Chapter 6 Effective Decision Making: Your Competitive Advantage

Chapter 6 Objectives Understand why effective decision making is important and how to make good decisions. Connect critical thinking skills to effective decision making and be able to devise a plan to strengthen your critical thinking. Understand why creativity is important when making decisions. Recognize problems and understand why resolving them can be complicated. Chapter 6 Effective Decision Making: Your Competitive Advantage 2

Importance of Effective Decision Making Effective decision making greatly impacts the organization and human relations system. Decision making is related to learning and innovation skills and is a part of your response in a 21st century organization. Effective decision making is a must for a successful career. Chapter 6 Effective Decision Making: Your Competitive Advantage 3

Importance of Effective Decision Making (cont.) Factors that help you make good decisions:  Confidence in your ability to make decisions  Knowing about available decision-making tools  Deciding which decision to make first  Being able to judge when a decision should be made in a group or individually Chapter 6 Effective Decision Making: Your Competitive Advantage 4

Importance of Effective Decision Making (cont.) Making Better Decisions Determine what decisions should be made first:  Prioritize.  Use the rule to focus time, efforts, and resources on the 20 percent of problems that matter. Chapter 6 Effective Decision Making: Your Competitive Advantage 5

Importance of Effective Decision Making (cont.) Making Better Decisions (cont.) Determine whether an individual or group should decide:  In general, groups make better decisions than individuals because of the increased input and suggestions.  Drawbacks to group decisions include wasting time and engaging in group think.  The goal of group decision making and problem solving is consensus. Chapter 6 Effective Decision Making: Your Competitive Advantage 6

Importance of Effective Decision Making (cont.) Making Better Decisions (cont.) Choose decision-making tools:  For important complex decisions, listen to your emotions.  Other decisions, such as everyday choices, require reason. Decision-makers are increasingly using computing power in the decision-making process. Chapter 6 Effective Decision Making: Your Competitive Advantage 7

Importance of Effective Decision Making (cont.) Making Better Decisions (cont.) DSS or decision support systems are generally computer applications that help sort through large amounts of data and pick among a variety of choices.  Passive systems collect and organize data.  Active systems process data and show solutions.  Cooperative systems collect data and perform analyses. Chapter 6 Effective Decision Making: Your Competitive Advantage 8

Importance of Effective Decision Making (cont.) Making Better Decisions (cont.) Types of DSS assistance:  Model-driven  Communications driven  Data driven  Document driven  Knowledge driven Chapter 6 Effective Decision Making: Your Competitive Advantage 9

Figure 6.3 Commonly Used Decision-Making Tools Graphic picture of how alternative solutions lead to various possibilities Decision tree Examination of pros and cons of proposed solutions Cost-benefit analysis Concentration of decisions where potential for payoff is greatest ABC analysis Graphic technique for planning projects in which a great number of tasks must be coordinated PERT chart Committee that meets regularly to examine and suggest solutions to problems of quality Quality circle Method of continuous process improvement using a structured statistical approach Six Sigma Group decision that gives each person a role to play in wearing the six hats of intelligence Six Thinking Hats Chapter 6 Effective Decision Making: Your Competitive Advantage 10

Improving Critical Thinking Critical thinking is the process of evaluating what other people write or say in order to determine whether to believe their statements. To become a critical thinker, learn to:  Distinguish fact from opinion  Understand the differences between primary and secondary sources  Evaluate information sources  Recognize deceptive arguments  Identify ethnocentrism and stereotypes Chapter 6 Effective Decision Making: Your Competitive Advantage 11

Improving Critical Thinking (cont.) Distinguishing Fact from Opinion A fact is a thing that is known to be true, to exist, or to have occurred. An opinion is a view about a particular issue and is not necessarily true. Facts may be misleading when taken out of context, the interrelated situation in which an event occurs. Chapter 6 Effective Decision Making: Your Competitive Advantage 12

Improving Critical Thinking (cont.) Understanding Primary and Secondary Sources A primary source is original material that has not been interpreted by anyone else. Primary sources include court records, letters, government documents, and original research and position papers of organizations. Chapter 6 Effective Decision Making: Your Competitive Advantage 13

