Chapter 7 - Decision making and Creativity

Question 1

Define Decision Making.

Answer 1

The conscious process of making choices among alternatives with the intention of moving towards some desired state of affairs.

Question 2

Define rational choice paradigm.

Answer 2

During decision making when people use logic and all of the available information to choose the alternative with the highest value.

Question 3

Define subjective expected utility (SEU).

Answer 3

The probability (expectancy) of satisfaction (utility) resulting from choosing a specific alternative in a decision.

Question 4

What are the 2 pieces of information that all rational choice decisions rely on?

Answer 4

1. The valence or expected satisfaction of outcomes (utility).
2. The probability of those good or bad outcomes occurring (expectancy) by choosing that particular alternative.

Question 5

Rational choice decision-making process.

Answer 5

1. Identify problem or opportunity.
2. Choose the best decision process.
3. Discover or develop possible choices.
4. Select the choice with the highest value.
5. Implement the selected choice.
6. Evaluate the selected choice.

Question 6

What is the most important step in decision making?

Answer 6

Identifying problems and opportunities.

-Problems are conclusions that we form from ambiguous and conflicting information.

Question 7

List the problems with problem identification…

Answer 7

1. Stakeholder Framing - information are highly selective, thus decision makers sees this as a problem.
2. Solution-focused problems - seeking out solutions while defining the problem.
3. Decisive Leadership - leaders announcing problems or opportunities before having a chance to logically assess the situation.
4. Perceptual Defence - screen out information that threatens our self-concept.
5. Mental Models - we only imagine how things should happen.

Question 8

Define bounded rationality.

Answer 8

The view that people are bounded in their decision-making capabilities, including having access to limited information, limited information processing and tendency towards satisfying rather than maximising when making choices.

Question 9

What’s the problem with goals?

Answer 9

Organisational goals are often ambiguous or in conflict with each other.

Question 10

What are the problems with information processing?

Answer 10

1. Decision makers do not process ALL information about all alternatives and their consequences.
2. Decision makers asses alternatives sequentially rather than all at the same time partly because all the alternatives are not usually available to the decision maker at the same time.
3. And as a new alternative comes alone it is compared to an implicit favourite. (bias)

Question 11

Define implicit favourite.

Answer 11

A preferred alternative that the decision maker uses repeatedly as a comparison with other choices.

Question 12

Define heuristic.

Answer 12

Enabling a person to discover or learn something for themselves.

Question 13

Explain Anchor and adjustment heuristic.

Answer 13

We are influence by an initial anchor point and do not sufficiently move away from that point as new information is provided.

Question 14

Explain Availability heuristic.

Answer 14

The tendency to estimate the probability of something occurring by how easily we can recall those events.

*we recall emotional events more clearly.

Question 15

Explain Representativeness heuristic.

Answer 15

We pay more attention to whether something resembles something else than t more precise statistics about its probability.

Question 16

Define Satisficing.

Answer 16

Selecting an alternative that is satisfactory or ‘good enough’, rather than the alternative with the highest value (maximisation).

Question 17

What do people Satisfice?

Answer 17

1. Decision makers rely on sequential evaluation of new alternatives against an implicit favourite.
2. Decision makers lack the capacity and motivation to process the huge volume of information required to identify the best choice.

Question 18

How do Emotions affect the evaluation of alternatives?

Answer 18

1. Emotions form early preferences - emotions. not rational logic. energise us to make the preferred choice.
2. Emotions change the decision evaluation process - emotions/mood shape how we evaluate information, not just which choice we make.
3. Emotions serve as information when we evaluate alternatives - ‘emotions as information’

Question 19

Define intuition.

Answer 19

The ability to recognise when a problem/opportunity exists and to select the best course of action without conscious reasoning.

Question 20

What are some strategies we could use to make choices more effectively?

Answer 20

1. Use intuition in combination with careful analysis of relevant information (rather than decisive leadership).
2. Deliberately revisit important issues later so that information is processed whilst experiencing a different mood.
3. Scenario planning - thinking about what would happen if a significant environmental condition changed and what the organisation should do to anticipate and react to such an outcome.

Question 21

Define escalation of commitment.

Answer 21

the tendency to repeat an apparently bad decision or allocate more resources to a failing course of action.

