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Chapter 6: Making Decisions and Solving Problems
Chapter Outlines
Challenges for Decision Makers
Dealing with Complex Streams of Decisions
Beware of Perceptual and Behavioral Decision Traps
Making Decisions
Making Programmed Decisions
Making Nonprogrammed Decisions
A General Decision-Making Model
Knowledge Management: A Tool for Improving the Quality of Decisions
Group-Aided Decision Making: A Contingency Perspective
Group Involvement in Decisions
Maintaining Accountability
Managerial Creativity
What Is Creativity?
Workplace Creativity: Myth and Modern Reality
Learning to Be More Creative
Creative Problem Solving
Identifying the Problem
Generating Alternative Solutions
Selecting a Solution
Implementing and Evaluating the Solution
Glossary
decision making identifying and choosing alternative courses of action.
law of unintended consequences the results of purposeful actions are often
difficult to predict.
framing error how information is presented influences ones interpretation of it.
escalation of commitment people get locked into losing courses of action to
avoid the embarrassment of quitting or admitting error.
programmed decisions repetitive and routine decisions.
decision rule tells when and how programmed decisions should be made.
nonprogrammed decisions decisions made in complex and nonroutine
situations.
knowledge management developing a system to improve the creation and
sharing of knowledge critical for decision making.
tacit knowledge personal, intuitive, and undocumented information.
explicit knowledge documented and sharable information.
creativity the reorganization of experience into new configurations.
problem solving the conscious process of closing the gap between actual and
desired situations.
problem the difference between actual and desired states of affairs.
causes variables responsible for the difference between actual and desired
conditions.
satisfice to settle for a solution that is good enough.
optimize to systematically identify the solution offering the best combination of
benefits.
idealize to change the nature of a problems situation.
Learning Objective Summary
Specify at least five sources of decision complexity, and explain the
three decision traps: framing, escalation of commitment, and
overconfidence.
• Decision making is a fundamental part of management because it requires choosing
among alternative courses
of action.
• Eight factors that contribute to decision complexity are:
- Multiple criteria
- Intangibles
- Risk and uncertainty
- Long-term implications
- Interdisciplinary input
- Pooled decision making
- Value judgments
- Unintended consequences
• Researchers have identified three perceptual and behavioral decision traps that can
hamper the quality of decisions:
- Framing error occurs when people let labels and frames of reference sway their
interpretations.
- Escalation of commitment occurs when people get locked into losing propositions for
fear of quitting and looking bad.
- Overconfidence tends to grow with the difficulty of the task.
Discuss why programmed and nonprogrammed decisions require
different decision-making procedures, and distinguish between the two
types of knowledge in knowledge management.
• Decisions, generally, are either programmed or nonprogrammed:
- Because programmed decisions are relatively clear-cut and routinely encountered,
fixed decision rules can be formulated for them.
- In contrast, nonprogrammed decisions require creative problem solving because they
are novel and unfamiliar.
• Decision making can be improved by using a knowledge management (KM) program:
- KM is a systematic approach to creating and sharing critical information throughout the
organization.
- Two types of knowledge are tacit (personal, intuitive, and undocumented) and explicit
(documented and readily sharable).
Summarize the advantages and disadvantages of group decision
making.
• Managers may choose to bring other people into virtually every aspect of the decisionmaking process.
When a group rather than an individual is responsible for making the decision, personal
accountability is lost.
• The advantages of group decision making include a greater pool of knowledge,
different perspectives, greater comprehension, increased acceptance, and training
ground.
• Among the disadvantages are social pressure, dispersed accountability, domination by
a vocal few, logrolling, goal displacement, and groupthink.
Define creativity, and identify five of the ten “mental locks” that can
inhibit creativity.
• Creativity is the reorganization of experience into new configurations. The domains of
creativity may be divided into art, discovery (the most relevant to management), and
humor.
• Ten mental locks on creativity are:
- Looking for the “right” answer
- Always trying to be logical
- Strictly following the rules
- Insisting on being practical
-
Avoiding ambiguity
Fearing and avoiding failure
Forgetting how to play
Becoming too specialized
Not wanting to look foolish
Saying “I’m not creative.”
List and explain the four basic steps in the creative problem-solving
process, and describe how causes of problems can be tracked down
with fishbone diagrams.
• The creative problem-solving process consists of four steps:
- Identifying the problem
- Generating alternative solutions
- Selecting a solution
- Implementing and evaluating the solution
• Inadequately pinpointing the real problem is common among busy managers.
• Fishbone diagrams are a good problem-finding tool because they graphically trace a
problem (the head of
the fish) back to its primary and secondary causes (the fishbones connected to the
skeleton).
• Problems can be:
- Resolved (“satisficing” with a good enough solution)
- Solved (“optimizing” with the best possible solution through research)
- Dissolved (“idealizing” by changing the situation so the problem disappears)
Test Preppers
Test Prepper 6.1
True or False?
_____ 1. Along with every decision alternative goes the chance that it will fail in some
way.
_____ 2. A single manager is typically responsible for a given decision from beginning to
end.
_____ 3. According to the law of unintended consequences, you can predict the results
of purposeful action.
_____ 4. In organizations, framing error is always destructive.
_____ 5. Escalation of commitment involves throwing good money after bad.
_____ 6. Overconfidence declines as the task becomes more difficult, according to
research.
