14–1 Manager as Decision Maker Models of Managerial Decisions Making: Prof. Simon 2.Non-Rational Model Models suggesting information gathering and processing limitation make it difficult for managers to make optimal decisions

14–2 Manager As Decision Maker Satisfice Accept solutions that are “Good Enough” Escalation of Commitment Increased commitment to a previous decision despite evidence that it may have been wrong

14–3 Non Rational Models 1.Satisfying Model Managers seek alternatives only until they find one which looks satisfactory, rather than seeking an optimal decision.

14–4 Factors Influencing the Satisfying Decision Limited Search Inadequate Information Processing Bias

14–5 Limited ability to Understand all factors Time Constraints Inadequate base of Information Limited memory of Decision-Makers Poor perception of factors to be considered in decision process Satisfying Decision Making

14–6 Non Rational Models 2.Incremental Model Managers makes the smallest response possible to reduce the problem to at least a tolerable level.

14–7 Non Rational Models 3.Rubbish bin Model Managers behave in virtually (by use of mind, memory, experience, knowledge, intuition) a random way in making non-programmed decisions.

14–8 Intuitive Decision Making Subconscious process of making decisions on the basis of experience and accumulated judgment.

14–9 What is Intuition?

14–10 The MD’s Diary I would like to think that most decisions in organization are made in the team environment. I say this while realizing that there always remains the need for a final point of arbitration, and in this organization that rest with me. However, generally decisions are not reached unilaterally, but through the broad involvement of all the stakeholders.

14–11 Group Decision Making Advantages 1.Moe information available 2.More alternative solutions 3.Increases solution, understanding & acceptance 4.Builds members knowledge & skill base Disadvantages 1.Time consuming 2.Delays & ill feeling possible (criticize the idea not the person) 3.Domination by individuals 4.Risk/disease of group thinking

14–12 Creativity In Decision Making Creativity is the cognitive process of developing an idea, concept, commodity or discovery viewed as novel by its creator or target audience. “Idea brings money but money doesn’t bring idea”

14–13 Creativity In Group Decision Making 1.Brainstorming 2.Nominal Group Technique 3.Delphi Technique 4.Scenario Analysis

14–14 Enhancing Creativity In Group Decision Making 1.Brainstorming Technique i.What features would you like cars to have 10 years from now? Rules: i.Criticism is ruled out ii.All ideas are welcomed iii.Quantity is wanted iv.Combinations and improvement are required

14–15 Enhancing Creativity In Group Decision Making 2.Nominal Group Technique Enhancing creativity and decision making by integrating individuals working independently and then presenting it for group interaction and discussion. Voting for best idea or Ranking!

14–16 Enhancing Creativity In Group Decision Making 3.Delphi Technique This technique is specifically used in log term planning. Basic Steps are: i.A questionnaire is sent to a group of experts ii.A summary of the first round is prepared iii.A summary of the second round is prepared

14–17 Enhancing Creativity In Group Decision Making 4. Scenario Analysis Reasons for using scenarios are: i.Provide a vide range of possibilities against which to evaluate strategies (analysis the current scenario and see the future scenario) ii.Provide a broad vision of possible events

14–18 Devil’s Advocacy i.Generate a potential solution ii.Assign a devil’s advocate to criticize iii.Present the critique of the solution to key decision makers iv.Gather additional information v.Decide whether to use, change, or not to use the originally proposed solution

14–19 Creativity In Decision Making Creativity also requires: 1.Convergent Thinking: Attempting to move logically to a problem solution. 2.Divergent Thinking: Generating new ways of viewing a problem and seeking a novel alternatives. 3.Vertical Thinking: Sequential and Rational Style. 4.Lateral Thinking: Step wise but not sequential.

14–20 Decision-Making Styles Types of Decision Makers  Directive  Use minimal information and consider few alternatives.  Analytic  Make careful decisions in unique situations.  Conceptual  Maintain a broad outlook and consider many alternatives in making long-term decisions.  Behavioral  Avoid conflict by working well with others and being receptive to suggestions.