Chapter 4 Creative Problemsolving and Decisionmaking

Learning Outcomes

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Learning Outcomes (contd)

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Christopher Columbus School of anagement! ("#$"-"$%&)

'(hen he left his port) he did not kno* *here he *as going to) (hen he arrived) he did not kno* *here he *as) (hen he returned) he did not kno* *here he had come from+,
( anagement -oda.)"//01"#(#)) a.)

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Problem-solving and Decision-making

Problem 2 situation that e3ists *hen ob4ectives are not being met+ Problem-solving -he process of taking corrective action to meet ob4ectives+ Decision-making -he process of selecting an alternative course of action that *ill solve a problem+ anagers need to make proficient decisions *hile performing the functions of management+

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anagement) Decision-making) and Problem-solving

-he 5elationship 2mong anagement 6unctions) Decision-making) and Problem-solving anagers need to make proficient decisions *hile performing the functions of management+

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-he Decisionmaking odel

2 si3-step model that *hen properl. utili7ed increases chances of success in decision-making and problemsolving+

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Decision-making St.les
5efle3ive St.le akes 8uick decisions *ithout taking the time to get all the information that ma. be needed and *ithout considering all the alternatives+ 5eflective St.le -akes plent. of time to make decision) gathering considerable information and anal.7ing several alternatives+ Consistent -ends to make decisions *ithout rushing or *asting time+

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-.pes of Decisions
Programmed Decisions 5ecurring or routine situations in *hich the decision-maker should use decision rules or organisational policies and procedures to make the decision+ 9on-programmed Decisions Significant and non-recurring and non-routine situations in *hich the decision-maker should use the decision-making model+

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Decision-making Structure

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Decision-making

odels

5ational odel (Classical odel) -he decision-maker attempts to use optimizing) selecting the best possible alternative+ -he :ounded 5ationalit. odel -he decision-maker uses satisficing) selecting the first alternative that meets the minimal criteria for solving the problem+

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(hich Decision

odel to ;se

<3hibit #=#a
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Decision-making Conditions
Certaint. <ach alternatives outcome is kno*n in advance+ 5isk Probabilities can be assigned to each alternative+ ;ncertaint. Lack of information or kno*ledge makes the each alternative unpredictable such that no probabilities can be determined+

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Decision-making Conditions Continuum

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Potential 2dvantages and Disadvantages of ;sing >roup Decision-making

Potential 2dvantages
"+ :etter 8ualit. decisions ?+ ore information) alternatives) creativit.) and innovation

Potential Disadvantages
"+ (asted time and slo*er decision making ?+ Satisficing @+ Domination and goal displacement #+ Conformit. and groupthink

@+ :etter understanding of the decision #+ >reater commitment to the decision $+ Amproved morale and motivation &+ >ood training

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(hen to ;se >roup or Andividual Decision-making

<3hibit #=#c
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Classif.ing the Opportunit. or Problem Continuums

Relationship among:
Nonprogrammed Decision (Significant, nonrecurring and nonroutine)

Decision-Making Structure
Programmed Decision (Nonsignificant, recurring, and routine)

Decision-Making Conditions
ncertaint! ($utcome of alternati%es unpredicta&le) Risk Certaint! ($utcome of alternati%es predicta&le)

#hich Decision Model to

Decision-Making Model ($ptimi'ing)

se
"ounded Rationalit! Model ( Satisficing)

#hen to
(roup Decisions

se (roup or )ndi%idual Decision-making

)ndi%idual Decisions

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Define the Opportunit. or Problem

Distinguish S.mptoms from the Cause of the Problem List the observable and describable occurrences (s.mptoms) that indicate a problem e3ists+ Determine the cause of the problem+ 5emoving the cause should cause the s.mptoms to disappear or cease+ S.mptom1 Customer dissatisfaction Cause1 Poorl. trained emplo.ees Solution1 Amplement customer relations training program for emplo.ees

