1. Decision Making
We could use two films here, so we want lots of extra time. What to cut out?
Dangerous minds is good hopefully for expectancy and equity theory.
Dead Poets Society is internal / external

2. Today: Decision Making Exercise!
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Today: Decision Making Exercise!
It is approximately 10 a.m. in mid Aug and you have just crash landed in the Sonora desert in the Southwest US. The light twin engine plane, containing the bodies of the pilots, has completely burned. Only the air frame remains. None of the rest of you are injured.
The pilot was unable to notify anyone of your position before the crash, however, he had indicated that you were 70 miles S/SW from a mining camp which is the nearest known habitation, and that you were approx 65 miles off course.

3. Today: Decision Making Exercise!
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Today: Decision Making Exercise!
The immediate areas is quite flat and except for a few cacti appears to be rather barren. The last weather report indicated that the temp would reach 110 that day, which means that at ground level it will be almost 130.
You are dressed in light weight clothing – short sleeved shirts, pants, socks and street shoes. Everybody has a handkerchief. Collectively, your pockets contain $2.83 in change and $85 in bills, a pack of cigarettes and a ball point pen

4. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Your Task
Before the plane caught fire, your group was able to salvage 15 items. Your task is to rank these items according to their importance to your survival, with 1 being the most important and 15 being the least important.
You may assume:
The number of survivors is the same as the number on your team
You are the actual people in the situation
The team has agreed to stick together
All the items are in good condition

5. Step 1: Individual Rankings
BA Spring 2004 Lecture Notes, Part 1
Session Decisions
Step 1: Individual Rankings
Flashlight (4 battery size)
Jack knife
Sectional air map of the area
Large plastic raincoat
Magnetic compass
45 caliber pistol (loaded)
Parachute (red and white)
Compress kit with gauze
Bottle of salt tablets
Quart of water per person
Book, “Edible Animals of the Desert”
A pair of sunglasses per person
2 Quarts of 180 proof Vodka
1 top coat per person
A cosmetic mirror

6. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
Step 2: Group Rankings
Flashlight (4 battery size)
Jack knife
Sectional air map of the area
Large plastic raincoat
Magnetic compass
45 caliber pistol (loaded)
Parachute (red and white)
Compress kit with gauze
Bottle of salt tablets
Quart of water per person
Book, “Edible Animals of the Desert”
A pair of sunglasses per person
2 Quarts of 180 proof Vodka
1 top coat per person
A cosmetic mirror

7. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Step 3: Expert Rankings
1. Cosmetic mirror
Most powerful tool to communicate your presence
Can generate 5-7 million candle power of light
Reflected sunbeam can be seen beyond the horizon
If you had no other item, you would still have better than an 80% chance of being spotted within 24 hours.
2. Top coat per person
After communication system next priority is to slow down dehydration
40% of dehydration is moisture lost through perspiration
Perspiration reduced by avoiding the hot dry air from circulating next to skin
Ironically, the coats are the best way to do this
Without them survival time would be cut by at least a day

8. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Step 3: Expert Rankings
3. Water
You could probably survive 3 days with the first 2 items
Although water would not extend life much, it would hold off dehydration
Best to drink as soon as you get thirsty so that you can remain clear headed in the first day when important decisions have to be made and a shelter erected
Once dehydration begins, it would be impossible to reverse it with the amount available so rationing would be pointless
4. Flashlight
Only quick reliable night signaling device
Multiple use during the day: reflector and lens could be an auxiliary signal device or for starting fire, the battery container could be used for digging or as a water container in the distillation process (see raincoat)

9. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Step 3: Expert Rankings
5. Parachute
Both shelter and signaling device
Use cactus as tent pole
Double or triple folding could provide shade enough to reduce temp 20%
6. Jackknife
Although not as crucial as 1-5, has multiple uses: rigging shelter and cutting cactus for moisture
7. Raincoat
Can be used to build a solar still by digging a hole and placing the raincoat over it the temperature differential will extract moisture and produce condensation on the underside of the plastic
By placing a rock in the center of the hole, a cone shape can be formed to drip the condensation into the flashlight container
Up to a quart can be made each day, but the energy required would likely outweigh the benefits

10. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Step 3: Expert Rankings
8. Gun
Sound signaling device (international distress 3 shots in rapid succession)
Bullets: quick fire starter
Butt of pistol as a hammer
Disadvantages: impatience, irritability and irrationality are linked with dehydration and guns are dangerous tools
Hunting useless, hard to aim and eating protein increases dehydration
9. Sunglasses
Replaceable by handkerchief and shelter of parachute, but still makes life more comfy
10. Compress kit with gauze
Because of low humidity and dehydration bleeding is unlikely
Materials could be used as rope or for further protection from the sun

11. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Step 3: Expert Rankings
11. Magnetic Compass
Bad idea to walk!
Possible to use as auxiliary signaling device
12. Sectional Air Map of Area
Again….bad idea to go anywhere!
Firewood or toilet paper
Head cover or shade
13. Book on Eating Animals in the Desert
Hunger much less of a problem than dehydration
Conserving energy means hunting is counterproductive and eating protein takes up a lot of water
Rule of thumb, eat only when you have lots of water
Desert animals are rare, hard to see

12. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Step 3: Expert Rankings
14. Vodka
Booze dehydrates
In this situation it would be lethal
Only use as a coolant, fire, or the empty bottle
15. Salt Tablets
Huge myths about their value
Without lots of extra water, the effect would be like drinking sea water

13. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
Step 4: Calculate Score
Item
Your Rank
Group Rank
Expert Rank
Individual Score: Difference between Individual and Expert
Team Score:
Difference between group and Expert
Calculate and put up on board:
Average individual scores on your team (all individual scores divided by the number of team members)
Team score
Gain score: the difference between the team and the average individual score
If the team score is lower than avg. ind. the gain is “+”, if it is higher it is “-”
Lowest individual score
Number of individual scores lower than the team score

14. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
DISCUSSION
To what extent did the group discussion change the accuracy of the answers?
Which behaviors helped/hindered the decision making process?
What happened if a person had a very accurate individual score but was not very persuasive in the group?
What happened if a person had a poor individual score and was very persuasive in the group?
Did any conflict arise? How was it managed?

15. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
DISCUSSION
Leader
Vote? Majority wins?

16. Summary Group decision making = better decisions
Individual decision making = faster decisions

17. BA 210 - Spring 2004 Lecture Notes, Part 1
Have a video here Apollo 13.
Talk about recognizing the existence of a problem / about need for a decision
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Decision Making

18. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Objective
Central task of managers: making decisions
Objective: understand how we make decisions

19. Types of Problems and Decisions
BA Spring 2004 Lecture Notes, Part 1
Session Decisions
Types of Problems and Decisions
Poorly-Structured Problems:
New, unusual problems for which information is ambiguous or incomplete.
Well-Structured Problems: Easily defined, familiar and straightforward.
Non-Programmed Decisions:
A unique decision to address (poorly-structured) problems needing customized solutions.
Programmed Decisions:
A “routine” (rate, procedure or policy) used to address repetitive (structured) problems
Minimize need for discretion
Facilitate efficiency
Most real-world decisions have elements of both.

20. Rational Decision Making
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Rational Decision Making
Definition: Decisions that are optimal
Value-maximizing
Select by analyzing alternatives and picking best solution

21. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
Rational Decision Making
3. Search for alternative solutions
4. Compare and evaluate alternative solutions
1. Define the issue
2. Set goals
External and Internal environment forces
7. Follow up and control
6. Implement the solution selected
5. Choose among alternative solutions

22. Choosing a University….
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Choosing a University….
Does your observations map onto these rational decision stages?
Which did you rush through?
Would you make any modifications to this model according to your experience?

23. The Feasibility of Rational Decisions
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
The Feasibility of Rational Decisions
It’s desirable, but lets look closer…
Assumptions of the model are very demanding
Managerial decisions seldom meet all the tests
Do we always want to make the best decision?

