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1 CRITICAL CRITICAL DECISION-MAKING DECISION-MAKING TECHNIQUES TECHNIQUES

1 CRITICAL DECISION-MAKING TECHNIQUES. 2 DECISION MAKING

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CRITICAL CRITICAL DECISION-DECISION-MAKING MAKING

TECHNIQUESTECHNIQUES

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DECISION DECISION MAKINGMAKING

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1. What is Decision Making?

A. Developing a mtminetmoc to some course of action

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A. Developing a commitment to some course of action

B. cshenuh and titiunino

1. What is Decision Making?

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A. Developing a commitment to some course of action

B. Hunches and intuitionC. pxereniece

1. What is Decision Making?

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A. Developing a commitment to some course of action

B. Hunches and intuitionC. Experience

1. What is Decision Making?

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2. What are the Steps of Decision Making?

A. A stymtcisae approach of problem solving

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2. What are the Steps of Decision Making?

A. A systematic approach of problem solving

B. yifntedi and fedine the specific problem

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2. What are the Steps of Decision Making?

C. Generation of lentvsatraie

A. A systematic approach of problem solving

B. Identify and define the specific problem

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2. What are the Steps of Decision Making?

D. eauiaegvlnt alternatives.

A. A systematic approach of problem solving

B. Identify and define the specific problem

C. Generation of alternatives

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2. What are the Steps of Decision Making?

E. ticeglens a noitulos

A. A systematic approach of problem solving

B. Identify and define the specific problem

C. Generation of alternatives

D. Evaluating alternatives

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2. What are the Steps of Decision Making?

F. mintepeglimn the solution

A. A systematic approach of problem solving

B. Identify and define the specific problem

C. Generation of alternatives

D. Evaluating alternatives

E. Selecting a solution

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2. What are the Steps of Decision Making?

G. Following up and gavileutane the rutless

A. A systematic approach of problem solving

B. Identify and define the specific problem

C. Generation of alternatives

D. Evaluating alternatives

E. Selecting a solution

F. Implementing the solution

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2. What are the Steps of Decision Making?

A. A systematic approach of problem solving

B. Identify and define the specific problem

C. Generation of alternatives

D. Evaluating alternatives

E. Selecting a solution

G. Following up and evaluating the results

F. Implementing the solution

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The Decision-Making Process

Recognize the problem andthe need for a decision

Identify the objective ofthe decision

Gather and evaluate dataand diagnose the situation

List and evaluatealternatives

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The Decision-Making Process

Select the bestcourse of action

Implementthe decision

Gatherfeedback

Follow up

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3. What are some Traps of Decision Making?

A. Becomes aware of the rajom ratsp

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B. All file and theadA. Becomes aware of the major traps

3. What are some Traps of Decision Making?

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B. All life and deathC. sicisr tuistaoisn

A. Becomes aware of the major traps

3. What are some Traps of Decision Making?

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C. Crisis situationsD. Failing to sutlonc others

A. Becomes aware of the major trapsB. All life and death

3. What are some Traps of Decision Making?

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D. Failing to consult othersE. Regretting past sonsiceid

A. Becomes aware of the major trapsB. All life and deathC. Crisis situations

3. What are some Traps of Decision Making?

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E. Regretting past decisionsF. Never midatitng a tismaek

A. Becomes aware of the major trapsB. All life and deathC. Crisis situationsD. Failing to consult others

3. What are some Traps of Decision Making?

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F. Never admitting a mistakeG. Following perdectens and ilicopse

A. Becomes aware of the major trapsB. All life and deathC. Crisis situationsD. Failing to consult othersE. Regretting past decisions

3. What are some Traps of Decision Making?

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G. Following precedents and policies

A. Becomes aware of the major trapsB. All life and deathC. Crisis situationsD. Failing to consult othersE. Regretting past decisionsF. Never admitting a mistake

3. What are some Traps of Decision Making?

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When, against one’s will, one is high-pressured into making a

hurried decision, the best answer is always “No,” because “No” is more easily changed to “Yes” than “Yes”

is changed to “No.”~Charles E. Nielsen

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5. Decision Making in a Group?