Improving Critical Thinking (cont.) Understanding Primary and Secondary Sources (cont.) A secondary source consists of information collected from primary sources and then interpreted by the collector. Secondary sources include magazine articles, critical analyses, and histories. Chapter 6 Effective Decision Making: Your Competitive Advantage 14

Improving Critical Thinking (cont.) Evaluating Information Sources All information has a point of view. When evaluating sources, determine the writer’s point of view and whether it affects the accuracy of the topic coverage. Ask yourself these questions about sources:  Who is the source of this information?  What is his/her point of view?  When was this written?  Is this source useful to me? Chapter 6 Effective Decision Making: Your Competitive Advantage 15

Improving Critical Thinking (cont.) Recognizing Deceptive Arguments The ability to recognize deceptive arguments is crucial to critical thinking. Some types of deceptive arguments include:  Bandwagon  Scare tactics  Personal attack  Testimonial  Straw person  Slanting Chapter 6 Effective Decision Making: Your Competitive Advantage 16

Improving Critical Thinking (cont.) Identifying Ethnocentrism and Stereotypes Stereotypes assume all members of a group share the same set of characteristics. Ethnocentrism holds that one’s own nationality, religion, or cultural traditions and customs are superior to others. Chapter 6 Effective Decision Making: Your Competitive Advantage 17

Improving Critical Thinking (cont.) When thinking critically, remember the following:  All people have subconscious biases.  Stay humble and realize your own potential for fallibility.  Everyone has a tendency towards group think.  No matter how good we believe our critical thinking skills are, we always have room for improvement. Chapter 6 Effective Decision Making: Your Competitive Advantage 18

Nurturing Creativity and Innovation Creativity is a thinking process that solves a problem or achieves a goal in an original and useful way. Creativity is the ability to come up with new and unique solutions to problems. Innovation is turning these creative solutions into products and services. Chapter 6 Effective Decision Making: Your Competitive Advantage 19

Nurturing Creativity and Innovation (cont.) Traits of creative people:  Sensitivity to problems and deficiencies  Flexibility and openness to new ideas  Self-confidence and willingness to take risks  Ability to connect seemingly unrelated ideas  Belief that nature is fundamentally orderly  Divergent thinking Chapter 6 Effective Decision Making: Your Competitive Advantage 20

Nurturing Creativity and Innovation (cont.) The Five Stages of the Creative Process Preparation Concentration Incubation Illumination Verification or Elaboration Chapter 6 Effective Decision Making: Your Competitive Advantage 21

Figure 6.4 Ways to Improve Your Creativity 1. Believe that you have the ability to be creative. 2. Listen to your hunches, particularly while relaxed. 3. Keep track of your ideas by writing down insights and thoughts. 4. Learn about things outside of your specialty to keep your thinking fresh. 5. Avoid rigid patterns of doing things. 6. Observe similarities, differences, and unique features in things. 7. Engage in an activity at which you are not an expert. Chapter 6 Effective Decision Making: Your Competitive Advantage 22

Figure 6.4 (cont.) Ways to Improve Your Creativity 8. Engage in hobbies, especially those involving your hands. 9. Take the other side occasionally to challenge your beliefs. 10. Have a sense of humor and learn to laugh easily. 11. Adopt a risk-taking attitude. 12. Think positive! 13. Turn your ideas into action; follow through. Chapter 6 Effective Decision Making: Your Competitive Advantage 23

Nurturing Creativity and Innovation (cont.) Unleashing Your Creativity Creativity can be hampered in a variety of ways. Researchers have identified ways that creativity is blocked:  Information overload  Unproductive thought processes  Emotional blocks  Cultural blocks  Environmental blocks Chapter 6 Effective Decision Making: Your Competitive Advantage 24

Nurturing Creativity and Innovation (cont.) Unleashing Your Creativity (cont.) Information overload is caused by:  Minds that are cluttered with trivia  Failure to use all senses Unblock by:  Changing activities or environment  Using senses as inputs into creative process Chapter 6 Effective Decision Making: Your Competitive Advantage 25

Nurturing Creativity and Innovation (cont.) Unleashing Your Creativity (cont.) Unproductive thought processes:  Inability to isolate real source of a problem  People see only what they want to see Unblock by:  Looking at the “big picture”  Looking at every angle Chapter 6 Effective Decision Making: Your Competitive Advantage 26