24. Assumptions of Rational Decisions
Here, the perfect example is taking a job.
Some people can approach this on individual elements … but if we roll through, we see that this is really tough to achieve.
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Assumptions of Rational Decisions
Rational
Decision
Making
Problem is
clear and
unambiguous
Single, well-
defined goal
Alternatives
& consequences
are known
Preferences
are clear
are constant
and stable
No time or cost
constraints exist
Final choice
will maximize
payoff

25. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Bound Rationality
Bounded rationality = behaving rationally within limitations imposed by cognitive abilities and complexity of environment.
Satisficing - Searching for and choosing an acceptable, or satisfactory response
Choosing “good enough” rather than trying to make the optimal decision
Intelligent satisficing means working on the decision only until the costs of further analysis outweigh the benefits from improving the decision.

26. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
Why Satisficing?
Satisficing decision
Uncertainty,
Risk, Ambiguity
Information
processing
biases
Limited
Information
Perceived problem

27. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
BRD: Key concepts
Certainty:
Outcome of every alternative is known
Risk:
Able to estimate the probability of outcomes stemming from each alternative
Uncertainty:
Not certain about outcomes and unable to estimate probabilities
Ambiguity:
Not certain about what the meaning of the data is in the first place
Limited Information:
Search costs & time constraints prevents gathering information on all alternatives & outcomes

28. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
BRD and Heuristics
Heuristics: Rules of thumb to deal with complex situations.
Saves effort if the heuristic is right
If heuristic is wrong, can have cognitive bias – systematically repeated errors that arise from the decision-making process in use.

29. BA 210 - Spring 2004 Lecture Notes, Part 1
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Availability Bias
Availability Bias: The frequency of an event is often assessed with how easily it is brought to mind.
Why? Ease of Recall:
E.g., Judging if a list of 100 names has more men or women is influenced by the number and gender of famous names.
Incidents that are hard to imagine are underestimated
E.g., Winning the lottery

30. Representativeness Bias
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Representativeness Bias
Incorrectly generalizing from a small sample or a single incident.
Why? Insensitivity to prior probabilities:
“Steve is very shy and withdrawn, invariably helpful, but with little interest in people, or in the world of reality.  A meek and tidy soul, he has a need for order and structure, and a passion for detail.” Is Steve a librarian, or a farmer?
Why? Misconception of chance:
Gamblers fallacy, if you hit 5 reds in a row in roulette, is it more likely for the next to be black?

31. Additional Key Cognitive Biases
BA Spring 2004 Lecture Notes, Part 1
Session Decisions
Additional Key Cognitive Biases
Illusion of Control:
The tendency to overestimate one’s own ability to control activities and events.
E.g., Throwing dice: people tend to throw harder for high numbers and softer for low numbers.
Escalating Commitment:
Committing considerable resources to a project and then committing more even if evidence shows the project is failing.
You call for information and are put on hold. How long do you stay on hold?
The car broke down last month and it was repaired.  You have a new problem.  Do you continue to put money in the lemon of a car?

32. Groups and Decision-Making
BA Spring 2004 Lecture Notes, Part 1
Session Decisions
Groups and Decision-Making
Advantages of group decision-making (assuming the group is working well):
Better decision:
More complete information
More creative decision:
More and better alternatives
Especially when expertise is diverse
The decision is more likely to be perceived as legitimate
Members are more likely to be committed to the decision 1 2 3 4

33. Groups and Decision-Making
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
Groups and Decision-Making
Disadvantages of group decision-making
Even if the group is working well:
Group decision-making is time consuming
And if the group is not working particularly well:
Members may feel railroaded by a minority
Who is responsible may be ambiguous
Members may feel pressure to conform even though they disagree
“Groupthink:” conformity marked by withholding different or unpopular views in order to give the appearance of agreement

34. So when do groups make better decisions than individuals?
Session Decisions
BA Spring 2004 Lecture Notes, Part 1
So when do groups make better decisions than individuals?
Criteria of Effectiveness Groups Individuals
Accuracy x
Speed x
Creativity x
Degree of acceptance x
Efficiency x
Roll through why. Groups have more information and they can use it in creative ways; but they take more time to process it so if an individual can do it, it is more efficient.