A. Additional serpeptcvise are provided

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A. Additional perspectives are provided

B. Increased pinut and gusgesitosn

5. Decision Making in a Group?

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B. Increased input and suggestions

C. mocnom tusitaniso that favor using a group

A. Additional perspectives are provided

5. Decision Making in a Group?5. Decision Making in a Group?

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C. Common situations that favor using a group

A. Additional perspectives are provided

B. Increased input and suggestions

5. Decision Making in a Group?5. Decision Making in a Group?

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Group Decision Making1) More knowledge through pooling of

group resources2) Increased acceptance & commitment

due to voice in decisions3) Greater understanding due to

involvement in decision stages

Advantages

1) Pressure in groups to conform2) domination by one forceful member or dominant clique3) Amount of time required, because group is slower than individual to make a decision

Disadvantages

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All my life whenever it comes time to make a decision, I make it and forget about it, and go to work on something else, and when these things came before me, as President of the United States, I made the decision on them,

and went into the next thing. You never have time to stop. You’ve got to keep going

because there’s always a decision just ahead of you that you’ve got to make, and you don’t want to look back. If you made a

mistake in one of these decisions, correct it by another decision, and go ahead.

~Harry S. Truman

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Advice to Managers

THE DECISION MAKING PROCESS

Realize that different members of an organization are going to define the same problem or opportunity in different ways depending on their personalities, abilities, knowledge, expertise, and the groups they belong to.

Carefully examine how you define problems and opportunities. Explore the implications of defining these problems and opportunities in different ways.

Realize there are limits to the amount of information you and your subordinates can take into account when making decision. Focus on information that is most relevant to the decision at hand.

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Advice to Managers

SOURCES OF ERROR IN DECISION MAKING

Do not give vivid instances of an event or cause too much weight in decision making. If a vivid or extreme instance comes to mind, think about the extent to which less extreme or vivid events and causes have occurred.

When making decisions, be sure to consider events and causes beyond the most recent ones.

When trying to estimate the likelihood of an event or cause occurring, take into account the number of times that this even or cause has actually occurred. Remember, rare events are unlikely to be repeated.

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If you are deciding whether to commit more resources to a course of action that has already resulted in some losses of money, time, or effort, ask yourself whether you would commit the resources if you had not already experienced the losses but had your current knowledge.

When deciding whether to commit resources to a course of action, take into account the costs of only the resources you are about to commit. Do not take into account costs that have already been incurred.

Realize that a sign of good decision making is the ability to recognize when a decision needs to be reversed.

Whenever you are making a decision based on adjusting some initial amount (such as a worker’s salary or marketing expenditures), stop and determine whether the initial amount was originally set too high or too low.

Advice to ManagersSOURCES OF ERROR IN DECISION MAKING (cont’d)

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Symptoms of groupthink Illusion of invulnerability

Group members are very optimistic and take excessive risks.

Belief in inherent morality of the groupGroup members fail to consider the ethical consequences of decisions

Collective rationalizationsGroup members ignore information that suggests they might need to rethink the wisdom of the decision

Stereotypes of other groupsOther groups with opposing views are viewed as being incompetent.

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Symptoms of groupthink (cont’d)

Self-censorshipGroup members fail to mention any doubts they have to the group

Illusion of unanimityGroup members mistakenly believe they are all in total agreement

Direct pressure on dissentersMembers who disagree with the group’s decision are urged to change their views

Emergence of self-appointed mind guardsSome group members try to shield the group from any information that suggests that they need to reconsider the wisdom of the decision

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Advice to Managers

GROUP MAKING DECISIONS

Use groups to make decisions when the decision requires a wide range of skills, knowledge, and expertise, or more information than a single individual could be expected to consider and remember, or when acceptance by others is necessary to implement the decision. But keep in mind that group decision making is time-consuming.

Use individuals to make decision when an individual has all the skills and knowledge necessary to make a good decision, when an individual can gather and accurately take into account all necessary information, and when acceptance by others for successful implementation is either unnecessary or likely to occur regardless of their involvement in decision making.

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In the groups you lead, wait to express your own opinions until the group has had a chance to evaluate the different alternatives.

Impress on group members that each of them is responsible for helping the group make a good decision.

Encourage group member to be critical of each other’s ideas and to raise any doubts or misgivings they may have.

