Download - Ob slides - decision making hold(1)
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M 05 Decision Making
• “Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.” – Jim Collins
• “The quality of decision is like the well-timed swoop of a falcon which enables it to strike and destroy its victim.” – Sun Tzu
• “Whenever you see a successful business, someone once made a courageous decision.” – Peter Drucker
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• The next slide provides a model of some of the issues involved in making a decision.
• These are not items that are on the surface – they are hidden inside of us and yet they impact our questions, thoughts, ideas, and the way we decide.
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Values
Attitudes
Personality
Ability
Motivation
Perception
Learning
IndividualBehavior in
Decision Making
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Decision Making Styles
• Decide– You decide alone and “announce” or “sell” it
• Consult Individually– Present it individually to all and then decide
• Consult Group– Present collectively and then decide
• Facilitate– Present, facilitate, define the problem and boundaries– Seek concurrence
• Delegate– Permit group decision within prescribed limits
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….. to consider(so many variables)
• Responsibilities• Power• Vulnerability• Dilemmas• Pressures• Loneliness• Analyzing• Not independent, solitary events
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……. to consider…
• Not just logical analysis & problem solving• Social process• Unending stream of decisions• Communication• Perceptions• Information• Experience
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……. to consider ….
• Wisdom• Stakeholders
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Critical pieces of decision making
• Determining how the problem is to be solved, not necessarily the solution.
• Determining how much data is needed.
• Understanding the background that lead to this point
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What doesn’t work
• Persuasion– Selling expert opinions to convince
• Edicts– Directives that announce decisions
– Depletes “social credits”
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Models of Decision Making
• Rational Decision-Making
• Bounded Rationality
• Garbage Can
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Rational Decision-Making
• Assumption that all facts are knowable• Process similar to problem solving– Define the problem– Develop and weight criteria– List alternatives– Select the best alternative– Implement – Evaluate
• Question: Is it possible to know all the facts?
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Bounded Rationality
• People are restricted:– in the information they have ,– limit their searches,– settle for less than optimal solutions.
• Assumptions– Satisficing – accepting the first, minimally acceptable solution– Comfortableness without all the alternatives– Judgmental shortcuts – called “heuristics”– Alternatives fall within the bounds of current moral & ethical
standards
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Garbage Can
• Organization – metaphorically described as a “garbage can”
• Floating in the GC are– Problems, Participants, Solutions, Choice opportunities– If they connect – a decision results
• Assumptions– Haphazard– Chaotic– Unpredictable– Sheer luck
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Common Decision Biases• Anchoring and adjusting
• (the first information is overweighted)
• Representativeness • (does this resemble another event?)
• Availability • (what we remember easily)
• Overconfidence • (Unrealistically optimistic views)
• Bounded Awareness • (perception narrows –thus limiting information needed)
• Emotional Involvement • (belief in a more positive outcome)
• Self-serving Reasoning • (credit for success & avoiding blame for failure)
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Tools
• Decision Trees» Significance» Level of Commitment » Leader Expertise» Likelihood of Commitment» Group – Support, Expertise, Competence
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Issues ( +/- ), to consider
• Zone of Indifference• http://www.examiner.com/article/helping-employees-
work-within-the-zone-of-indifference
• Groupthink• http://www.mindtools.com/pages/article/
newLDR_82.htm
• Escalation of commitment• http://en.wikipedia.org/wiki/Escalation_of_commitment
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Reality(what happens…)
• Rationality • Otherwise we believe that people make irrational decisions.
We may not understand their rationality – but to them it is rational
• Intuitive consideration• We pull all our experiences together without even knowing it
and use that data as well as the data around the proplem
• Combine to provide decisions• Decision making is complex – not just for us but for everyone
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The Literature Suggests…..
• There are four (4) guidelines to making better decisions:– Personally manage your decision making.
» This isn’t something that you can delegate
– Search for understanding.» Make sure you know what is at stake
– Establish a direction with objectives.» Objectives help you to know what you really want
– Manage the social and political forces» Always know your clear rational