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CHAPTER 3

Problem Solving and Decision Making

Learning Objectives
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Differences between programmed and non-programmed decisions. The steps involved in making a non-programmed decision. The major factors influencing decision making in organizations. The nature of creativity and its contribution to managerial work.

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Organizational programs for improving creativity.


Suggestions for becoming a more creative problem solver. The value and potential limitations of group decision making.
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1. Programmed and Non-programmed Decisions: A Comparison


Programmed Decisions
Types of problems Repetitive, routine, frequent; decisions made according to specific procedures

Non-programmed Decisions
Novel, complex, difficult, infrequent; decisions require original thinking Require creativity, intuition, tolerance for ambiguity

Procedures

Depend on policies and rules

Business firm: Periodic


Examples

Business firm: Diversification


into new products and markets Health care: Purchase of experimental equipment University: Construction of new classrooms

reorders of inventory Health care: Procedure for admitting patients University: Necessary GPA for good academic standing

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2. Six Steps in Problem Solving and Decision Making


Identify and diagnose the problem What really, really is our problem? Develop creative alternatives Lets dream up some great ideas. Evaluate the alternative solutions Some of these ideas are good; others are wacko.

Evaluate and control How really good was that idea?

Implement the decision Now lets take action.

Choose one alternative solution This alternative is a winner!

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3. Factors Influencing Decision Making


Im great at hunches. Lets wait before deciding. I like risks and Im really bright.

Intuition

Ive got integrity.

Procrastination

Personality and cognitive intelligence


I can read people great and control my emotions.

Values
Our backs are to the wall, and we disagree.

Emotional intelligence

Decision Maker
Degree of certainty
Looks like a sure thing.

Crisis and conflict

Quality and accessibility of information

Political considerations
What does my boss want me to decide?

The IS group is feeding me great stuff.

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Decision-Making Styles

1.

Combining the dimensions of using information and creating options result in four decisionmaking styles: Decisive (one option, less information)

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Flexible (many options, less information) Hierarchic (one option, more information) Integrative (many options, more information)
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3.

4.

How Decisive Are You?

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4. Creativity and Innovation in Managerial Work


a.

Conditions Necessary for Creativity Expertise

knowledge to put facts together

Creative-thinking skills and internal motivation Environmental need plus conflict and tension

Necessity is the mother of invention

Encouragement from others

Permissive atmosphere that welcomes new ideas


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b. The Creative and Innovative Organization


Providing challenges Greater diversity in groups
Establishing a Creative Atmosphere Involves. . .

Allowing freedom

Building on the ideas of others

Allocating ample resources

Allocating time for innovative thinking

Rewards and recognition for innovative ideas

Creativity!
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5. Organizational Programs for Improving Creativity and Innovation


Creativity Training Brainstorming Systematically gathering ideas Appropriate physical surroundings
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6. Self-Help Techniques for Improving Creativity

6 Specific Suggestions to Build Creativity


1. Keep an idea notebook 2. Stay current in your field and be curious about your environment

3. Improve your sense of humor 4. Adopt a risk-taking attitude


5. Identify your most creative times 6. Step back when faced with a creativity block
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6. Self-Help Techniques for Improving Creativity (cont.)

Play the Roles of


Explorer, Artist, Judge, and Lawyer

Engage in Appropriate Physical Exercise

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7. Suggestions for Improving Group Problem-Solving


1. Have a specific 2. Rely on agenda and adhere qualified group to it members 5. Build consensus so the decision is more likely to be implemented 3. Have the 4. Provide leader share summaries for decision-making each major point authority
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The Nominal Group Technique


1. Small group is assembled 6. Alternatives are rated and bestrated one is chosen

2. Leader presents a problem

5. Group clarifies and evaluates all suggestions 4. Each participant presents one idea to group

3. Members write down ideas individually

Homework for group presentation

Prepare for a 15 minute group presentation on Case Problem 5-B: Staples Invention Quest, page 190:

Describe shortly the case problem Answer questions 1, 2, and 3 in the case problem Email your files to the lecturer

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