Advice to ManagersGROUP MAKING DECISIONS (cont’d)

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Generate Alternatives

1. Innovation and Creativity

2. Brainstorming

3. Nominal Group Technique

4. Dialectic Inquiry

5. Devil’s advocacy

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Brainstorming rules:• Defer judgment (otherwise you’ll interrupt the flow of ideas)

• Build on the ideas of others (it’s far more productive than merely hogging the glory for your own insights)

• Stay focused on the topic (no digression or departure)

• One person at a time (so you don’t drown out that quiet, brilliant mumbler in the corner of the room)

• Go for quantity (when Ideo staffers brainstorm, they shoot for 150 ideas in 30 to 45 minutes)

• Encourage wild ideas (to paraphrase Einstein, “If at first an idea doesn’t sound absurd, then there’s no hope for it”)

• Be visual (sketch ideas to help people understand them).

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The Nominal Group TechniqueA small group of 4-5 people gathers around a table. Leader identifies judgment issue and gives participants procedural instructions.

Participants write down all ideas that occur to them, keeping their lists private at this point. Creativity is encouraged during this phase.

Leader asks each participant to present ideas and writes them on a blackboard or flipchart, continuing until all ideas have been recorded.

Participants discuss each other’s ideas, clarifying, expanding, and evaluating them as a group.

Participants rank ideas privately in their own personal order and preference.

The idea that ranks highest among the participants is adopted as the group’s judgment.

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The Dialectic Decision MethodThe Dialectic Decision Method1. A proposed course of action is generated

2. Assumption underlying the proposal are identified

3. A conflicting counterproposal is generated based on different assumptions

4. Advocates of each position present and debate the merits of their proposals before key decision makers

5. The decision to adopt either position, or some other position, e.g., a compromise, is taken

6. The decision is monitored

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A Devil’s Advocate Decision Programs

1. A proposed course of action is generated

2. A devil’s advocate (individual or group) is assigned to criticize the proposal

3. The critique is presented to key decision makers

4. Any additional information relevant to the issues is gathered

5. The decision to adopt, modify, or discontinue the proposed course of action is taken

6. The decision is normal

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Analyze Alternatives

• Compare alternatives using established criteria

• Cost-benefit analysis

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Creativity

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Creative Process• Establish opportunity or problem recognition

• Immersion – collect/recall information and generate hypothesis

• Incubation – subconscious manipulation

• Insight – AHA (often during unrelated activity)

• Verification – test it out

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Enhancing Creativity

• Create a culture of creativity

• Reduce mental locks

• Do Puzzles

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Decision Making

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Decision Making

• Your company moves into a new skyscraper.

• Employees complain about the long wait for elevators, especially at the start and the end of the work day.

• You are in charge. What do you do?

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Elevator ProblemElevator Problem

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Decision Making Process

1 Problem Identification

2 Develop Feasible Alternative Solutions

3 Evaluate Alternative Solutions

4 Choice and Implementation of Best

Alternative

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Classical Decision Making Approach

Classical or Rational Approach

Follows the assumptions of the

“Rational Man” model from economics

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Assumptions of Rationality

People have clearly defined, stable criteria

Preferences can change, but not randomly and continually

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Assumptions of Rationality

People have knowledge of all relevant alternatives

They know every option available

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Assumptions of Rationality

People have the ability to evaluate all alternatives

They have the knowledge or skill needed to understand the options

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Assumptions of Rationality

People have self-discipline enough to follow the system of evaluation

They won’t stop until every option is analyzed

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Behavioural Decision Making Approach

Does not assume people are efficient machines

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Bounded Rationality

Assumes people have limits to their perceptual and calculative abilities

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Satisficing

Selecting the alternative that may not be optimal, but is good enough

(Satisfy + Suffice = Satisfice)

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Bad Decisions

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Bad Decisions “The horse is here to stay, but the

automobile is only a novelty—a fad”

Bank president advising Henry Ford’s lawyer not to invest in Ford Motor Co. (1903)

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Some Bank President The attorney ignored the advice, bought

$5,000 worth of stock, and sold it several years later for $12.5 million

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Bad Decisions“There is no reason for any individual to

have a computer in their home”

Kenneth Olsen, founder of Digital Equipment Corporation (DEC)

(1977)

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Bad Decisions“Who the hell wants to hear actors talk?”

Harry M. Warner, Warner Bros.

(1927)

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Bad Decisions“We don’t like their sound. Groups of

guitars are on the way out”

Decca Records, rejecting the Beatles

(1962)

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Counter-Intuitive Problems Our intuition can be wrong

Common sense can be wrong

Common knowledge can be wrong

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The End