Multiple Choice
_____ 7. What is the meaning of the analogy of decision making as a stream?
a. The decision maker as a swimmer going upstream
b. A smooth and even flow of information
c. Problems and choices flow by as random bits and pieces
d. Solutions as boats
e. Decisions as bridges
_____ 8. _____ is (are) not one of the contributors to decision complexity covered in the
text.
a. Long-term implications
b. Risk and uncertainty
c. Interdisciplinary input
d. Multiple criteria
e. Government regulation
_____ 9. Which one of the eight sources of decision complexity guarantees
disagreement over ethical issues?
a. Interdisciplinary input
b. Risk and uncertainty
c. Intangibles
d. Value judgments
e. Long-term implications
_____ 10. _____ is the tendency to evaluate positively presented information favorably
and negatively presented information unfavorably.
a. Escalation of commitment
b. Overconfidence
c. Framing error
d. Short-term thinking
e. Satisficing
_____ 11. Which of these is the tendency of individuals and organizations to get locked
into losing courses of action because quitting is personally and socially difficult?
a. Escalation of commitment
b. Framing error
c. Auction fever
d. Satisficing
e. Overconfidence
_____ 12. A psychological factor contributing to the decision trap of escalation of
commitment is
a. resistance to change.
b. fear of admitting a mistake to others.
c. cultural emphasis on persistence.
d. desire to justify earlier decisions.
e. organizational politics.
Test Prepper 6.2
True or False?
_____ 1. When making programmed decisions, “if-then” decision rules are used.
_____ 2. According to on-the-job research, managers do not necessarily follow a logical
sequence of steps when making decisions.
_____ 3. There are two types of knowledge: personal knowledge and tactical
knowledge.
_____ 4. The flow of constructive tacit knowledge between coworkers is a top priority of
knowledge management.
Multiple Choice
_____ 5. Shelly works in the purchasing department of a theater chain and she is in
charge of making routine supply reorder decisions. These decisions are considered
_____ decisions.
a. organizational
b. passive
c. spontaneous
d. programmed
e. nonprogrammed
_____ 6. Decisions that are made in complex, important, and nonroutine situations are
called
a. group decisions.
b. nonprogrammed decisions.
c. ethical decisions.
d. programmed decisions.
e. individual decisions.
_____ 7. Which of these is the first step in the general decision-making model?
a. Forecasting
b. Evaluating alternatives
c. Making a decision
d. Conducting a stakeholder audit
e. Scanning the situation
_____ 8. Within the context of knowledge management (KM), what kind of knowledge is
found in verbal, textual, visual, or numerical form?
a. Implicit
b. Tacit
c. Explicit
d. Nonverbal
e. Contextual
Test Prepper 6.3
True or False?
_____ 1. Choosing an alternative is the only aspect of the decision-making process that
can be assigned to a group.
_____ 2. An advantage of group-aided decision making is “logrolling.”
_____ 3. Groupthink is a potential disadvantage of group-aided decision making.
Multiple Choice
_____ 4. When groups make decisions, a major difficulty that managers face is
a. increased uncertainty.
b. loss of personal accountability.
c. poor problem identification.
d. choosing logical but impractical decisions.
e. low job satisfaction.
_____ 5. _____ is an advantage of group-aided decision making.
a. Domination by a vocal few
b. Increased acceptance
c. Groupthink
d. Goal displacement
e. Logrolling
_____ 6. _____ is not among the disadvantages of group-aided decision making.
a. Social pressure
b. Goal displacement
c. Minority domination
d. Groupthink
e. Overconfidence
Test Prepper 6.4
True or False?
_____ 1. “Discovery” is the most relevant domain of creativity to management.
_____ 2. Creative work is not necessarily the result of creative self-expression through
unconventional dress and strange behavior.
_____ 3. Forgetting how to play can stifle creativity.
Multiple Choice
_____ 4. Creativity is said to be a function of
a. knowledge, imagination, and evaluation.
b. inspiration and persistence.
c. skill, ability, and luck.
d. motivation, insight, and luck.
e. inspiration and perspiration.
_____ 5. The “aha!” reaction describes the _____ domain of creativity.
a. technology
b. enlightenment
c. discovery
d. surprise
e. art
_____ 6. Which of the following is not among the ten mental locks on creativity?
a. Strictly following the rules
b. Not being logical or rational
c. Insisting on being practical
d. Avoiding ambiguity
e. Not wanting to look foolish
Test Prepper 6.4
True or False?
_____ 1. The beginning of the four-step problem-solving process is identifying the
problem.
_____ 2. A problem is defined as any sort of deficiency.
_____ 3. The “head” of a fishbone diagram represents the main cause of the problem.
_____ 4. The creative leap approach to creativity involves listing of ideal characteristics
of a given object.
Multiple Choice
_____ 5. Step 3 in the four-step problem-solving process calls for
a. generating alternative solutions.
b. selecting a solution.
c. evaluating.
d. implementing a solution.
e. pinpointing the cause of the problem.
_____ 6. “Satisficing” means __________ relative to selecting a solution to a problem.
a. finding the best cost-benefit relationship
b. finding the least expensive solution
c. finding the best possible solution
d. making the most people happy
e. settling for a solution that is good enough
_____ 7. When the situation in which a problem occurs is changed so that the problem
no longer exists, it is
a. resolved.
b. created.
c. optimized.
d. dissolved.
e. satisfied.
Test Prepper Answer Key
6.1
1. T
2. F
3. F
4. F
6.2
1. T
2. T
3. F
4. T
6.3
1. F
2. F
3. T
4. b
6.4
1. T
2. F
3. F
4. F
5. T
6. F
7. c
5. d
6. b
7. e
5. b
6. b
5. b
6. e
7. d
8. e
9. d
10. c
11. a
12. d