PlayStationChapter 13 – Decision Making

The A-TeamAnthony Mata

Alida SaarJacqueline Rios

Nursyairah BasriJohanan Ramos

The Decision Making Process and Its

Foundations

Sony PlayStation’s Network Outage

¨ April 17 - 19, 2011o There was an external intrusion on Sony’s PlayStation

Network.

¨ April 20, 2011o Sony shut down the network ono Approximately 77 million accounts were stolen.

¨ April 26, 2011o Sony finally notified its users about the problem.

¨ May 15, 2011o The network began being brought back online.

¨ May 16, 2011o Sony announced its plans to provide compensation

for its users.

Steps of Decision-Making1) Recognize & define the problem or

opportunity.2) Identify and analyze alternative courses

of action, and estimate their effects on the problem.

3) Choose a preferred course of action.4) Implement the preferred course of action.5) Evaluate the results and follow up as

necessary.

Results of Sony’s Decision Making

¨ Sony PlayStation demonstrated poor

decision-making techniques.

¨ The reported cost of the network outage

was $171 million.

¨ Risk a loss of loyal users who switch to

other competitors such as Microsoft’s X-

Box 360 or Nintendo’s Wii.

Decision Environments

¨ Certain decision environments o Exist when information is sufficient to predict

the results of each alternative in advance of implementation

¨ Risk decision environmentso Exist when decision makers lack complete

certainty regarding the outcomes of various courses of action, but they are aware of the probabilities associated with their occurrence

Decision Environments

¨ Uncertain decision environmentso Exist when managers have so little information

on hand that they cannot even assign probabilities to various alternatives and their possible outcomes

o Organized anarchy: a firm or division of a firm in transition characterized by rapid change and lack of a legitimate hierarchy.

Types of Decisions

¨ Programmed decisionso Involve routine problems that arise regularly and

can be addressed through standard responses¨ Non-programmed decisions

o Involve non-routine problems that require solutions specifically tailored to the situation at hand

¨ Associative choices o decisions that can be loosely linked to nagging

continual problems but that are not specifically developed to solve the problem

How does this apply to PlayStation?

¨ The decision environment that PlayStation is facing is that of a risk decision environment.

¨ The type of decision PlayStation needs to make regarding this issue is a non-programmed decision.

Decision Making Models

Decision Making Models

¨ Classical Decision Theory

o Classical decision theory views the decision

makers as acting in a world of complete

certainty

¨ Behavioral Decision Theory

o Behavioral decision theory views the decision

makers as acting only in terms of what they

perceive about a given situation.

Classical Decision Maker

Clearly Defined Problem

Knowledge of all possible alternatives and their

consequences

Choice of the “optimum” alternative

Managerial Action

Behavioral Decision Maker

Problem not clearly defined

Knowledge is limited on possible alternatives

and their consequences

Choice of a “satisfactory” alternative

Managerial Action

Cognitive limitations bounded rationally

Bounded Rationally?

¨ Being “bounded rationally” is a shorthand term suggesting that while individuals are reasoned and logical, humans have their limits.o Individuals interpret and make sense of things

within the context of their personal situations.o They engage in decision making “within the

box” on a simplified view of a more complex reality.

Effects of Being Bounded Rationally ¨ Classical decision making theory

o Does not give a full and accurate description of how most decisions are made in organizations.

¨ Behavioral decision making theoryo Accepts the notion of bounded rationality and

suggests that people act only in terms of what they perceive about a given situation.

¨ Satisficingo Choosing the first alternative that appears to

give an acceptable or satisfactory resolution to the problem.

The Third Decision Making Model“The Garbage Can Model”

¨ Garbage Can Modelo Views the main components of the choice

process – problems, solutions, participants, and the choice situations – as all mixed up together in the garbage can of the organization.• When the setting is dynamic, the technology is

changing, demands are conflicting, or the goals are unclear, things can get mixed up.

o Many problems go unsolved• All organizations have chronic, persistent deficiencies

that never seem to get much better because decision makers cannot agree on opinions on proper solutions.

Information Technology in Extended Decision Making

¨ Artificial Intelligence (AI)o The study of how computers can be

programmed to think like the human brain.o Will allow computers to displace many decision

makers¨ In the 1960’s, Herbert Simon was

convinced that computers would someday be more intelligent than humans.o AI applications have significantly aided in

proving his idea.

Which Model Should PlayStation Use?

¨ PlayStation is probably experiencing the garbage can model.o The problem is severe and there are so many

different types of solutions.¨ Because the PlayStation Network’s

dilemma is computer based, artificial intelligence may benefit them greatly. o The hacker dug into the network so deeply that

no human can figure out how it happened.o PlayStation should focus on AI to help stop the

theft.

Intuition Judgment and Creativity

Intuition

¨ Intuitiono The ability to know or recognize quickly and

readily the possibilities of the situation of a given

situation.

o Intuition adds elements of personality and

spontaneity to decision making. As a result, it

offers the potential for creativity and innovation.