Question 22

Explain the Self-Justification effect.

Answer 22

Appearing to be rational and competent while making a decision to convey a positive public image.

Question 23

Explain the Self-Enhancement effect.

Answer 23

People feel better about themselves regarding things that are important to them.

-This supports a positive self-concept but it also increases the risk to escalation to commitment.

Question 24

Define Prospect theory effect.

Answer 24

A natural tendency to feel more dissatisfaction from losing a particular amount than satisfaction from gaining an equal amount.

Question 25

Define Sunk costs.

Answer 25

A cost that an entity has incurred, and which it can no longer recover by any means.

-Sunk costs should not be considered when making the decision to continue investing in an ongoing project, since you cannot recover the cost

Question 26

What are ways to evaluate decision outcomes more effectively?

Answer 26

1. Separation of roles minimises the self-justification effect.
2. Publicly establish a pre-set level at which the decision is abandoned or re-evaluated.
3. Find a source of systematic and clear feedback.
4. To involve several people in the evaluation. Thus co-workers will continuously monitor each other and might notice problems sooner than someone working alone on a project.

Question 27

Define Creativity.

Answer 27

The development of a original ideas that make a socially recognised contribution.

Question 28

Define divergent thinking.

Answer 28

Reframing a problem in a unique way and generating different approaches to the issue.

Question 29

What is the Creative Process Model.

Answer 29

1. Preparation - developing knowledge and possibly skills about the issue or object of attention.
2. Incubation - maintain a low-level awareness; come back to it.
3. illumination - flickering ideas; must be written down or they can be quickly lost.
4. Verification -further creativity as the ideas evolve into finished products or services.

Question 30

What are some characteristics of creative people?

Answer 30

1. Cognitive and practical intelligence - know the significance of small bits of info and are able to connect them in creative ways.
2. Persistence - high need for achievement. strong task motivation. never give up.
3. Knowledge and experience - try to ignore mental model.
4. Independent Imagination - high openness to experience. low need for affiliation. strong personal values of self-direction and stimulation.

Question 31

What is the most important condition to support creative practice in a an organisation?

Answer 31

1. Learning orientation - leaders recognise that employees make reasonable mistakes as a part of the creative process.
2. Motivation - employees tend to be more creative when they believe their work benefits the organisation and/or larger society
   -&raquo_space; jobs encourage creativity when they are challenging and aligned with the employees competencies.

Question 32

List the activities that encourage creativity in an organisation.

Answer 32

1. Redefining the problem (revisiting old projects).
   - Asking people who are unfamiliar with the issue (different expertise) to explore the problem with you.
2. Associative play - literally in engaging in playful activities.
   - Morphological analysis - involves listing different dimensions of a system and the elements of each dimension and then looking at each combination.
3. Cross-pollination - people from different areas of the organisation, exchange ideas.

Question 33

Define Employee involvement.

Answer 33

The degree to which employees influence how their work is organised and carried out.

Question 34

Compare the different types of involvement.

Answer 34

A low level of involvement occurs where employees are asked individually for specific information but the problem is not described to them.

A higher level of involvement occurs when the problem is described to them but the employees are still not entitled to make the final decision.

The highest level of involvement occurs when the entire decision-making process is handed over to employees.

Question 35

What are the benefits of employee involvement?

Answer 35

1. Improves the identification off problems and opportunities.
2. Improve the number and quality of solutions generated.
3. Under specific conditions, it improves the evaluation of alternatives.
4. Along with improving the decision quality, involvement tends to strengthen employee commitment to the decision.
5. Has positive effects n employee motivation, satisfaction and turnover. It increases skill variety, feelings of autonomy and task identity, all of which increase job enrichment and potentially employee motivation.

Question 36

What are the 4 contingencies of employee involvement?

Answer 36

1. Decision structure - Employee involvement increases with the complexity of the problem or opportunity.
2. Source of Decision Knowledge - Subordinates should be involved in some level of decision making when the leader lacks sufficient knowledge and subordinates have additional information to improve decision quality.
3. Decision commitment - participation tends to improve employees commitment to the decision.
4. Risk of Conflict
   a) if employee goals and norms conflict with the organisation’s goals.
   b) the degree of involvement depends on whether employees will agree on the preferred solution.