1 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition. 0 T E N Decision Making and Creativity C H A P T E R 1

2 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Decision Making & Creativity at G.A.P Creativity and astute decision making have helped Bruce Poon Tip (shown) and his company, G.A.P Adventures, to become an innovator in the travel industry Courtesy of G.A.P Adventures

3 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Decision Making Defined Conscious process of making choices among one or more alternatives with the intention of moving toward some desired state of affairs Courtesy of G.A.P Adventures

4 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition 3. Develop alternatives 1. Identify problem 2. Choose decisionstyle Rational Decision Making Model 4. Choose best solution 5. Implement solution 6. Evaluate decision

5 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Problem Identification Process Problems and opportunities are not announced or pre-defined –need to interpret ambiguous information Involves both rational and emotional brain centres –probably need to pay attention to both in problem identification

6 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Famous Missed Opportunities A Knight’s Tale was a box office success, yet most Hollywood studios rejected Brian Helgeland’s proposal. They failed to see the appeal of a film about a lowly squire in 14th century England who aspires to be a knight, set to 1970s rock music and reflecting contemporary themes of youth, freedom, and equality. © Photofest

7 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Problem Identification Challenges Perceptual bias : –Imperfect perceptions –Selective attention mechanisms –Influence from others –Mental models Diagnostic skills : –Defining problems in terms of solutions © Photofest

8 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Identifying Problems Effectively Be aware of perceptual and diagnostic limitations Understand mental models Consider other perspectives Discuss the situation with colleagues © Photofest

9 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Making Choices: Rational vs OB Views ProcessingInformation Evaluation Timing Rational: People can process all information Rational: All choices evaluated simultaneously Goals Rational: Clear, compatible, agreed upon OB: Ambiguous, conflicting, lack agreement OB: People process only limited information OB: Choices evaluated sequentially more

10 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Making Choices: Rational vs OB (con’t) Info Quality Decision Objective Rational: People rely on factual information Rational: Maximization -- the optimal choice Standards Rational: Evaluate against absolute standards OB: Evaluate against implicit favourite OB: Rely on perceptually distorted information OB: Satisficing -- a “good enough” choice

11 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Intuitive Decision Making Ability to know when a problem or opportunity exists and select the best course of action without conscious reasoning Conduit for tacit knowledge Use intuition to complete rational process

12 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Choosing Solutions Effectively Systematically evaluate alternatives Balance emotions and rational influences Scenario planning © Corel Corp. With permission

13 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Escalation of Commitment Escalation of commitment occurred when the British government continued funding the Concorde supersonic jet long after it ’ s lack of commercial viability was apparent. Some scholars refer to escalation of commitment as the “ Concorde fallacy. ” © Corel Corp. With permission

14 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Escalation of Commitment Causes Self-justification Gambler’s fallacy Perceptual blinders Closing costs © Corel Corp. With permission

15 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Employee Involvement Defined The degree that employees share information, knowledge, rewards and power throughout the organization –active in decisions –employees influence how their work is organized and carried out

16 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition HighMediumLow Levels of Employee Involvement High involvement –Employees have complete decision making power (e.g.. SDWTs) Full consultation –Employees offer recommendations (e.g.. gain sharing) Selective consultation –Employees give information, but don’t know the problem

17 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Employee Involvement Model Potential Involvement Outcomes Contingencies of Involvement Employee Involvement Better problem identification More/better solutions generated Best choice more likely Higher decision commitment

18 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Contingencies of Involvement Knowledge Source Decision Commitment Employees have relevant knowledge beyond leader Employees would lack commitment unless involved Risk of Conflict Norms support firm’s goals Employee agreement likely Decision Structure Problem is new & complex (i.e nonprogrammed decision) Employee involvement is better when:

19 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Preparation Incubation Insight Verification Creative Process Model

20 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Creativity at Research in Motion Through his persistence, Mike Lazardis (shown) helped Research in Motion to become a leader in wireless communications. “[He] keeps grinding towards his goal until he gets there,” says one observer. R. Koza, CP/K-W Record

21 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Characteristics of Creative People Above average intelligence Persistence Relevant knowledge and experience Inventive thinking R. Koza, CP/K-W Record

22 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Supporting Creativity Learning orientation –Encourage experimentation –Tolerate mistakes Intrinsically motivating work –Task significance, autonomy, feedback Open communication and sufficient resources

23 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Creative Activities Review abandoned projectsReview abandoned projects Ask other peopleAsk other people Redefine the Problem StorytellingStorytelling Artistic activitiesArtistic activities Morphological analysisMorphological analysisAssociativePlay Diverse teamsDiverse teams Information sessionsInformation sessions Internal tradeshowsInternal tradeshows Cross- Pollination

24 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Team Decision Making Constraints Time constraints –Time to organize/coordinate –Production blocking Evaluation apprehension –Belief that other team members are silently evaluating you Conformity to peer pressure –Suppressing opinions that oppose team norms

25 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Team Constraints: Groupthink Tendency in highly cohesive teams to value consensus at the price of decision quality More common when the team: –Is highly cohesive –Is isolated from outsiders –Team leader is opinionated –Faces external threat –Has recent failures –Team lacks clear guidance

26 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Team Constraints: Group Polarization Tendency for teams to make more extreme decisions than individuals alone Riskier options usually taken because of gambler’s fallacy -- believe they can beat the odds

27 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition General Guidelines for Team Decisions 1.Ensure neither leader nor any member dominates 2.Maintain optimal team size 3.Team norms encourage critical thinking 4.Introduce effective team structures

28 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Generating Constructive Conflict Form heterogeneous decision making team Ensure team meets often to face contentious issues Members should take on different discussion roles

29 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Rules of Brainstorming 1. Speak freely 2. No criticism 3. Provide many ideas 4. Build on others’ ideas

30 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Evaluating Electronic Brainstorming Benefits –Less production blocking –Less evaluation apprehension –More creative synergy –More satisfaction with process Problems –Too structured –Technology-bound –Candid feedback is threatening –Not applicable to all decisions

31 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Nominal Group Technique Describeproblem Individual Activity Team Activity Individual Activity Nominal Group Technique Write down possiblesolutionsPossiblesolutionsdescribed to others Vote on solutionspresented

32 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition. 0 T E N Decision Making and Creativity C H A P T E R 1

33 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Solutions to Creativity Brainbusters

34 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Double Circle Problem

35 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Nine Dot Problem

36 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Nine Dot Problem Revisited

37 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Word Search FCIRVEEALTETITVEERS

38 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.McShane 5th Canadian Edition Burning Ropes One Hour to Burn Completely After first rope burned i.e. 30 min.