Chapter 13: Decision-Making Flashcards
Decision making today
high elements of rapid change, greater complexity, and uncertainty
New Decision making requirements
- must be made faster
- no one individual has all information needed
- rely less on hard data
- there is less certainty about outcomes
- evolve through trial and error
Individual
- rational approach
- bounded rationality approach
Organizational Decision Making Models
- management science approach
- incremental decision process model
- garbage can model
Rational approach
a process of decision making that stresses the need for systematic analysis of a problem followed by choice and implementation in a logical sequence
- ideal model, not fully achievable
bounded rationality approach
how decisions are made under severe time and resource constraints
Rational approach 2 stages
- problem identification stage
- problem solution stage
Problem Identification Stage
- monitor the decision environment
- define the decision problem
- specify decision objectives
- diagnose the problem
Problem solution stage
- develop alternative solutions
- Evaluate alternatives
- Choose the best alternative
- Implement the chosen alternative
Organizational Decision Making
the organizational process of identifying and solving problems
Programmed Decisions
Repetitive and well defined procedures that exist for resolving problems
Nonprogrammed Decisions
Novel and poorly defined, made when no procedure exists for solving the problem
- bounded rationality
- organization constraints
- personal constraints
- decision/ choice
Management Science Approach
Organizational decision making that is the analogue to the rational approach by individual managers
- uses statistics
- removes human element
- successful in complex and stable environments
- lack tacit knowledge
Explicit knowledge
Can be written down, can be quantified
Tacit knowledge
Qualitative, can’t be quantified
Personal knowledge; transmitted through personal contact
Carnegie Model
organizational decision making involving many managers and a final choice based on a coalition among those managers
- uncertainity and conflict cause coalition formation, causes search and satisficing decision behaviour
coalition
an alliance among several managers who agree through bargaining about organizational goals and problem priorities
Satisficing
Satisfying and sacrificing, the acceptance by organizations of a satisfactory rather than a maximum level of performance
Incremental Decision Process Model
a model that describes the structured sequence of activities undertaken from the discovery of a problem to its solution
Incremental Decision Process Model: Phases
- Identification
- Development
- Selection
Identification
- Recognition
- Diagnosis
Development
- search/ screen
- design
Selection
- judgement evaluation
- analysis evaluation
- bargaining evaluation
- authorization
Combining Incremental Process and Carnegie Model
Problem Identification –> Problem Solution
Problem solution
the decision-making stage in which alternative courses of action are considered and one alternative is selected and implemented
The Garbage Can Model
Describes the flow of multiple decisions within the organization
- organized anarchy
- ongoing stream of events
Organized Anarchy:
- Extremely organic organizations characterized by highly uncertain conditions
Problematic preferences - Unclear, poorly understood technologies
- Turnover
Ongoing stream of events
- problems
- potential solutions
- participants
- choice opportunities
Problems
Gaps between desired performance and current activities. Some problems are never solved
Potential solutions:
An idea someone proposes for adoption, whether or not it fits a particular solution
Participants
People are hired, reassigned, fired. As people move, problems, solutions & opportunities are defined and redefined
Choice opportunities
occasions when a decision is made, sometimes as a random collision of people and ideas
Garbage Can Model Consequences
- Solutions may be proposed even when problems do not exists
- Solutions arise without choice opportunities or participants
- Choices are made without solving problems
- Problems may persist without being solved
- A few problems are solved; many are not
Contingency Framework
a perspective that brings together the two organizational dimensions of problem consensus and technical knowledge about solutions
Contingency Framework Axis
Problem Consensus
Solution Knowledge
Quad 1
Problem Consensus Certain and Solution Knowledge Certain
- individual: rational approach, computation
- organization: management science
Quad 2
Problem consensus uncertain and solution knowledge certain
- individual: bargaining, coalition formation
- organization: Carnegie model
Quad 3
Problem consensus certain and solution knowledge uncertain
- individual: judgement, trail and error
- organization: incremental decision process model
Quad 4
Problem consensus uncertain and solution knowledge uncertain
- individual: bargaining and judgment, inspiration and imitation
- organization: canegie and incremental decision, evolving to garbage can model
imitation
the adoption of a decision tried elsewhere in the hope that it will work in the present situation
inspiration
an innovative, creative solution that is not reached by logical means
decision learning
a process of recognizing and admitting mistakes that allows managers and organizations to acquire the experience and knowledge to perform more effectively in the future
escalating commitment
persisting in a course of action when it is failing; occurs because managers block or distort negative information and because consistency and persistence are valued in contemporary society
evidence-based management
a commitment to make better informed decisions based on facts and evidence
groupthink
the tendency of people in groups to suppress their own views
high-velocity environments
industries in which competitive and technological change is so extreme that market data are either unavailable or obsolete, strategic windows open and shut quickly, and the cost of a decision error is company failure
intuitive decision making
the use of experience and judgment, rather than sequential logic or explicit reasoning, to solve a problem
point-counterpoint
a decision-making technique that divides decision makers into two groups and assigns them different, often competing, responsibilities
problem consensus
the agreement among managers about the nature of problems or opportunities and about which goals and outcomes to pursue
problemistic search
when managers look around in the immediate environment for a solution to resolve a problem quickly
prospect theory
a theory that suggests that the threat of loss has a greater impact on decisions than the possibility of an equivalent gain
