Chapter 12 - Decision making, learning, knowledge management, and information technology Flashcards
Organisational decision making
The process of responding to a problem by searching for a solution that will create the most value for organisational stakeholders
Programmed decision making
Decisions that are repetitive and routine
Non-programmed decision making
Decisions that are novel and unstructured.
Difference in requirements between programmed and non-programmed decision making
Non-programmed decision making requires more search for information, as it is impossible to know in advance if these decisions are the right ones.
What does non programmed decision making require from managers?
Requires managers to rely on judgement, intuition, and creativity
The three steps of the rational model
1) managers identify problems that need to be solved
2) managers seek to design and develop a series of alternative courses of action to solve the problems they have identified
3) managers compare the likely consequences of each alternative and decide which course of action offers the best solution
What is the ideal situation for the rational model
No uncertainty
What are the 3 assumptions that are criticised in the rational model?
The assumption that decision makers have all the information they need
The assumption that decision makers can make the best decision
The assumption that decision makers agree about what needs to be done
The Carnegie model
Recognises the effects of ‘satisfying’, bounded rationality, and organisational coalitions
Organizational decision-making
The process of responding to a problem by searching
for and selecting a solution or course of action that will create value for organisational stakeholders.
To make the best choices, managers must make two kinds of decisions:
Programmed decision-making
Non-programmed decision-making
Non-programmed decision-making
Decisions that are novel and unstructured.
Programmed decision-making
Decisions that are repetitive and routine
The rational model
Decision-making is a straightforward three stages process
Steps in the rational model
Stage 1: Identify and define the problem
Stage 2: Generate alternative solutions to the problem
Stage 3: Select solution and implement is
What assumptions are made with the rational model?
Decision maker have all the information
Decision makers can make the best decision
The assumption that decision makers agree about what needs to be done
The Carnegie model
Attempt to better describe the realities of the decision-making process
The Carnegie model recognises the effects of
Satisficing
Bounded rationality
Organizational coalitions
Satisficing
Limited information searches to identify problems and
alternative solutions
Bounded rationality
A limited capacity to process information
Organizational coalitions
The variation in managers’ preferences and values and assumes different managers will evaluate different alternatives in the same way.
The incrementalist model
Organisational decision making, is when selecting a set of new alternative courses of actions,
managers tend to choose those that are only slightly, or incrementally, different from those used in the past, thus lessening their chances of making a mistake
The unstructured approach
This approach emphasises the unstructured nature of incremental decision making:
Managers make decisions in a haphazard, intuitive way, and uncertainty forces them to re-examine their decisions continuously to find new ways to behave in a constantly chaining environment.
The garbage-can model
This model turns the decision-making process around and argues that managers are as likely to start decision making form the solution side as from the problem side.
Decision makers may propose solutions to problems that do not exist: they create a problem they can solve with solutions that are already available
Organizational learning
The process managers use to improve organization
members’ capacity to understand and manage the
organization and its environment so they can make
decisions that continuously increase organizational
effectiveness.
Two principal types of organizational learning
Exploration
Exploitation
Exploration
Organizational member’s search for and experimentation
with new kinds or forms of organizational activities and
procedures
Exploitation
Organizational members’ learning of ways to refine and
improve existing organizational activities and procedures.
Learning organization
An organization that purposefully designs and constructs its structure, culture and strategy so as to enhance and
maximize the potential for organizational learning to take
place.
Levels of organizational learning
Individual
Group
Organisational
Inter-organisational
Individual
At the individual level, managers need to do all they can to facilitate the learning of new skills, rules, norms and values so individuals can increase their own personal abilities and, in doing so, help build an organisation’s core competences.
- Senge argued that, for organisational learning to occur, each of its members needs to develop, a sense of personal mastery.
Personal mastery
Organizations should empower all employees and
allow them to experiment and create and explore what they want
Group
At group level, managers need to encourage learning by promoting the use of various kinds of groups – such as self-managed or cross-functional teams – so that employees can share or pool their skills and abilities to solve problems.
Organizational
At the organizational level, managers can provide learning through the way they create its structure and culture.
Inter-organizational
Organizational structure and culture not only establish the shared vision or framework of common assumptions that guide learning inside an organization, they also determine how learning occurs at the inter-organizational level.
Inter-organizational learning is important because organizations can improve their effectiveness by imitating each other’s distinctive competences.
Serge principle of organizational learning, is systems thinking, that says: to create a learning organization, managers must recognize the effects of one level of
learning on the others
Principles of Serge’s organizational learning
Personal mastery
Metal models
Team learning
Building shared vision
Systems thinking
Knowledge management
A type of IT-enabled organizational relationship that has
important implications for both organisational learning and decision making
Codification approach
Knowledge is carefully collected, analysed and stored in databases where users who input organization-specific commands and keywords can retrieve it easily.
It is a form of bureaucratic control that can result in major gains in technical efficiency and allow an organization better to manage its environment.
Is only suitable when the product or service being provided is itself quite standardized so best practices can continually be discovered and entered into the knowledge management system to be used by others in the organization.
Personalization approach
Is pursued when an organization needs to provide customized products or solutions to clients, when technology is changing rapidly and when employees rely much more on know-how, insight, and judgement to make decisions.
Information systems are designed to show employees who in the organization might posses the knowledge they might need or who might have confronted a similar problem in the past.
Cognitive structure
The system of interrelated beliefs, preferences, expectations and value a person uses to define problems and events
Cognitive biases
Factors that systematically bias cognitive structures and
affect organizational learning and decision-making
Cognitive dissonance
The state of discomfort or anxiety a person feels when
there is an inconsistency between his or her beliefs and actions
Illusion of control
A cognitive bias that causes managers to overestimate the extent to which the outcomes of an action are under their personal control
Frequency
A cognitive bias that deceives people into assuming that extreme instances of a phenomenon are more prevalent that they really are
Representativeness
A cognitive bias that leads managers to form judgements
based on small and unrepresentative samples
Escalation of commitment
A cognitive bias that leads managers to remain
committed to a losing course of action and refuse to admit they have made a mistake
Projection:
A cognitive bias that allows managers to justify and reinforce their own preferences and values by attributing them to others
Ego-defensiveness
A cognitive bias that lead managers to interpret events in
such a way that their actions appear in the most favourable light
Strategies for organizational learning
Listening to dissenters
Converting events into learning opportunities
Experimenting
Groupthink
The conformity that emerges when like-minded people reinforce one another’s tendencies to interpret events and information in similar ways.
Devil’s advocate
A person who is responsible for critiquing on-going organizational learning.
Devil’s advocate
A person who is responsible for critiquing on-going organisational learning.
Collateral organizational structure
An informal organisation of managers set up parallel to the formal organisational structure to “shadow” the decision-making and actions of managers in the formal
organization.
