Decision Making And Creative Problem Solving

Decision Making And Creative Problem SolvingChapter 8Decision Making and Creative Problem Solving Every now and then, Im reminded that the difference between success and failure in business is often one decision. You make the right one, and you will survive. You make the wrong one, and you dont.

-Norm Brodsky,Entrepreneur WHAT IS DECISION MAKING?Is the process of identifying and choosing among alternative courses of action in a manner appropriate to the demands of the situation.The act of choosing implies that alternative courses of action must be:IdentifiedWeighedWeeded OutJudgment and discretion are fundamental to decision making.

The Challenges For Decision MakingAccording to a survey of 479 managers, 77% reported making more decisions during the previous years, and 43% said they had less time to make each of those decisionsTodays decision makers face a host of Four tough challengesDealing with Complex Streams of DecisionsThere are 8 intertwined factors contributing to decision complexity can help decision makers successfully navigate streamMultiple CriteriaIntangiblesRisk and uncertaintyLong-term implicationsInterdisciplinary inputPooled decision makingValue JudgmentsUnintended cinsequences Multiple CriteriaTypically, a decision today must satisfy a number of often-conflicting criteria representing the interest of different groupsA major challenge for todays decision makers is identifying stakeholders and laboring their conflicting interests.INTANGIBLESFactors such as customer goodwill, employee morale, increased bureaucracy and aesthetic appeal (example: negative reaction to a billboard or a scenic highway), although difficult to measure, often determine decision alternatives. Risk And UncertaintyAlong with every decision alternative goes the chance that it will fail in some way.Poor choices can prove costly yet the right decision can open up whole new worlds of opportunity because of the importance of the particular aspect of decision complexity. Long-term ImplicationsMajor decisions generally have a ripple effect with todays decisions creating the need for later sounds of decisions

Interdisciplinary InputDecision complexity is greatly increased when technical specialists such as lawyers, consumer advocates, tax advisers, accountants, engineers and production and marketing experts are consulted before making a decisionThis process can become even more complex and time consuming in traditional societies such as china.

Pooled Decision MakingRarely is a single manager totally responsible for the entire decision process.After pooled input, complex decisions wind their way through the organization, with individuals and groups interpreting, modifying, and sometimes resisting. Value JudgmentsAs long as decisions are made by people with differing backgrounds, perceptions, aspirations, and values, the decision-making process will be marked by disagreement over what is right or wrong, good or bad, and ethical or unethical.Unintended ConsequencesThe law of unintended consequences, according to an expert on the subject, states that you cannot always predict the results of purposeful action.In other words, there can be a disconnect between intentions and actual results. Although unintended consequences can be positive, negative ones are most troublesome and have been called the Frankenstein Monster Effect. Coping With UncertaintyAmong the valuable contributions of decision theorists are classification schemes for types and degrees of uncertainty.Managers are continually asked to make the best decisions they can, despite uncertainties about both present and future circumstances.Managers who are able to access the degrees of uncertainty in a situation-whether conditions are certain, risky or uncertain- are able to make more effective decisions. CertaintyA condition of certainty exists when there is no doubt about that factual basis of a particular decision, and its outcome can be predicted accurately.Much like the economic concept of pure competition, the concept of certainty is useful mainly as a theoretical anchor point for a continuum.In a world filled with uncertainties, certainty is relative rather than absolute. RiskA condition of risk is exist when a decision must be made on the basis of incomplete but reliable factual information.Reliable information, though incomplete, is still useful to managers coping with risk because they can use it to calculate the probability that a given event will occur and then to select a decision alternate with favorable odds.Two Basics Types Of ProbabilitiesObjective Probabilities- derived mathematically from reliable historical dataSubjective Probabilities- are estimated on the basis of ones past experience or judgment.Decision making based on probabilities is common in all areas of management today.UncertaintyA condition of uncertainty exists when little or no reliable factual information is available. Still, Judgmental or subjective probabilities can be estimatedDecision making under conditions of uncertainty can be both rewarding and nerve-racking for managers.Information Processing StylesResearchers have identified two general information styles:

Thinking Style

Intuitive Style. Thinking StyleThinking Style- managers rely predominantly on the thinking style tend to be logical, precise, and objective. They prefer routine assignments requiring attention to detail and systematic implementation

Intuitive Stylemanagers who predominantly intuitive find comfort in rapidly changing situations in which they can be creative and follow their hunches and visitors.They see things in complex patterns rather than as logically ordered bits and piecesThey typically rely on their own mental shortcuts and detours.