35. Summary Different types of problems and decisions
Rational and boundedly rational decision making models
Biases and heuristics
Groups and decision making

36. Teams

37. Objectives Explore the elements of the management of teams
Design
Development
Process
Discuss the challenges of successfully managing teams

38. Groups vs. Teams Group Team
Two or more people who interact with each other to accomplish certain goals or meet certain needs.
Team
A group whose members work intensely with each other to achieve a specific, common goal.
All teams are groups but not all groups are teams.
The ideal definition of a team is hard to achieve.

39. Types of work teams
Functional Team: A manager and subordinates from a particular functional area or department.
Cross-functional Team: A group of individuals who normally work within different functional areas but who are brought together to accomplish a task.
Self-managing Team: A formal group of employees that operate without a manager and are responsible for a complete work process or segment.

40. ESSENTIALS OF TEAM DESIGN
Team design is the most important thing to get right
Goals
Define team’s goal to gain focus and urgency
Size
Smallest team that can do the job
Leadership
Choose an enabling, credible and powerful leader
Rewards
Reward the team not the individual

41. Design: Size Matters Group size affects how a group performs.
Large groups - good for getting diverse input
Small groups - good at making use of information
Normally, small groups (say 2 to 9 members) interact better and tend to be more motivated.
Optimal group size 5-7
Free Rider Tendency:
Individual members reduce their effort and contribution as groups increase in size, because responsibility becomes dispersed.
Reduce by:
Keeping the group no larger than necessary
Make individual efforts identifiable and accountable.
Emphasize each member’s valuable contributions.

42. Essentials of Team Process
Stages of Development
Conflict
Cohesiveness
Norms

43. Teams develop through stages
High
Adjourning
Performing
Degree of Maturity
Norming – “Norms”
Storming – “Control”
Forming – “Existence”
Low
Start
End
Time Together

44. The Stages Forming Storming Norming Performing
Aimed at answering key questions: Who are We? What do we do? Who is our leader?
Storming
Conflict arises through the promotion of agendas and challenges to leadership.
Norming
Characterized by cooperation, consensus, and shared understanding of goals and rules.
Performing
Focus on achievement of goals.

45. Examples: Group Development
In what stage does each task occur:
A consensus develops as to group goals and how the group should work to get there.
Feelings of friendship and camaraderie arise.
The real work gets done.
There is conflict over leadership and how to achieve group goals.
There is conflict because some members don’t want to submit to the demands of other group members.
Members try to reach a common understanding of what the group’s goal should be and how to get there.

46. Conflict Management
Conflict - perceived incompatible differences resulting in interference or opposition
Task Conflict
Relationship Conflict
Process Conflict
Functional vs. Dysfunctional conflict
Conflict can help group performance!
Functional conflict resolution occurs when the conflict is settled by compromise (give and take) or collaboration (finding a way to make both parties better off).
Low-Med levels Functional
Usually Dysfunctional
Low levels Functional

47. Conflict and Performance
The same goldilocks curve. You see the groups internal process – you want it to be self-critical, innovative. You don’t want apathy, stagnation, and you don’t want disruption and chaos.

48. Group Cohesiveness Cohesiveness
Degree to which members are attracted to a group and share the group’s goals
Usually good for performance, unless group’s goals are not aligned with organization’s goals.
Build cohesiveness through:
Smaller groups
Group identity – name the group, engage in competition with other groups.
Success – small initial successes

49. Norms, Conformity and Deviance
Acceptable standards or expectations that are shared by the group’s members
E.g., Working hours, behavior rules, & output quotas
Conformity:
Compliance with norms
Members conform to obtain rewards, imitate respected members, and because they feel the behavior is right.
When a member deviates, other members tend to try to make them conform, expel them, or change the group norms to accommodate.
Desire for acceptance by group makes some members susceptible to conformity pressures
Deviance is not all bad.
Excessive conformity reduces flexibility.
Deviance allows for new ideas in the group.

50. Deviance and Performance
The goldilocks relationship – just the right amount of deviance. Too much conformity = inflexibility, don’t change even when it makes sense. Too little conformity, the group doesn’t control its member’s behavior. Example of the receptionist at a dental office.