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Decision Making and Learning

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Elevator Dilemma

• Imagine that the elevator in our business school building operates very slowly. Wait times are generally over 5 minutes, and sometimes as long as 15 minutes. People pace the hallway, repeatedly pressing the call button and making bitter jokes about inefficiency. Both tenants and visitors are also complaining to building administrators.

• As a group, please decide how best to deal with this situation. You’ll have about ten minutes to brainstorm, select one or two ideas, and develop them into a brief proposal.

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Decision Making in Organizations

Satisficing—limited information searches to identify problems and alternative solutions

Bounded rationality—a limited capacity to process information and generate

solutions

Organizational coalitions—solution chosen is a result of compromise, bargaining, and accommodation between coalitions

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Garbage Can Model

• takes the unstructured process to the extreme

• organizations are as likely to start making decisions from the solution side as from the problem side

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Decision makers may propose solutions to problems that do not exist:

They create a problem that they can address with solutions that are already available.

Decision making becomes like a “garbage can” in which problems, solutions, and the preferences of different individuals all mix together.

Garbage Can Model

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Organizational Learning

Learning organization—an organization thatpurposefully designs and constructs its structure, culture, and strategy to enhance and maximize the potential for organizational learning to take place

Managers need to encourage learning atfour levels: individual, group, organizational, and interorganizational

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Learning Strategies

There are two principal types :

Exploration—members search for and experiment with new kinds or forms of organizational activities and procedures.

Exploitation—members learn ways to refineand improve existing organizational activities.

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To Promote Organizational Learning

• Listen to dissenters

• Convert events into learning opportunities

• Experiment

• Create a learning culture

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Two Approaches to Knowledge Management

ExplicitProvide high-quality, reliable, and fast

information systems for access of codified reusable knowledge

TacitChannel individual expertise to provide creative advice

on strategic problems

KnowledgeManagement

Strategy

People-to-documents

Develop an electronic document system thatcodifies, stores,disseminates, and allowsreuse of knowledge

Invest heavily in informationtechnology, with a goal ofconnecting people withreusable codified knowledge

Data warehousing Knowledge mapping Electronic librariesIntranets, networks

Person-to-person

Develop networks forlinking people so thattacit knowledge canbe shared

Invest moderately ininformation technology,with a goal of facilitatingconversations and the ex-change of tacit knowledge

DialogueLearning histories and storytellingCommunities of practice

Technology

Mechanisms

Source: Based on Morten T. Hansen, Nitin Nohria, and Thomas Tierney,“What’s Your Strategy for Managing Knowledge?” Harvard BusinessReview, March-April 1999, 106-116.