Steps in Decision MakingSteps in Decision Making• Problem IdentificationProblem Identification (need Goal Consensus) (need Goal Consensus)– Monitor the decision environmentMonitor the decision environment– Define the problemDefine the problem– Specify decision objectivesSpecify decision objectives– Diagnose the problemDiagnose the problem

• Problem SolutionProblem Solution (need Technical Knowledge) (need Technical Knowledge)– Develop alternative solutionsDevelop alternative solutions– Evaluate alternativesEvaluate alternatives– Choose the best alternativeChoose the best alternative– Implement the chosen alternativeImplement the chosen alternative

Contingency FrameworkContingency Framework

HIGH

LOW

TEC

HN

ICA

L K

NO

WLE

DG

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tion)

LOWHIGH GOAL CONSENSUS(Problem Identification)

INDIVIDUAL: INDIVIDUAL:

INDIVIDUAL: INDIVIDUAL:

ORGANIZATION:

ORGANIZATION:

ORGANIZATION:

ORGANIZATION:

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RATIONAL APPROACHCOMPUTATION

MANAGEMENT SCIENCE

BARGAININGCOALITION FORMATION

CARNEGIE MODEL

JUDGMENTTRIAL AND ERROR

INCREMENTAL DECISIONPROCESS MODEL

BARGAINING, JUDGMENTINSPIRATION, IMITATION

CARNEGIE , INCREMENTALPROCESS MODELS,EVOLVING INTO GARBAGECAN MODEL

Garbage Can ModelGarbage Can Model

• Extreme Problem Uncertainty Extreme Problem Uncertainty – i.e., low goal consensus and low technical i.e., low goal consensus and low technical

knowledgeknowledge

• Streams of EventsStreams of Events– ProblemsProblems– SolutionsSolutions– ParticipantsParticipants– Choice opportunitiesChoice opportunities

Garbage Can Model: Garbage Can Model: ImplicationsImplications

• Solutions may be proposed to problems Solutions may be proposed to problems that do not exist.that do not exist.

• Choices may be made without solving Choices may be made without solving problems.problems.

• Problems persist without being solved.Problems persist without being solved.

• A few problems are solved.A few problems are solved.

Escalation of CommitmentEscalation of CommitmentEscalationEscalation occurred when occurred when the British government the British government continued funding the continued funding the Concorde supersonic jet Concorde supersonic jet long after its lack of long after its lack of commercial viability was commercial viability was apparent. Some scholars apparent. Some scholars now refer to escalation of now refer to escalation of commitment as the commitment as the “Concorde Fallacy.”“Concorde Fallacy.”

Causes:Causes:

•Gambler’s fallacyGambler’s fallacy

•Self-justificationSelf-justification

•Sunk costsSunk costs

© Corel Corp. With permission

FramingFraming

• To prevent the way a problem is To prevent the way a problem is presented presented (framing)(framing) from biasing the from biasing the decision:decision:– Try to look at problem in different ways Try to look at problem in different ways • Re-word itRe-word it

• Put yourself in the position of other peoplePut yourself in the position of other people

• Leave the problem and come back to it laterLeave the problem and come back to it later

Group Decision MakingGroup Decision MakingADVANTAGES:ADVANTAGES:• More background More background

knowledgeknowledge • More More alternativesalternatives

generatedgenerated• More More understandingunderstanding

of the decisionof the decision• More More supportsupport for for

decisiondecision• Helps fulfill Helps fulfill social social

needsneeds

DISADVANTAGES:DISADVANTAGES:• Time consuming, Time consuming,

inefficientinefficient• Ineffective Ineffective

Compromise Compromise decisionsdecisions

• GroupthinkGroupthink, social , social pressure, conflictpressure, conflict

• Lack of clear Lack of clear responsibilityresponsibility

Conditions for GroupthinkConditions for Groupthink

• Team leader’s opinion is known

• Team is highly cohesive

• Team is isolated from outside influences

• Team has recent decision failures

Creative OrganizationsCreative Organizations• Decentralized / Low Bureaucracy Decentralized / Low Bureaucracy

• Open channels of communication Open channels of communication

• Creative people identified by testsCreative people identified by tests,, past achievements past achievements

• Free time to create Free time to create

• Freedom to choose problems Freedom to choose problems

• Assignment of nonspecialists to problemsAssignment of nonspecialists to problems

• Long-time orientation (Resources allocated without Long-time orientation (Resources allocated without expectation of immediate payoff)expectation of immediate payoff)

• Tolerate FailuresTolerate Failures

• Reward SuccessesReward Successes

Creative PeopleCreative People

• Background KnowledgeBackground Knowledge• CuriosityCuriosity• Open-mindednessOpen-mindedness• Self-ConfidenceSelf-Confidence• Not afraid to be differentNot afraid to be different• PersistencePersistence• Relaxed and playful attitudeRelaxed and playful attitude

Increasing Your CreativityIncreasing Your Creativity

• Mental ExercisesMental Exercises

• Keep Optimistic AttitudeKeep Optimistic Attitude

• Speak to Lead UsersSpeak to Lead Users

• Maintain an Idea NotebookMaintain an Idea Notebook

Improving Decision-Making Improving Decision-Making EffectivenessEffectiveness

• Work on enhancing your creativityWork on enhancing your creativity• Learn from past decisions, but don’t waste time Learn from past decisions, but don’t waste time

regretting pastregretting past• Distinguish between idea getting and evaluatingDistinguish between idea getting and evaluating• Seek advice, when practicalSeek advice, when practical• As a group leader, don’t dominate the discussionAs a group leader, don’t dominate the discussion• When possible, “sleep on” decisions, but don’t When possible, “sleep on” decisions, but don’t

procrastinate beyond when a decision should be procrastinate beyond when a decision should be mademade