Steps in Decision Making Problem Identification (need Goal Consensus) Monitor the decision environment Define the problem Specify decision objectives Diagnose the problem Problem Solution (need Technical Knowledge) Develop alternative solutions Evaluate alternatives Choose the best alternative Implement the chosen alternative

Contingency Framework GOAL CONSENSUS (Problem Identification) HIGH LOW HIGH 1 2 INDIVIDUAL: INDIVIDUAL: RATIONAL APPROACH COMPUTATION BARGAINING COALITION FORMATION ORGANIZATION: ORGANIZATION: MANAGEMENT SCIENCE CARNEGIE MODEL TECHNICAL KNOWLEDGE (Problem Solution) 3 4 INDIVIDUAL: INDIVIDUAL: JUDGMENT TRIAL AND ERROR BARGAINING, JUDGMENT INSPIRATION, IMITATION ORGANIZATION: ORGANIZATION: INCREMENTAL DECISION PROCESS MODEL CARNEGIE , INCREMENTAL PROCESS MODELS, EVOLVING INTO GARBAGE CAN MODEL LOW

Garbage Can Model Extreme Problem Uncertainty Streams of Events i.e., low goal consensus and low technical knowledge Streams of Events Problems Solutions Participants Choice opportunities

Garbage Can Model: Implications Solutions may be proposed to problems that do not exist. Choices may be made without solving problems. Problems persist without being solved. A few problems are solved.

Escalation of Commitment Escalation occurred when the British government continued funding the Concorde supersonic jet long after its lack of commercial viability was apparent. Some scholars now refer to escalation of commitment as the “Concorde Fallacy.” Causes: Gambler’s fallacy Self-justification Sunk costs © Corel Corp. With permission

Framing To prevent the way a problem is presented (framing) from biasing the decision: Try to look at problem in different ways Re-word it Put yourself in the position of other people Leave the problem and come back to it later

Group Decision Making ADVANTAGES: More background knowledge More alternatives generated More understanding of the decision More support for decision Helps fulfill social needs DISADVANTAGES: Time consuming, inefficient Ineffective Compromise decisions Groupthink, social pressure, conflict Lack of clear responsibility 23

Conditions for Groupthink Team leader’s opinion is known Team is highly cohesive Team is isolated from outside influences Team has recent decision failures

Creative Organizations Decentralized / Low Bureaucracy Open channels of communication Creative people identified by tests, past achievements Free time to create Freedom to choose problems Assignment of nonspecialists to problems Long-time orientation (Resources allocated without expectation of immediate payoff) Tolerate Failures Reward Successes 20

Creative People Background Knowledge Curiosity Open-mindedness Self-Confidence Not afraid to be different Persistence Relaxed and playful attitude 19

Increasing Your Creativity Mental Exercises Keep Optimistic Attitude Speak to Lead Users Maintain an Idea Notebook 19

Improving Decision-Making Effectiveness Work on enhancing your creativity Learn from past decisions, but don’t waste time regretting past Distinguish between idea getting and evaluating Seek advice, when practical As a group leader, don’t dominate the discussion When possible, “sleep on” decisions, but don’t procrastinate beyond when a decision should be made 27