decision making
the process of identifying & choosing among alternative courses of action in a manner appropriate to the demands of the situation
decision complexity factors
multiple criteria, intangibles, risk & uncertainty, long-term implications, interdisciplinary input, pooled decision making, value judgments, and unintended consequences
multiple criteria
decision makers must often satisfy numerous conflicting criteria representing the interest of different groups
intangibles
factors (e.g. customer goodwill, employee morale, increased bureaucracy, aesthetic appeal) often determine decision alternatives despite the difficulty to measure them
risk & uncertainty
ever present chance that a decision will fail in some way
long-term implications
major decisions usually have a ripple effect with the need for a later round of decisions
interdisciplinary input
complexity increases when technical specialists are consulted before making a decision (e.g. lawyers, consumer advocates, tax advisers, accountants, engineers, production & marketing experts)
pooled decision making
complex decisions go through an entire organization with individuals/groups interpreting, modifying, and occasionally resisting
value judgments
decision-making process marked by disagreement because people have different backgrounds, perceptions, aspirations, and values
law of unintended consequences
results of purposeful actions are often difficult to predict
condition of certainty
exists when there is no doubt about the factual basis allows accurate prediction of a decision's outcome
condition of risk
exists when a decisions must be made on the basis of incomplete but reliable, factual information
objective probabilities
derived mathematically from reliable historical data
subjective probabilities
estimated on the basis of one's past experience or judgment
condition of uncertainty
exists when little or no reliable factual information is available
general information-processing styles
thinking & intuitive styles
thinking style
managers tend to be logical, precise, and objective
intuitive style
managers find comfort in rapidly changing situation in which they can be creative and follow their intuitions & visions
common perceptual/behavioral decisions traps
framing error, escalation of commitment, and overconfidence
framing error
the tendency to evaluate positively presented information favorably and negatively presented information unfavorably
escalation of commitment
people get locked into losing courses of action to avoid the embarrassment of quitting or admitting error
overconfidence
has the ability to expose managers to unreasonable risks; the more difficult the task, the greater the tendency for people to be overconfident
programmed decisions
decisions that are repetitive & routine (e.g. hiring decisions, billing decisions, supply reorder decisions, consumer loan decisions, pricing decisions); managers usually develop fixed procedures for handling these everyday decisions
decision rule
a statement that identifies the situation in which a decision is required and specifies how the decisions will be made
non-programmed decisions
decisions made in complex, important, and non-routine situations; often under new and largely unfamiliar circumstances; include deciding whether to merge with another company, how to replace an executive who dies unexpectedly, whether a foreign branch sho
general decision-making model
scan internal & external situation, determine whether the situation merits a decision, determine if it's a routine decision, follow programmed decision rule if it's a routine decision or generate a non-programmed decision through problem solving if it's n
knowledge management (KM)
developing a system to improve the creation & sharing of knowledge critical for decision making
tacit knowledge
personal, intuitive, and undocumented information about how to skillfully perform tasks, solve problems, and make decisions
explicit knowledge
readily sharable information because it is in verbal, textual, visual, or numerical form; can be found in presentations & lectures, books & magazines (hard copy & online), policy manuals, technical specifications, training programs, databases, and softwar
collaborative computing
teaming up to make decisions via computer network programmed with groupware
group-aided decision making
group does everything except make the final decision
group decision making
group actually makes the final decision
creativity
the reorganization of experience into new configurations
mental locks
attitudes that get us through daily activities, but tend to stifle creativity
problem solving
the conscious process of bringing the actual situation closer to the desired situation; involves identifying the problem, generating alternative solutions, selecting a solution, and implementing & evaluating the solution
problem
the difference between an actual state of affairs and a desired state of affairs
causes
variables responsible for the differences between actual & desired conditions
solutions for problems
resolving, solving, or dissolving
satisfice
associated with resolving a problem; to settle for a solution that is good enough; criticized as shortsighted and passive; emphasizes expedient survival instead of improvement & growth
optimize
associated with solving a problem; to systematically identify the solution with the best combination of benefits
idealize
associated with dissolving a problem; to change the nature of the situation in which a problem has arisen
brainstorming
all ideas are recorded in a non-judgmental setting for later critique & selection
free association
analogies & symbols are used to foster unconventional thinking
Edisonian method
named after Thomas Edison; involves trial-and-error experimentation
attribute listing
ideal characteristics of a given object are collected and then screened for useful insights
scientific method
systematic hypothesis testing, manipulation of variables, situational controls, and careful measurement
creative leap
involves thinking up idealistic solutions to a problem and then working back to a feasible solution