Nurturing Creativity and Innovation (cont.) Unleashing Your Creativity (cont.) Unproductive thought processes:  Inability to isolate real source of a problem  People see only what they want to see Unblock by:  Looking at the “big picture”  Looking at every angle Chapter 6 Effective Decision Making: Your Competitive Advantage 27

Nurturing Creativity and Innovation (cont.) Unleashing Your Creativity (cont.) Emotional blocks:  Fear of taking a risk or making a mistake  Being overly critical  Fear of change Unblock by:  Learning to tolerate ambiguity and change  Unlocking your unconscious mind  Learning to distinguish what is feasible from what is not Chapter 6 Effective Decision Making: Your Competitive Advantage 28

Nurturing Creativity and Innovation (cont.) Unleashing Your Creativity (cont.) Cultural blocks:  Some cultures value conformity over creativity  Some disapprove of idleness, intuition, and humor Unblock by:  Allowing your mind to “float” creatively  Maintaining a balance between intuition and logic  Allowing for humor and laughing Chapter 6 Effective Decision Making: Your Competitive Advantage 29

Nurturing Creativity and Innovation (cont.) Unleashing Your Creativity (cont.) Environmental blocks  Lack of trust and cooperation among colleagues and superiors  Fear of jeopardizing work harmony Chapter 6 Effective Decision Making: Your Competitive Advantage 30

Nurturing Creativity and Innovation (cont.) Unleashing Your Creativity (cont.) Steps toward a creative workplace: 1. Help people see the purpose of what they do. 2. Expect a lot. 3. Tell employees what you expect, not how to do it. 4. Realize that people are different. 5. Be available to employees. 6. Get the word out in 24 hours or less. 7. Provide the proper tools. 8. Say “thanks” and mean it. Chapter 6 Effective Decision Making: Your Competitive Advantage 31

Nurturing Creativity and Innovation (cont.) Turning Creativity into Innovation Creativity is useless to organizations unless innovation occurs. Knowing how to present ideas successfully and get others to act on them is a crucial skill. Chapter 6 Effective Decision Making: Your Competitive Advantage 32

Nurturing Creativity and Innovation (cont.) Turning Creativity into Innovation To present new ideas effectively:  Champion your idea.  Be enthusiastic and willing to take reasonable risks.  Be persistent; don’t get discouraged.  Sell your ideas using communication and networking skills.  Share information and share credit. Chapter 6 Effective Decision Making: Your Competitive Advantage 33

Nurturing Creativity and Innovation (cont.) Turning Creativity into Innovation To stimulate creativity among employees:  Suspend judgment.  Accept a reasonable amount of failure.  Offer constructive criticism.  Tolerate some different behavior. Chapter 6 Effective Decision Making: Your Competitive Advantage 34

Problems and Solutions A problem is “a puzzle looking for an answer,” or a disturbance or unsettled matter that requires a solution if the organization or person is to function effectively. Chapter 6 Effective Decision Making: Your Competitive Advantage 35

Problems and Solutions (cont.) Types of Problems and Their Resolution Three types of problems:  Occurring now—must be addressed now  Expected in the future—plans must be made for dealing with them in the future  Urgent and foreseen in the future—action must be taken immediately to prevent their developing Chapter 6 Effective Decision Making: Your Competitive Advantage 36

Problems and Solutions (cont.) Types of Problems and Their Resolution (cont.) Steps in solving problems:  Identify and define the problem.  Generate ideas; use brainstorming to generate alternative solutions.  Evaluate alternatives for practicality.  Determine a plan of action.  Implement the solution.  Evaluate results. Follow up and modify actions. Chapter 6 Effective Decision Making: Your Competitive Advantage 37

Key Terms rule Group think Consensus DSS (decision support systems) Critical thinking Fact Opinion Context Stereotypes Innovation Chapter 6 Effective Decision Making: Your Competitive Advantage 38

Key Terms (cont.) Preparation Concentration Incubation Illumination Verification or elaboration Problem Brainstorming Chapter 6 Effective Decision Making: Your Competitive Advantage 39