Decision-Making Processes

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Chapter Eleven Decision-Making Processes 1 Today’s Business Environment New strategies Reengineering Restructuring Mergers/Acquisitions Downsizing New product/market development . . . Etc. 2 Decisions Made Within the Organization Complex, emotionally charged issues More rapid decisions Less certain environment Less clarity about means/outcomes Requires more cooperation 3 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 4 INDIVIDUAL DECISION MAKING Steps in the Rational Approach to DecisionMaking Implement Chosen Alternative Choose Best Alternative Evaluate Alternatives 8 Monitor Decision Environment 1 7 2 6 3 5 Develop Alternative Solutions Define Decision Problem 4 Specify Decision Objectives Diagnose Problem 5 Group Activity Organizational Decisional making Models    Management Science Approach (The SABRE Group) Carnegie Model (Encyclopedia Britannica) Incremental Decision Process Model (Gillette) Learning Organization  Garbage Can Model (Casablanca) Contingency Decision-Making Framework 6 Choice Processes in the Carnegie Model Uncertainty Information is limited Managers have many constraints Coalition Formation Hold joint discussion and interpret goals and problems Share opinions Conflict Managers have diverse goals, opinions, values, experience Establish problem priorities Search Conduct a simple, local search Use established procedures if appropriate Create a solution if needed Obtain social support for problem, solution Satisficing Adopt the first alternative that is acceptable to the coalition 7 The Incremental Decision Process Model Every step characterized by decision interrupts Identification Phase  Recognition  Diagnosis Development Phase  Search  Screen  Design Selection Phase  Judgment (evaluation – choice)  Analysis (evaluation)  Bargaining (evaluation – choice)  Authorization 8 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 9 Contingency Framework for Using Decision Models Certain Certain 1 Solution Knowledge 3 Uncertain Problem Consensus Uncertain 2 Individual: Rational Approach Computation Individual: Bargaining, Coalition Formation Organization: Management Science Organization: Carnegie Model Individual: Judgment Trial-and-error Organization: Incremental Decision Process Model 4 Individual: Bargaining and Judgment Inspiration and Imitation Organization: Carnegie and Incremental Decision Process Models, evolving to Garbage Can 10 Special Decision Circumstances High-Velocity Environments Decision Mistakes and Learning Escalating Commitment 11