Week 6 - Managing Information & Decision-Making Flashcards
Managing and decision-making
- Decision-making influenced by sources, quality, and reliability of information
- Ability to engage in critical thinking, analysis, and reflection determines how well one makes decisions based on available information
- The execution of the managerial functions of POLC results in decision-making, often daily
- Big Data and its associated analytics changing contemporary debates and arguments around decision-making
- As organizational decisions increasingly become more data driven, managers need to consider inclusiveness of data (i.e. who uses it) in addition to the use of data for productive purposes
Methods of managerial decision-making
- Rationality
- Bounded rationality
- Intuition
Rationality
- Managerial decision making is assumed to be rational
- Rational decisions describe choices that are consistent and value-maximising
- Rational decisions made by managers “maximise” economic benefit for the organization
- Assumes:
- The problem is clear and unambiguous
- A single, well-defined goal is to be achieved
- All alternatives and consequences are known
- Preferences are clear
- Preferences are constant and stable
- No time or cost constraints exist
- Final choice will maximise payoff
Bounded Rationality
- Decisions made within the parameters of a simplified model that captures the essential features of a problem
- Bounded by the limitations and constraints, managers attempt to behave rationally
- “Good enough” decisions – “satisficing”
Intuition
Steve Jobs and the evolution of his intuition:
- “In his early years at Apple, before he was forced out in 1985, Mr. Jobs was notoriously hands-on, meddling with details and berating colleagues. But later, first at Pixar, the computer-animation studio he co-founded, and in his second stint at Apple, he relied more on others, listening more and trusting members of his design and business teams.”
Intuition a product of:
- Previous Experience
- “Gut-Level Feeling”
- Accumulated Judgement
Types of problems and decisions
Well structured problems and programmed decisions
- Structured problems are easily defined
- Programmed decisions are those handled by a routine approach
- Procedure –> Rule –> Policy
Un-structured problems and non-programmed decisions
- Un-structured problems are new or unusual
- Non-programmed decisions need a custom approach
- Unique + Non Recurring
The value of collaborative decision-making
Steve Jobs on the value of collaborative decision-making
- No, you see you can’t. If you want to hire great people and have them stay working for you, you have to let them make a lot of decisions and you have to, you have to be run by ideas, not hierarchy. The best ideas have to win, otherwise good people don’t stay.
Pros and cons of group decision-making
Advantages
- More complete information & knowledge
- More diverse alternatives
- Increases acceptance of a solution
- Increase legitimacy
Disadvantages
- Time consuming
- Minority domination
- Pressure to conform
- Ambiguous responsibility
Decision-making conditions, styles and errors
- Certainity
- Risk
- Uncertainity
- Linear
- NonLinear
Certainity
A manager can make accurate decisions because the outcome of every alternative is known
Risk
A manager can estimate the likelihood of certain outcomes
Uncertainty
A manager has neither certainty nor reasonable probability estimates
Linear
- Preference for using external data and facts
- Process information through rational, logical thinking
Non-linear
- Preference for internal sources of information
- Process information through internal insights, feelings, and hunche
