CREATIVE DECISION MAKING AND RESEARCHChapter 3Describe the role of research in business decision making.Present a creative and analytical decision-making process.Discuss the importance of writing actionable research questions.Suggest techniques for being more creative.Understand concepts related to evaluating alternatives and choice.

Research and Decision-Making Go Together C-A-B PROCESSCreative-Analytical-Business Decision-Making ProcessResearch QuestionsCreativityEvaluation & ChoiceImplementation

Research

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How much research?Routine decisions require little research.

Unfamiliar decisions with high risk require much research.

Research has value two ways!Provides a more informed answer to the current question.Increases the knowledge of personnel so that more informed decisions can be made in general.

DECISION MAKING PROCESSBusiness decision-making = selectingfrom among alternative courses ofaction each likely to have adifferent outcome.1. Opportunity = a situation where a potentially advantageous outcome is possible.2. Crisis management = a decision- making situation that occurs with little notice and has great potential for negative implications.

IDENTIFYING DECISION-MAKING SITUATIONSDSSMIS

CrisisPure OpportunityImmediate Response NeededUnplanned TacticalPreprogrammed Solution Usually UsedResponse Can Be Timed (Long-Run Orientation)Plan can be developedStrategic Novel Solution Often Desired

BUSINESS DECISION MAKING PROCESSDecision maker identifies issues and/or problems.Available information is screened.Decision maker and researcher translate issues/problems into researchable questions.Knowledge is acquired through research.Decisions are made to reach a more desirable future situation.

BARRIERS TO EFFECTIVE PROBLEM IDENTIFICATION AND ACTIONABLE RESEARCH QUESTIONS:Incorrect AssumptionsFunctional FixednessExpedienceCommunication DifficultiesThe SolutionUnclear GoalsDeveloping better vision.

Functional FixednessOnce one learns an effective rule or action, increased familiarity with the process makes it difficult to see other ways of doing the same thing, even if they are simpler and better. That is, it creates tunnel vision.

BEATING FUNCTIONAL FIXEDNESSInterrogatories.What ___?Why ___?When___?Where ___?Who ___?How ___?Invite Multiple Solutions.Identify WAYS not a WAY!?

EFFECTIVE COMMUNICATIONS. . . are essential because multiple people are usually involved in the decision making process. Effective communications make effective research questions more likely!

INVITING MULTIPLE SOLUTIONSToo often we tend to work on the most obvious question, or the first one posed.Considering a larger number of potential questions and solutions leads to better research, better answers, and improved decision making.

ISSUES OR SYMPTOMS?Issues are the things that if altered will close the gap between the actual and the desired situation.Symptoms are signals that some change is needed to avoid further problems or to take advantage of an opportunity.Effective communication insures that research and decision making are directed toward issues and not symptoms!

ISSUES, SYMPTOMS, RESEARCH QUESTIONS

SymptomPotential IssuesDecision IssuesResearch QuestionsStock-outs are reduced from last yearShelf space reduction has lowered retail inventories?Should we increase slotting allowances in an effort to gain more shelf space?What is the relationship between shelf space and retail sales?Churn-rate is highest in the marketService provider unfriendly?Should we change service management procedures?Is service provider friendliness related to churn rate?Labor costs are higher than the competitionsEmployee sick days are too high?Should we create flex- time?Do flexible schedules create increased labor efficiency (lower labor costs)?

CREATIVITY. . . involves combining and synthesizing information into novel ideas.. . . is a divergent thinking exercise.. . . means developing many possible alternatives, not just one.

BARRIERS TO CREATIVITYFunctional Fixedness.Group Think.Emotional Inhibition.Expediency.

BUSINESS PEOPLE LACK CREATIVITYQuantity creates quality.Defer judgment.Craziness should be encouraged.Get away from the situation.Run with your ideas.Thus, their decision making lacks creativity too. So, tips for adding creativity . . . .

HEURISTIC IDEATION TECHNIQUE. . . is a very effective way of combining lists and forced combinations to develop large numbers of ideas in a very short period of time.

Heuristic Ideation Matrix [HIT]What do people eat for breakfast?How can food be cooked?Identify possible new breakfast foods.

What/How:FriedBoiledRawBakedColdMWToastedFrozenGrilledw/FruitBread12345678910Cereal11121314151617181920Pancakes21222324252627282930Muffins31323334353637383940Scones41424344454647484950Bagels51525354555657585960Eggs61626364656667686970Bacon71727374757677787980Ham81828384858687888990Yogurt919293949596979899100

EVALUATION AND CHOICEThe best decision makers avoid any evaluation until a large set of alternatives has been developed.The goal of evaluation and choice is to narrow down the alternative courses of action to those most likely to produce a good outcome.Preliminary screening is used to reduce large numbers of alternatives to a more manageable number.

EVALUATIVE CRITERIA . . . characteristics used to judge the merits of alternatives. Good alternatives generally have high levels of some or all of the following:Advantageousness.Trialability.Observability.Consistency.Simplicity.

FIELD TESTSTest Market an experiment evaluating a new product or promotion under real market conditions.Pilot Test small scale implementation of an idea being considered.

IMPLEMENTATION Critical to success.good idea + poor implementation = poor result.Often a problem unto itself.C-A-B used again.

MONITORINGAssessing the extent to which a decision is accomplishing its stated objective.MIS and DSS useful again.Requires feedback.Creates learning instead of failing.

SUMMARYDescribed the role of research in helping make effective business decisions.Presented a C-A-B process.Discussed importance of actionable research questions.Identified approaches for better problem definition.Suggested ways to enhance creativity.Discussed concepts related to evaluation and choice of alternative decisions.