dragon 4

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Decision Making and CreativityChapter SixChapter Six

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Decision Making at Radical

Radical Entertainment founder Ian Wilkinson (third from right) meets with employees every week to reinforce the electronic games developer’s emphasis on creative decision making and employee involvement.

Ron Sangha/ BC Business

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Decision Making Defined

Decision making is a conscious process of making choices among one or more alternatives with the intention of moving toward some desired state of affairs.

Ron Sangha/ BC Business

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Rational Choice Decision Process

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Rational Choice Decision Process

Identify problem/opportunity Problem is a gap between the current and the desired ‘what

is’ and ‘what ought to be’

Choose decision process Involves how to process the decision -- e.g. are we facing a

routine/programmed decision that requires a standard operating procedure? Or a unique/ nonprogrammed decision that requires working through all steps in the decision process?

Develop (and identify) alternatives Searching for ready-made solution which have worked well

in similar situations, or otherwise designing a custom-made solution

Choose best alternative Rational choice view: choosing an alternative that maximizes

payoff

Implement choiceEvaluate choice

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Problem Identification Process

Problems and opportunities are not announced or pre-defined Managers need to interpret ambiguous information and

to find out what the problem or opportunity is

This discovery process uses both logical analysis and unconscious emotional reaction during perceptual process We evaluate information as soon as we perceive it by

attaching emotional makers (worry, afraid, angry, …etc.) to that information. These rapid emotional responses together with logical analysis, determine whether you perceive something as a problem, opportunity, or irrelevant

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No Problem, Houston?

NASA’s space shuttle Columbia

disintegrated during re-entry,

killing all seven crewmembers. A

special accident investigation

board concluded that NASA’s

middle management continually

resisted attempts to recognize that

the Columbia was in trouble, and

therefore made no attempt to

prevent loss of life.

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Problem Identification Challenges

Following are four of the most recognized challenges:

1. Stakeholder framing• Stakeholders try to frame the situation by persuading

the decision maker that the available information points a problem, opportunity or irrelevance which tend to influence decision maker’s assessment of the situation

2. Perceptual defense• People sometimes reject or avoid bad news (negative

info) especially when they lack control overt the situation

3. Mental models• Cognitive perceptions or images that produce

assumptions or expectations that prevent us from seeing unique problem

4. Decisive leadership• Decisive leaders tend to dominate situations which

limits careful analysis of facts and producing less effective decisions

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Evaluating and Choosing Alternatives

When evaluating and choosing alternatives people engage in bounded rationality because they process limited and imperfect information and rarely select the best choice

Bounded rationality: processing limited and imperfect information and satisficing rather than maximizing when choosing between alternatives

Satisficing: Try to get hold of a workable solution and not wait for the best solution to appear

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ProcessingInformation

Evaluation Timing

Rational: People can process all information

Rational: Choices evaluated simultaneously

Goals Rational: Clear, compatible, agreed upon

OB: Ambiguous, conflicting, lack agreement

OB: People process only limited information

OB: Choices evaluated sequentially

more

Making Choices: Rational vs OB Views

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Info Quality

Decision Objective

Rational: People rely on factual information

Rational: Maximization -- the optimal choice

Standards Rational: Evaluate against absolute standards

OB: Evaluate against implicit favorite

OB: Rely on perceptually distorted information

OB: Satisficing -- a “good enough” choice

Making Choices: Rational vs OB (con’t)

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Emotions and Making Choices

Emotional marker process forms preferences before we consciously think about choices

Moods and emotions influence the decision process affects vigilance, risk aversion, etc.

We ‘listen in’ on our emotions and use that information to make our choices

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Intuitive Decision Making

Ability to know when a problem or opportunity exists and select the best course of action without conscious reasoning

Intuition as emotional experience Gut feelings are emotional signals Not all emotional signals are intuition

Intuition as rapid unconscious analysis Uses action scripts

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Making Choices more Effectively

Systematically evaluate alternatives

Balance emotions and rational influences

Scenario planning

Decision making is better when leaders are contemplative and not decisive.

Leaders reduce the effect of implicit favorite

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Escalation of Commitment

The tendency to repeat an apparently bad decision or allocate more resources to a failing course of action

Four main causes of escalation: Self-justification Prospect theory effect Perceptual blinders Closing costs

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Evaluating Decisions Better

Separate decision choosers from evaluators

Establish a preset level to abandon the project

Involve several people in the evaluation process


Employee Involvement

Decision Makingand Creativity


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Employee Involvement at Thai Carbon Black

Thai Cabon Black, the Thai-Indian joint venture, relies on employee involvement to boost productivity and quality.

Employees submit hundreds of suggestions in little red boxes located around the site

Participatory management meetings are held every month

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Employee Involvement Defined

The degree to which employees influence how their work is organized and carried out

Different levels and forms of involvement

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Employee Involvement Model

Potential Involvement Outcomes

Contingenciesof Involvement

Employee Involvement

Better problem identification

Synergy produces more/better solutions

Better at picking the best choice

Higher decision commitment

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Contingencies of Involvement

Knowledge Source

Decision Commitment

• Employees have relevant knowledge beyond leader

• Employees would lack commitment unless involved

Risk ofConflict

1. Norms support firm’s goals2. Employee agreement likely

Decision Structure

• Problem is new & complex(i.e nonprogrammed decision)

Higher employee involvement is better when:


Creativity inDecision Making



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Preparation

Incubation

Insight

Verification

Creative Process Model

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Characteristics of Creative People

Above average intelligence

Persistence

Relevant knowledge and experience

Inventive thinking style

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Creative Work Environments

Learning orientation Encourage experimentation Tolerate mistakes

Intrinsically motivating work Task significance, autonomy, feedback

Open communication and sufficient resources

Team competition and time pressure have complex effect on creativity

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Creative Activities

• Review abandoned projects

• Explore issue with other people

Redefinethe Problem

• Storytelling

• Artistic activities

• Morphological analysis

AssociativePlay

• Diverse teams

• Information sessions

• Internal tradeshows

Cross-Pollination


Solutions to Creativity

Brainbusters



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Double Circle Problem

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Nine Dot Problem

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Nine Dot Problem Revisited

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Word Search

FCIRVEEALTETITVEERS

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Burning Ropes

One Hour to Burn Completely

After first rope burnedi.e. 30 min.


Decision Making and CreativityChapter SixChapter Six

dragon 4

Business

creative decision

routineprogrammed decision

defined decision making

perceptual process

decision makers assessment

unique nonprogrammed

conscious process

discovery process