Avoiding Perceptual And Behavioral Decision TrapsBehavioral Scientists have identified some common human tendencies that are capable of eroding the quality of decision makingThere are 3 well documented onesFramingEscalationoverconfidenceThree well Documented OnesFraming Error is the tendency to evaluate positively presented information favorably and negatively presented information unfavorably.Escalation of Commitment Is the tendency of individuals and organizations to get locked into losing courses of action because quitting is personally and socially difficult. This decision making trap has been the Throwing good money after bad dilemma.Three well Documented OnesOverconfidence It is a common place and requires no formal definition. We need to comprehend the psychology of overconfidence because it can expose managers to unreasonable risks.Researchers have found a positive relationship between overconfidence and task difficulty.In other words, the more difficult the task, the greater the tendency for the people to be overconfident.Three well Documented OnesEasier and more predictable situations faster confidence, but generally not unrealistic overconfidencePeople may be overconfident about one or more of the following:Accuracy of input dataIndividualTeam or organizational abilityThe probability of success.

Making DecisionsIt stands to reason that if the degree of uncertainty varies from situation to situation, there can be no single way to make decisions. Managers do indeed make decisions in every conceivable wayOne of the oddest examples is how the stacked potato chips we know as Pringles got their own nameMaking Programmed DecisionsProgrammed Decisions are those that are repetitive and routineExamples include hiring decisions, billing decisions in a hospital, supply reorder decisions in a purchasing department , consumer loan in a bank and pricing decisions in a university bookstore.Managers tend to devise fixed procedures for handling these everyday decisions.Decision RuleDecision Rule is a statement that identifies the situation in which a decision is required and specifies how the decision will be madeEnable busy managers to make routine decisions quickly without having to go through comprehensive problem solving over and over againIt should be stated in If-then terms.Making Non programmed DecisionsNon-programmed Decisions- are those made in complex, important and non routine situations, often under new and largely unfamiliar circumstancesThis kind of decision is made much less frequently than programmed decisions.Examples of non-programmed decisions include deciding whether to merge with another company, how to replace an executive who died unexpectedly , whether a foreign branch should be opened and how to marked an entirely new king of product or serviceSix Questions need to be asked prior to making a non-programmed decisionWhat decision needs to be made?When does it have to be made?Who will decide?Who will need to be consulted prior to the making of the decision?Who will ratify or veto the decision?Who will need to be informed of the decision?A General Decision-Making ModelIt shows an idealized, logical, and rational model of organizational decision making

It describes how decisions can be made, but it does not portray how managers actually make decisions.Knowledge Management : A Tool for improving the Quality of DecisionsKnowledge Management is a powerful and robust concept that deserves a permanent place in management theory and practice.Authorities on the subject desire knowledge management (KM) as the development of tools, processes, systems, structures, and cultures explicitly to improve the creation, sharing, and the use of knowledge critical for decision-making.KM is at the heart of what organizational theorists call learning organizations.Two Types Of knowledgeTacit Knowledge

Explicit Knowledge TACIT KNOWLEDGETacit Knowledge is personal, intuitive, and undocumented information about how to skillfully perform tasks, solve problems, and make decisions. People who are masters of their craft have tacit knowledge( or deep smarts) accumulated through years of experience.