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Set Ob4ectives and Criteria

Setting Ob4ectives Anvolves establishing clear ob4ectives that *ill make for better decisions+ Ob4ectives state *hat the decisions should accomplish in solving a problem or taking advantage of an opportunit.+ Setting Criteria Anvolves setting standards that an alternative must meet to be selected as the decision that *ill accomplish the ob4ective+

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>enerate Creative 2lternatives

Annovation -he implementation of a ne* idea Product innovation (ne* things) Process innovation (ne* *a. of doing things) Creativit. 2 *a. of thinking that generates ne* ideas -he Creative Process Preparation Ancubation and illumination <valuation

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Stages in the Creative Process

:ecome familiar *ith the problemB generate as man. alternatives as possible+

-ake some time before *orking on the problem again to gain additional insight+

:efore implementing the solution) evaluate the alternative to be sure it is practical+

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Characteristics of ;seful Anformation

-imeliness Cualit. (2ccurac.) Completeness (2mount) 5elevance

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>roup Decision-making -echni8ues -hat 6oster Creativit.

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>enerating Creative 2lternatives

:rainstorming -he process of suggesting man. possible alternatives *ithout evaluation+ S.nectics -he process of generating novel alternatives through role pla.ing and fantasi7ing+ 9ominal >rouping -he process of generating and evaluating alternatives using a structured voting method that includes listing) recording) clarification) ranking) discussion) and voting to select an alternative+

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>enerating Creative 2lternatives

Consensus apping (Ringi) -he process of developing group agreement on a solution to a problem+ Delphi -echni8ue -he process of using a series of confidential 8uestionnaires posed to e3perts to refine a solution+

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5esponses -hat Dill Creativit.

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2nal.7ing the 6easibilit. of 2lternatives

Cuantitative -echni8ues :reak-even anal.sis Capital budgeting Pa.back Discounted cash flo* Linear programming Cueuing theor. Probabilit. theor.

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-he Depner--regoe

ethod

"+ Compare each alternative to the 'must, alternative+ ?+ 5ate each '*ant, criterion on a scale of " to "% ("% being the most important)+ @+ 2ssign a value of " to "% ("% being the highest) to ho* *ell each alternative meets the '*ant, criteria+ #+ Compute the *eighted score ((S) for each alternative+ $+ Select the alternative *ith the highest total (S+

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-he Depner--regoe
ust Criteria E5@% %%% (ithin one *eek (ant Criteria <conom. Lo* km Condition Cruise control :lue -otal (+S+ 9: G3 &3 "%3 ?3 @3

ethod for 2nal.7ing 2lternatives

Car " F F Car ? F F eets criteria $ H @$ & H @& $ H $% "H? "% H @ "?& G H #/ # H ?# & H &% %H% %H% "@@ 0 H $& $ H &% 0 H 0% %H% %H% "@&
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Car @ F F

Car # F 9

Cost-:enefit (Pros and Cons) 2nal.sis

Cost-:enefit 2nal.sis 2 techni8ue for comparing the cost and benefit of each alternative course of action using sub4ective intuition and 4udgment along *ith math+ -he 2lternative 2nal.sis -echni8ues Continuum1

<3hibit #="%
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Plan) Amplement) and Control

Plan Develop a plan of action and a schedule of implementation+ Amplement the Plan Communicate and delegate for direct action+ Control ;se checkpoints to determine *hether the alternative is solving the problem+ 2void escalation of commitment to a bad alternative+

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Decision -ree

<3hibit #=""
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Situational

anagement1 Decision-making (")

odel #=?a
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Situational

anagement1 Decision-making (?)

odel #=?b
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-utorial
;se a method that applies both 8uantitative and 8ualitative techni8ues for .our decision to stud. in the Postgraduate Programme of the Department of anagement) ;(C+ ethod1 I Develop t*o ' ;S-, criteria I Adentif. three other tertiar. institutions+ I <ach member of the group identifies criteria+ I -he group reaches consensus on the "% most appropriate '(29-, criteria+ I ;se the Depner--regoe ethod 2t the end of the -utorial Session) hand in .our group*ork *ith each students details
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