Intuition

¨ Ways to Improve your Intuition

o Relax!

• Drop the problem for a while.

• Spend some quite time by yourself.

• Try to clear your mind.

¨ Use Common Mental Exercise

o Use Image to guide your thinking.

o Let ideas run freely without a specific goal.

Judgmental Heuristics¨ Heuristics

o Simplified strategies or “rules of thumb” used to

make decisions.

¨ The Availability Heuristics

o Assessing a current event or situations based on

past events that are in our memory.

¨ Representative Heuristics

o Involves assessing the likelihood that events

will occur based on its similarity to one’s

stereotypes of similar occurrences.

Judgmental Heuristics

¨ The Anchoring and Adjustment Heuristicso Involving assessing an event by taking an initial value from historical

precedent or and outside source and then incrementally adjusting this value

to make current assessments.

¨ Confirmation Trap o Where by the decision maker seeks confirmation for what is already thought

to be true and neglects opportunities to acknowledge or find disconfirming

information.

¨ Hindsight Trap o The decision maker overestimates the degree to which he or she could of

have predicted an event that has already taken place.

Creativity

¨ Creativity

o In decision making it involves the development

of unique and novel responses to problems

and opportunities.

o Creativity in crafting decision often determines

how well people and organizations do in

response to complex challenges.

Fostering Creativity Tips1) Diversify teams to include members with

different backgrounds, training, and perspectives.

2) Encourage analogical reasoning.3) Stress periods of silent reflection.4) Record all ideas so that the same ones

are not rediscovered.5) Establish high expectations for creativity.6) Develop physical space that encourages

fun, divergent ideas.

How does this apply to PlayStation?

¨ Use of intuition vs. systematic approach to solve

the problem?

¨ PlayStation might be bias and fallen in

Confirmation trap.

¨ PlayStation has come up with creative solutions

to make up for the hack. Rewards include 2 free

games in the first 31 days PlayStation online is

back, and one year of free Identification

Protection.

Managing the Decision Making

Process

Choosing Problems to Address

¨ Is the problem easy to deal with?

o Small and less-significant problems should not

get the same time and attention as bigger ones.

Putting problems in rank order leaves the less

significant for last.

¨ Sony knows how - but not who - hacked into

its PlayStation Network.

o The fraud last month could possibly be the

biggest Internet security breach in history.

Examples of actions that can help PlayStation

solve the problem

¨ List some precautions for the customers.o emails, telephone , postal mail scams, encourage to be

vigilant, put fraud alert, change user name or password if use PS network accounts.

¨ Provide theft protection offer for PS network customers.

¨ PlayStation Network users should be provided with financial data security services, including free access to credit reporting services, for two years, the costs of which should be borne by Sony,” wrote Blumenthal, a former Connecticut attorney general.

Is This My Decision To Make?

¨ Many problems can be handled by other

persons.

¨ These should be delegated to people who

are best prepared to deal with them;

ideally, they should be delegated to

people whose work they most affect.

Is this a solvable problem within the context of the organization?

¨ The astute decision maker recognizes the

difference between the problems that

realistically can be solved and those that are

simply not solvable for all practical purposes.

¨ Example problems with the hackers:

¨ To minimize the activity hackers are quite

hard, that is why they have to upgrade the

security software.

Deciding Who Should Participate¨ Group decision: are made by all members of the group¨ Mistakes: In light of the recent PSN hack attack that took Sony's

servers down for more than three weeks, CEO Howard Stringer seems a little caught off-guard that his company was helping gamers out with a free service which then got hacked.

¨ Example:¨ The Tokyo-based company has hired a security firm to conduct a

complete investigation into the intrusion and is rebuilding the system to offer more protection, Seybold said in the blog posting.

¨ Sony has initially resumed a subset of the full PlayStation Network and Qriocity services. Back online are: online gaming, playback of already rented video, "Music Unlimited" online audio streaming, access to third-party services like Netflix and Hulu, PlayStation Home and friends features such as chat.

¨ Sony worked with the U.S.-based security firm Debix to set up the identity theft protection program, called AllClear ID PLUS, for people worried about security "following the criminal cyber attack on the network," the May 25 blog post says.

Conclusion¨ “Man is born to live and not to prepare to live” Boris

Pasternak¨ You have the power of decision to make a change. Don’t

complain about something, make the decision that this situation is no longer acceptable to you and decide to change it. Then and only then will it change. The power of change is within each and every one of us, whatever background we may be from.

¨ Committing to a decision actually brings clarity which will in turn will enlighten your path to success. Practice making decisions, the more you make the better you will get at it and you will realise that you actually are in control of your life not the other way around. You will look forward to challenges and see them as opportunities. Life will not always give you the perfect conditions to achieve your goals but if are committed to your dream you will find a way of using the cards you are dealt.