EXPLICIT KNOWLEDGEReadily sharable information because it is in verbal, textual , visual or numerical formIt can be found in presentations and lectures, books, and magazines (both hard copy and online), policy manuals, technical specifications, training programs, data bases, and software programs.In short, Explicit Knowledge is public ( to varying degrees), whereas tacit knowledge is private.Group-Aided Decision Making: A Contingency PerspectiveDecision Making, like any other organizational activity, does not take place in a vacuum.Decision Making is a highly social activity with committees, study groups, reviews panels, or project teams contributing a variety of ways.Collaborative ComputingA catchphrase for a new body of software and hardware that helps people work better together. A collaborative system creates an environment in which people can share information without the constraints of time and space.Collaborative applications include calendar management, video teleconferencing, computer teleconferencing, integrated team support for business meetings and group authoring.Group Involvement in Decisions5 aspects of the decision-making process can be assigned to groups:Analyzing the problemIdentifying components of the decision situationEstimating components of the decision situation Designing alternativesChoosing an alternativesThe Problem Of Dispersed AccountabilityThere is critical difference between group aided decision making and group decision making.1st instance, in the group does everything except make the final decision2nd instance, the group actually makes the final decisionManagers who choose the second route face a dilemma. Although a decision made by a group will probably reflect the collective experience and wisdom of all those involved, personal accountability is lost.The Problem Of Dispersed AccountabilityThe traditional formula for resolving this problem is to make sure that a given manager is personally accountable for a decision when the responsibility for it has to be traced.According to this line of reasoning, even when a group is asked to recommend a decision, the responsibility for the final outcome remains with the manager in charge.

The Problem Of Dispersed AccountabilityThere are 3 situations in which individual accountability for a decision is necessary:The decision will have significant impact on the success or failure of the unit or organization.The decision has legal ramifications (such as possible prosecution for price-fixing, antitrust, or product safety violations)A competitive reward is tied to a successful decision.Advantages and Disadvantages of Group-Aided Decision MakingVarious combination of positive and negative factors are encountered when a manager brings others into the decision making process.Are two or more heads actually better than one? The answer depends on the nature of the task, the ability of the contributions, and the form of interactionAdvantages and Disadvantages of Group-Aided Decision MakingAn Analysis of dozens of individual versus group performance studies conducted over a 61-year period led one researcher to the following conclusions:Groups tend to do quantitatively and qualitatively better that the average individualExceptional individuals tend to outperform the group, particularly when the task is complex and the group is made up of relatively low-ability people. Managerial CreativityDemands for creativity and innovation make the practice for management endlessly exciting (and often extremely difficult). Nearly all managerial problem solving requires a healthy measure of creativity as managers mentally take thing apart, rearrange the pieces in new and potentially productive configurations and look normal frameworks for new solutionsWhat is Creativity?Creativity reorganization of experience into new configurations.According to a management consultant specializing in creativity, Creativity is a function of knowledge, imagination and evaluationCreativity is often subtle and may not be readily apparent to the untrained eye.The greater our knowledge, the more ideas, patterns, or combinations we can achieve.What is Creativity?One pioneering writer on the subject isolated three overlapping domains of creativity:Art, Discovery and HumorThese have been called the Ah! reaction. The Aha! and the haha! reaction respectivelyThe Discovery (Aha!) variation is the most relevant to management.Workplace Creativity: Myth And Modern RealityRecent research has shattered a long-standing myth about creative employees. According to the myth, creative people are typically nonconformists.Thus, creative self-expression through unconventional chess and strange behavior does not necessarily translate into creative work.Todays managers are challenged to create an organizational culture and climate capable of evoking the often hidden creative talents of every employee.Learning To Be More CreativeCreative ability can be learned, in the sense that our creative energies can be released from the bonds of convention, lack of self-confidence and narrow thinking. We all have the potential to be more creative.10 Mental Locks by Roger von OechLooking for the right answer A given problem may have several right answers, depending on ones perspective.Always trying to be logical Logic does not prevail, given human emotions and organizational inconsistencies, ambiguity, and contradictionsStrictly following rules If things are to be improved, arbitrary limits on thinking and behavior to be questioned10 Mental Locks by Roger von OechInsisting on being practical Impractical answers to what-if questions can become steppingstones to creative insightsAvoiding Ambiguity Creativity can be stunted by too much objectivity and specificityFearing and Avoiding failure Fear of failure can paralyze us into not acting on our good ideas. This is unfortunate because we learn many valuable and lasting lessons from our mistakes.10 Mental Locks by Roger von OechForgetting how to play The playful experimentation of childhood too often disappears by adulthoodBecoming too specialized Cross-fertilization of specialized areas helps in defining problems and generating solutions

10 Mental Locks by Roger von OechNot wanting to look foolish Humor can release tensions and unlock creative energies. Seemingly foolish questions can enhance understanding.Saying Im not creative. By nurturing small and apparently insignificant ideas, we can convince ourselves that we are indeed creative.