Problem Solving and Decision Making CHAPTER 6 Problem Solving and Decision Making Andrew J. DuBrin Essentials of Management, 6/e South-Western College Publishing Copyright © 2003 Screen graphics created by: Jana F. Kuzmicki, PhD, Christian Brothers University 1

6.1 Learning Objectives Differentiate between programmed and nonprogrammed decisions. Explain the steps involved in making a nonprogrammed decision. Understand the major factors influencing decision making in organizations. Understand the nature of creativity and how it contributes to managerial work. Describe organizational programs for improving creativity. Implement several suggestions for becoming a more creative problem solver. Appreciate the value and potential limitations of group decision making. 2

Programmed and Nonprogrammed Decisions: A Comparison 6.2 Programmed and Nonprogrammed Decisions: A Comparison Programmed Decisions Nonprogrammed Decisions Repetitive, routine, frequent; decisions made according to specific procedures Novel, complex, difficult, infrequent; decisions require original thinking Depend on policies and rules Require creativity, intuition, tolerance for ambiguity Types of problems Proce-dures Business firm: Periodic reorders of inventory Health care: Procedure for admitting patients University: Necessary GPA for good academic standing Business firm: Diversification into new products and markets Health care: Purchase of experimental equipment University: Construction of new classrooms Examples 3

Steps in Problem Solving and Decision Making 6.3 Steps in Problem Solving and Decision Making “What really, really is our problem?” Identify and diagnose the problem “Let’s dream up some great ideas.” Develop creative alternatives “Some of these ideas are good; others are wacko.” Evaluate the alternative solutions “How really good was that idea?” Evaluate and control “Now let’s take action.” Implement the decision “This alternative is a winner!” Choose one alternative solution Adapted from Exhibit 6.1 4

Factors Influencing Decision Making 6.4 Factors Influencing Decision Making “I like risks and I’m really bright.” “Let’s wait before deciding.” Personality and cognitive intelligence “I’m great at hunches.” Intuition Procrastination “I’ve got integrity.” “I can read people great and control my emotions.” Decision Maker Emotional intelligence Values “Our backs are to the wall, and we disagree.” Quality of information Crisis and conflict “The IS group is feeding me great stuff.” Political considerations Degree of uncertainty “What does my boss want me to decide?” “Looks like a sure thing.” Adapted from Exhibit 6.2 5 5

Creativity! Establishing a Creative Atmosphere Involves. . . 6.5 Encouraging risk taking Allowing freedom Providing organizational support Allocating ample resources Establishing a Creative Atmosphere Involves. . . Providing challenges Providing encouragement Creativity! 6

Suggestions to Build Creativity 6.6 Suggestions to Build Creativity 1. Keep an idea notebook 2. Stay current in your field 3. Listen to other people 4. Learn to think in the five senses 5. Improve your sense of humor 6. Adopt a risk-taking attitude 7. Develop a creative mental set 8. Identify your most creative times 9. Be curious about your environment 10. Step back when faced with a creativity block 7

Suggestions for Improving Group Problem-Solving 6.7 Suggestions for Improving Group Problem-Solving 1. Have a specific agenda and adhere to it 2. Rely on qualified group members 3. Have the leader share decision-making authority 4. Provide summaries for each major point 5. Build consensus so the decision is more likely to be implemented 8

The Nominal Group Technique 6.8 The Nominal Group Technique 2. Leader presents a problem 6. Alternatives are rated and best-rated one is chosen 5. Group clarifies and evaluates all suggestions 3. Members write down ideas individually 1. Small group is assembled 4. Each participant presents one idea to group Adapted from Exhibit 6.6 9