Decision Making and Creativity McGraw-Hill/Irwin McShane/Von Glinow OB 5e Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Decision Making at Google Google is a hotbed of creativity and innovation by giving staff 20 percent of their time to work on pet projects, using evidence-based experiments to test ideas, and involving employees in organizational decisions. 7-2

Decision Making Defined Decision making is a conscious process of making choices among one or more alternatives with the intention of moving toward some desired state of affairs. 7-3

Rational Choice Decision Process 7-4

Rational Choice Decision Process Identify problem/opportunity Symptom vs problem Choose decision process e.g. (non)programmed Develop/identify alternatives Search, then develop Choose best alternative Subjective expected utility Implement choice Evaluate choice 7-5

Problem Identification Process Problems and opportunities are not announced or pre-defined Use logical analysis and nonconscious emotional reaction during perceptual process 7-6

No Problem, Houston? NASA’s space shuttle Columbia disintegrated during re-entry, killing all seven crewmembers. A special accident investigation board concluded that NASA’s middle management continually resisted attempts to recognize that the Columbia was in trouble, and therefore made no attempt to prevent loss of life. 7-7

Problem Identification Challenges Stakeholder framing Perceptual defense Mental models Decisive leadership Solution-focused problems 7-8

Identifying Problems Effectively Be aware of perceptual and diagnostic limitations Fight against pressure to look decisive Maintain “divine discontent” (aversion to complacency) Discussing the situation with colleagues -- see different perspectives 7-9

Making Choices: Rational vs OB Views Rational Choice Paradigm Assumptions Observations from Organizational Behavior Goals are clear, compatible, and agreed upon Goals are ambiguous, conflicting, and lack agreement People are able to calculate all alternatives and their outcomes People have limited information processing abilities People evaluate all alternatives simultaneously People evaluate alternatives sequentially more 7-10

Making Choices: Rational vs OB Views Rational Choice Paradigm Assumptions Observations from Organizational Behavior People use absolute standards to evaluate alternatives People evaluate alternatives against an implicit favorite People make choices using factual information People make choices using perceptually distorted information People choose the alternative with the highest payoff (SEU) People evaluate alternatives sequentially 7-11

Biased Decision Heuristics People have built-in decision heuristics that bias evaluation of alternatives Anchoring and adjustment – initial information (e.g., opening bid) influences evaluation of subsequent information Availability heuristic – we estimate probabilities by how easy we can recall the event, but other factors influence ease of recall Representativeness heuristic -- we estimate probabilities by how much they represent something (e.g. stereotypes) in spite of better probability info 7-12

Paralyzed by Choice Research has found that when decision makers are presented with more options, they are less likely to make any decision at all. This paralysis of choice occurs even when there are clear benefits of selecting any alternative (such as joining a company retirement plan). 7-13

Emotions and Making Choices Emotions form preferences before we consciously evaluate those choices Moods and emotions influence how well we follow the decision process We ‘listen in’ on our emotions and use that information to make choices 7-14

Intuitive Decision Making Ability to know when a problem or opportunity exists and select the best course of action without conscious reasoning Intuition as emotional experience Gut feelings are emotional signals Not all emotional signals are intuition Intuition as rapid nonconscious analysis Uses action scripts 7-15

Making Choices more Effectively Systematically evaluate alternatives against relevant factors Be aware of effects of emotions on decision preferences and evaluation process Scenario planning 7-16

Postdecisional Justification Tendency to inflate quality of the selected option; forget or downplay rejected alternatives Results from need to maintain a positive self- identity Initially produces excessively optimistic evaluation of decision 7-17

Escalation of Commitment The tendency to repeat an apparently bad decision or allocate more resources to a failing course of action Four main causes of escalation: Self-justification Prospect theory effect Perceptual blinders Closing costs 7-18

Evaluating Decisions More Effectively Separate decision choosers from evaluators Establish a preset level to abandon the project Find sources of systematic and clear feedback Involve several people in the evaluation process 7-19

Involvement at Thai Carbon Black Thai Cabon Black, the Thai-Indian joint venture, relies on employee involvement to boost productivity and quality. Employees submit hundreds of suggestions in little red boxes located around the site Participatory management meetings are held every month 7-20

Employee Involvement Defined The degree to which employees influence how their work is organized and carried out Different levels and forms of involvement 7-21

Employee Involvement Model Potential Involvement Outcomes Employee Involvement Better problem identification Synergy produces more/better solutions Better at picking the best choice Higher decision commitment Contingencies of Involvement 7-22

Contingencies of Involvement Higher employee involvement is better when: Decision Structure Problem is new & complex (i.e nonprogrammed decision) Knowledge Source Employees have relevant knowledge beyond leader Decision Commitment Employees would lack commitment unless involved Risk of Conflict Norms support firm’s goals Employee agreement likely 7-23

Going for WOW at Nottingham-Spirk Team members at Nottingham-Spirk Design Associates Inc. give coworker Craig Saunders (standing) a “WOW” rating for one of the firm's creative products, the SwifferVac. Nottingham-Spirk’s work environment supports creativity. 7-24

Creativity Defined Developing an original idea that makes a socially recognized contribution Applies to all aspects of the decision process – problems, alternatives, solutions 7-25

Creative Process Model Verification Insight Incubation Preparation 7-26

Characteristics of Creative People Above average intelligence Persistence Relevant knowledge and experience Independent imagination traits Higher openness to experience personality Lower need for affiliation motivation Higher self-direction/stimulation values 7-27

Creative Work Environments Learning orientation Encourage experimentation Tolerate mistakes Intrinsically motivating work Task significance, autonomy, feedback Open communication and sufficient resources Team competition and time pressure have complex effect on creativity 7-28

Creative Activities Review abandoned projects • Explore issue with other people Redefine the Problem • Storytelling • Artistic activities • Morphological analysis Associative Play • Diverse teams • Information sessions Internal tradeshows Cross- Pollination 7-29

Decision Making and Creativity McGraw-Hill/Irwin McShane/Von Glinow OB 5e Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Solutions to Creativity Brainbusters McGraw-Hill/Irwin McShane/Von Glinow OB 5e Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Double Circle Problem 7-32

Nine Dot Problem 7-33

Nine Dot Problem Revisited 7-34

Word Search FCIRVEEALTETITVEERS 7-35

One Hour to Burn Completely Burning Ropes After first rope burned i.e. 30 min. One Hour to Burn Completely 7-36