Decision-making processes. (Chapter 12)

1. Chapter Twelve

Decision-Making Processes
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12-1

2. Today’s Business Environment

New strategies
Reengineering
Restructuring
Mergers/Acquisitions
Downsizing
New product/market development
. . . Etc.
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3. Decisions Made Inside the Organization

Complex, emotionally charged issues
More rapid decisions
Less certain environment
Less clarity about means/outcomes
Requires more cooperation
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4. A New Decision-Making Process

Required because
no one person has enough info to make all
major decisions
No one person has enough time and
credibility to convince many
Relies less on hard data
Guided by powerful coalition
Permits trial and error approach
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5. Steps in the Rational Approach to Decision-Making

Implement
Chosen
Alternative
Choose
Best
Alternative
Evaluate
Alternatives
7
6
8
5
Develop
Alternative
Solutions
Monitor
Decision
Environment
1
4
2
3
Define
Decision
Problem
Specify
Decision
Objectives
Diagnose
Problem
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6. Constraints and Trade-offs During Non-programmed Decision-Making

Bounded Rationality:
Limited time, information,
resources to deal with complex,
multidimensional issues
Trade-off
Trade-off
Trade-off
Decision/
Choice:
Personal Constraints:
Desire for prestige, success;
personal decision style; and
the need to satisfy emotional
needs, cope with pressure,
maintain self-concept
Trade-off
Search for
a high-quality
decision
alternative
Organizational Constraints:
Need for agreement, shared
perspective, cooperation,
support, corporate culture and
structure, ethical values
Sources: Adapted from Irving L. Janis, Crucial Decisions
(New York: Free Press, 1989); and A. L. George, Presidential
Decision Making in Foreign Policy: The Effective Use of
Information and Advice (Boulder, Colo.: Westview Press, 1980).
Trade-off
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7. Choice Processes in the Carnegie Model

Uncertainty
Information is
limited
Managers have
many constraints
Conflict
Managers have
diverse goals,
opinions, values,
experience
Coalition Formation
Hold joint discussion
and interpret goals
and problems
Share opinions
Establish problem
priorities
Obtain social support
for problem, solution
Search
Conduct a simple,
local search
Use established
procedures if
appropriate
Create a solution
if needed
Satisficing
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Adopt the first
alternative
that is acceptable
to the coalition
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8. The Incremental Decision Process Model

·
Identification Phase
Recognition
Diagnosis
Development Phase
Search
Screen
Design
Selection Phase
Judgment (evaluation – choice)
Analysis (evaluation)
Bargaining (evaluation – choice)
Authorization
Dynamic Factors
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9. Learning Organization Decision Process When Problem Identification and Problem Solution Are Uncertain

PROBLEM IDENTIFICATION
PROBLEM SOLUTION
When problem identification is
uncertain, Carnegie model applies
When problem solution is
uncertain, Incremental process
model applies
Political and social process is
needed
Incremental, trial-and-error
process is needed
Build coalition, seek agreement,
and resolve conflict about goals
and problem priorities
Solve big problems in little steps
Recycle and try again when
blocked
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10. Illustration of Independent Streams of Events in the Garbage Can Model of Decision-Making

Problems
Solutions
Middle Management
Participants
Problems
Solutions
Choice
Opportunities
Participants
Choice Opportunities
Participants
Choice Opportunities
Department A
Solutions
Department B
Problems
Solutions
Choice
Opportunities
Participants
Choice
Opportunities
Problems
Solutions
Choice
Opportunities
Participants
Solutions
Problems
Participants
Problems
Participants
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Problems
Solutions
Participants 12-10

11. Contingency Framework for Using Decision Models

Problem
Consensus
Certain
Certain
Solution
Knowledge
1
Individual:
Rational Approach
Computation
Organization:
Management Science
3 Individual:
Judgment
Trial-and-error
Uncertain
Organization:
Incremental Decision
Process Model
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2
Uncertain
Individual:
Bargaining, Coalition
Formation
Organization:
Carnegie Model
4 Individual:
Bargaining and Judgment
Inspiration and Imitation
Learning Organization:
Carnegie and Incremental
Decision Process Models,
Evolving to Garbage Can
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12. Special Decision Circumstances

High-Velocity Environments
Decision Mistakes and Learning
Escalating Commitment
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13. Decision Styles

Workbook
Activity
Decision Styles
Your
decisions
Approach used
Advantages and
disadvantages
Your
recommended
decision style
1.
2.
Decisions by
others
1.
2.
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