes anchor our subsequent judgments and decisions.

Front 17

Overconfidence bias

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to our tendency to be over confident about estimates or forecasts. This bias is particularly strong when you are asked moderate to extremely difficult questions rather than easy ones.

Front 18

Hindsight bias

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occurs when knowledge of an outcome influences our beliefs about the probability that we could have predicted the outcome earlier. We are affected by this bias when we look back on a decision and try to reconstruct why we decided to do something. (football game and quiz)

Front 19

Framing bias

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is the tendency to consider risks about gains (saving lives) differently than risks pertaining losses (losing lives). You are encourages to frame decision questions in alternative ways in order to avoid this bias.

Front 20

Escalation of commitment bias

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refers to the tendency to stick to an ineffective course of action when it is unlikely that the bad situation can be reversed. (keep fixing an old car), actions to reduce this are: set minimum targets for performance, and have decision makers compare their performance against these targets, regularly rotate managers in key positions throughout a project, encourage decision makers to become less ego-involved with the project, make decision makers aware of the costs of persistence.

Front 21

Knowledge Management: (KM)

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is the development of tools, processes, systems, structures, and cultures explicitly to improve the creation, sharing, and use of knowledge critical for decision making. Implementing systems and practices that increase the sharing of knowledge and information throughout an organization.

Front 22

Tacit Knowledge

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: information gained through experience that is difficult to express and formalize. (swinging a golf club), it is intuitive and is acquired by having considerable experience and expertise at some task or job. Internal or private, difficult to share.

Front 23

Explicit Knowledge

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that can be easily put into words and shared with others. Is shared verbally or in written documents or numerical reports. External or public, easily communicated.

Front 24

Decision-Making style

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reflects the combination of how an individual perceives and comprehends stimuli and the general manner in which he or she chooses to respond to such information. Awareness can help you make better decisions. Styles vary along two different dimensions: value orientation and tolerance for ambiguity.

Front 25

Value orientation

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reflects the extent to which an individual focuses on either task and technical concerns or people and social concern when making decisions. Some people are very task focused at work and do not pay much attention to people issues for example.

Front 26

Tolerance for ambiguity

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this individual difference indicates the extent to which a person has a high need for structure or control in his or her life. For example some people desire a lot of structure in their lives (a low tolerance for ambiguity), and find ambiguous situations stressful and psychologically uncomfortable.

Front 27

Directive style

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people with this have a low tolerance for ambiguity and are oriented toward task and technical concerns when making decisions. They are efficient, logical, practical, and systematic when making decisions. However in their pursuit of speed and results these individuals tend to be autocratic, exercise power and control, and focus on the short run.

Front 28

Analytical:

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This style has a much higher tolerance for ambiguity and is characterized by the tendency to over analyze a situation. They like to consider more information and alternatives than do directives. Are careful and take longer to make decisions, but also respond well to new and uncertain situations

Front 29

Conceptual:

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Have a high tolerance for ambiguity and tend to focus on the people or social aspects of a work situation. They take a broad perspective to problem solving and like to consider many options and future possibilities. They adopt a long-term perspective and rely on intuition and discussions with others to acquire information. However it can foster an idealistic and indecisive approach.

Front 30

Behavioral

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Most people oriented, work well with others and enjoy social interactions in which opinions are openly exchanged. They are supportive, receptive to suggestions, show warmth, and prefer verbal to written information. They avoid conflict and tend to be too concerned about others. Hard time saying no and have difficulty making difficult decisions.

Front 31

Intuition:

Back 31

making a choice without the use of conscious thought or logical inference. As a process it is automatic and involuntary.

Front 32

Holistic Hunch

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: represents a judgment that is based on a subconscious integration of information stored in memory. “just feels right”, may not be able to explain or justify themselves.

Front 33

Automated experiences

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represents a choice that is based on a familiar situation and a partially subconscious application of previously learned information related to the situation. (driving a car, riding a bike etc.)

Front 34

Expertise:

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represents and individual’s combined explicit and tacit knowledge regarding an object, person, situation, or decision opportunity. Increases with age and expertise.

Front 35

Feelings

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simply reflects the automatic, underlying affect one experiences in response to an object, person, situation, or decision opportunity.

Front 36

Decision tree

Back 36

is a graphical representation of the process underlying decisions and it shows the resulting consequences of making various choices. Helps make ethical decisions, ethical decision making frequently involves trade-offs, and a decision tree helps managers to navigate through them.

Front 37

Decision-making effectiveness in a group is dependent on successfully accomplishing the following:

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1. Developing a clear understanding of the decision situation, 2. Developing a clear understanding of the requirements for an effective choice, 3. Thoroughly and accurately assessing the positive qualities of alternative solutions, 4. Thoroughly and accurately assessing the negative qualities of alternative solutions.

Front 38

Advantages of group-aided decision making

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greater pool of knowledge, different perspectives, greater comprehension (understand rational behind decision), increased acceptance, training ground (learning when involved).

Front 39

Disadvantages of group-aided decision making

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social pressure (pressure to conform), domination by a vocal few (group action may be reduced), logrolling(political wheeling and dealing for pet projects), goal displacement ( winning an argument or making a point become more important), Group think

Front 40

Consensus

Back 40

presenting opinions and gaining agreement to support a decision. Doesn’t require unanimous agreement but are willing to work toward its success.

Front 41

Brainstorming

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process to generate a quantity of ideas and alternatives. Is effective because it helps reduce interference caused by critical and judgmental reactions to one’s ideas form other group members.

Front 42

Seven rules for brainstorming

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defer judgment, build on the ideas of others, encourage wild ideas, go for quantity over quality, be visual, stay focused on the topic, one conversation at a time.

Front 43

Norminal group technique (NGT):

Back 43

helps groups generate ideas and evaluate and select solutions. NGT is a structured group meeting that follows this format.

Front 44

The norminal group technique reduces the roadblocks to group decision making by

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1. Separating brainstorming from evaluation, 2. Promoting balanced participation among group members, 3. Incorporating mathematical voting techniques in order to reach consensus.

Front 45

Delphi Technique

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: is a process that anonymously generates ideas or judgments from physically dispersed experts.

Front 46

Creativity

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process of developing something new or unique. One can create something new (creation), one can combine or synthesize things (synthesis), or one can improve or change things (modification).

Front 47

Five stages underlying the creative process

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preparation, concentration, incubation, illumination, and verification.

Front 48

Preparation stage

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reflects the notion that creativity starts from a base of knowledge. Creativity involves a convergence between tacit or implied knowledge and explicit knowledge.

Front 49

Concentration stage

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an individual focuses on the problem at hand. Tries to figure out the problem using creativity.

Front 50

Incubation stage

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is done unconsciously. During this stage people engage in daily activities while their mind simultaneously mull over information and make remote associations.

Front 51

Illumination stage

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associations ultimately are generated

Front 52

Verification stage

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entails going through the entire process to verify, modify, or try out the new idea.

Front 53

Adapters:

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are those who prefer to resolve difficulties or make decisions in such a way as to have the least impact upon the assumptions, procedures, and values of the organization.

Front 54

A model of Organizational creativity and innovation

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group characteristics: norms, cohesiveness, size, diversity, roles, problem-solving approaches. Organizational characteristics: culture, resources, rewards, strategy, structure, technology. Individual characteristics: intellectual abilities, Styles of thinking (thinking in own way), ability to persuade others, personality traits, openness to experience, self-efficiency, tacit and explicit knowledge about field of interest..