“TRULY SUCCESSFUL DECISION-MAKING RELIES ON A BALANCE BETWEEN DELIBERATE AND INSTINCTIVE THINKING” MALCOLM GLADWELL Decision Making 1

2 Roadmap Definitions Types of decisions Models of decision making The decision making process Pros and cons of decision making Shortcuts and traps Toughest decision How to make better decisions

Decisions and Decision Making 3 Decision = choice made from available alternatives Decision Making = process of identifying problems and opportunities and resolving them Decision-making can be regarded as the cognitive process resulting in the selection of a belief and /or a course of action among several alternative possibilities. Every decision-making process produces a final choice that may or may not prompt action

4 Instance of Decision Making “Making warning systems more sensitive reduces the risk of surprise, but increases the number of false alarms, which in turn reduces sensitivity” “Travelling by car or bus is safe, but car is costly. Travelling by bus or bike is cheaper, but bike is unsafe and bus is slow” Spans from individual decisions to collective social decisions  Making breakfast  Electing president of the country  Moon landing

5 Organizational - Types of Decisions Programmed Decision  A decision that is repetitive and routine and can be made by using a definite, systematic procedure. Non-programmed Decision  A decision that is unique and novel. The Principle of Exception  “Only bring exceptions to the way things should be to the manager’s attention. Handle routine matters yourself.” Programmed Decisions Nonprogrammed Decisions Top Level in Organization Bottom Ill-structured Type of Problem Well-structured

Decision Making Models

7 Understanding Decision Making Puzzles, Problems, and Wicked Problems  A discrepancy between a desirable and an actual situation.  Well structured, ill-structured, and complex problems. Decision  A choice made between available alternatives. Decision Making  The process of developing and analyzing alternatives and choosing from among them. Judgment  The cognitive, or “thinking,” aspects of the decision- making process.

8 The Decision-Making Process  Define the problem.  Clarify your objectives.  Identify alternatives.  Analyze the consequences.  Make a choice.

Pros and Cons Advantages  Optimum solution  Low cost & high benefits Disadvantages  Time consuming  Availability of resources – availability bias  Communication issues  Ignore emotions  Emotional impacts 9

10 Decision-Making Shortcuts and Traps Using a Heuristic  Applying a rule of thumb or an approximation as a shortcut to decision making. Anchoring  Unconsciously giving disproportionate weight to the first information available. Adopting a Psychological Set  The tendency to rely on a rigid strategy or approach when solving a problem. Perception (Personal Bias)  The unique way each person defines stimuli, depending on the influence of past experiences and the person’s present needs and personality. Availability Bias  Depends on availability of knowledge and recourses Analysis Paralysis  Over analysis may leads to that a decision or action is never taken

Toughest Decision Made In Life 11 Selecting career path Was not the first interest Availability bias Optimum choice selected

12 How To Make Better Decisions 1. Increase Your Knowledge  Ask questions.  Get experience.  Use consultants.  Do your research.  Force yourself to recognize the facts when you see them (maintain your objectivity). 2. Use Your Intuition  A cognitive process whereby a person instinctively makes a decision based on his or her accumulated knowledge and experience.

13 How To Make Better Decisions (cont’d) 3. Weigh the Pros and Cons  Quantify realities by sizing up your options, and taking into consideration the relative importance of each of your objectives. 4. Don’t Overstress the Finality of Your Decision  Remember that few decisions are forever.  Knowing when to quit is sometimes the smartest thing a manager can do. 5. Make Sure the Timing Is Right

Summary Once you made a decision, don’t look back. Make it work. 14

THANK YOU 15