Corporate Strategy and Decision Making

Lecture 2: Choice and Types of Decision

Introduction
Decision making is generally considered by managers, and the academic discipline of
management, to be central to organizational activity. There are several reasons why decision
making is considered to be so crucial. There is the need to formalize and codify management
work, to promote communication between managers and others in organizations, and to be able to
justify a selected course of action from the range of likely or perceived options. There is also the
very real disciplinary imperative to distinguish management work from other types of work in
organizations. Describing management work as decision making seems so obvious and natural
that it is hard to conceive of an alternative to it. Nevertheless, we will critically evaluate some of
the assumptions behind traditional decision-making studies, including the notions of choice! and
decision!, drawing on traditions which normally lie outside the management discipline and its
decision-making literature. "e will e#amine some major difficulties associated with these
traditional management decision-making theories and later we will introduce a postmodern,
te#tual process model of organizations $%larke &''&, &''() *instead &'+,, &'''-, which
addresses some of the concerns raised in our evaluation of the traditional decision-making
literature.
Despite the fact that managers are often e#pected to be and to appear decisive!, and
fre.uently report themselves to be decision makers!, actually defining a decision! and
identifying when it has been made is e#tremely difficult $/iller, 0ickson and "ilson &''1-. The
process of decision making most often seems to resist reduction to discrete decisions taken, or
choices avoided or suppressed.
The 2cientific /anagement approach even reduced the idea of the decision itself to the point
of disappearance, implying that management was a process of applying and following abstract
principles. Decision making was, at best, a matter which was tightly constrained by evidence
gathered through scientific methods, on the optimal way of accomplishing a task. 3t was %hester
4arnard $&'5+-, in The Functions of the Executive, who contested these assumptions and argued
that managers have a range of possible actions over which they can e#ercise discretion and
choice. Decision making for 4arnard is rational, purposeful and intentional, and these
characteristics have dominated subse.uent approaches.
/any writers on decision making have emphasized the rational aspect of decision making,
seeing causes and effects and assuming that all actions have clear and identifiable antecedents and
conse.uences. The theorists tend to assume that decision makers are fully aware of what they are
doing, and that they look for the best or optimum outcome in all circumstances. There is also a
tendency to regard decisions as being made at specific moments in time, perhaps at meetings
specially called for the purpose. 2everal pieces of research, which we will discuss later, have
demonstrated that all of these assumptions can be .uestioned.
"e will e#amine in more detail the following approaches to decision making6 the rational
model of decision making, the administrative or bureaucratic model $which .uestions whether
managers are capable of making rational decisions-, the garbage can model of decision making
$which tries to introduce the idea that decisions are really problems looking for solutions-, and the
political model of decision making $which includes discussion of the role of very powerful
groups in decision making called dominant coalitions! and why many decisions are really non-
decisions!-. 4efore we e#amine these models, however, we need to consider what might
constitute a decision!.
What is a decision?
"e discuss the developments associated with later versions of the rational decision-making model
later, but what concerns us now is how the assumptions of this model have led people to define a
decision! as a product of decision-making processes. 3n fact, the process of identifying a decision
is often problematic, as 0enry /intzberg, 7ames 8. "aters, 8ndrew /. 9ettigrew and :ichard
4utler $&'';6 (- argue, because decisions are difficult to track down! and, as the cases above
illustrate, managers often seek to avoid making decisions or obscure them. <or /intzberg et al.,
because decisions may unfold rather than be e#plicitly made at one point in time, the important
thing is action = once actions are observed, then patterns can be observed, and the role of the
decision in determining these actions can be inferred by looking for a point where consensus
emerges before the action. 3n effect, they say that decision! is too slippery a concept to work with
and displace it in favour of action, although they infer that decision is a necessary prior condition
for action. 8n alternative approach sees decisions as occurring in a flow of smaller decisional
acts. <or e#ample, when a manager chooses to pay attention to balance sheet figures, rather than,
say, customer complaints, that is a kind of decision, but a very restricted one. This we can call a
decisional act.
Think of a manager who at the beginning of the day sets priorities on several tasks, regarding
some as more important, some less, and orders them accordingly. 2ome tasks may not be very
important in themselves, such as putting more paper in the office printer, but may need to be done
first, so the tasks need to be se.uenced. 2ometimes the tasks may be grouped or divided.
8dditionally, the manager will have to consider whose advice to take, and whose to ignore, whose
interests to respect and whose to take lightly, effectively placing some things at the centre of the
day and others at the margins. 8s events unfold, some commitments may need to be cancelled or
erased, some pencilled in! for the future. 3ndeed, in ordering, se.uencing, dividing up, centring,
marginalizing, planning and erasing the day in this way, managers could be said to be writing!
their world = because these are e#actly the same things that we do when we write something. This
is no mere metaphorical mapping. /any of these tasks will literally be achieved through the
writing of words on paper, disk and screen $>allinikos, &''1) ?zzamel et al., forthcoming)
*ennie, (;;&-.
*ittle decisional acts pile up on each other, as managers and others are constantly making
them, and form what can be called a text. Decision processes produce not decisions as products,
but te#ts = particular patterns of organizational e#perience that people come to accept as being
relatively true or authoritative. <or e#ample, consider the idea of a decision support system. The
simplest of these is the coin which can be tossed in the air and determines, for e#ample, which
side bats first in a cricket match. 0owever, the situation must already be carved up into a dualism,
so that it can be e#pressed in the form heads is yes, tails is no! or something similar. 2o a range
of possibilities is suppressed, condensed or discarded so that two alternatives can be carved out of
the moment and a decision can be made. 8 slightly more elaborate device, which incorporates
more variety, is the die, as e#emplified in *uke :einhardt!s novel The Dice-Man. 0ere the hero,
or anti-hero, develops a system for running his whole life based on the principle that all decisions
$no matter how small or large, important or unimportant- can be divided into si# optional courses
of action, one of which has to be unacceptable to the decision maker. This element of challenge
and risk adds e#citement to the process = the possibility that the randomization of decision upon
decision in this way as each day unfolds and presents its possibilities for action could lead to
either a highly conservative outcome or a wildly unpredictable one. The decision maker never
knows what is going to happen, and has only the responsibility of making the range of possible
choices, never the choice itself, and feels a sense of being unburdened@ The point here is that the
die imposes a set of decision rules, which are appropriate to its technology $a si#-sided cube-, and
also to its genre, or the style of its use, that of a game which one can win or lose. The rules,
technology and genre of the decision system, especially with more comple# systems, unfold to
create a pattern of inclusion and e#clusion which we can regard as a text. To pursue :einhardt!s
e#ample, the dice-man is included as a definer of alternatives but e#cluded as a chooser between
these alternatives, although he has, of course, already taken another choice, that of having his life
run by the die according to the self-imposed rules of his game. Ane unfolding of a life ordered in
this way is the te#t of The Dice-Man.
*ater we will look more closely at what a textual approach to decision making looks like.
0owever, we will now take a look at what traditional theories of decision making have to say
about choice!.
Traditional decision-making theories and choice
Decision making is a comple# process which can be seen to involve many different stages or
events before an actual decision is taken. Despite what we have just argued, managers do have to
make decisions, and under varying circumstances, pressures and constraints. These have naturally
led to competing e#planations of decision making in organizations. There is strong evidence
among traditional theories of a polarization between unitary and pluralist approaches to decision
making. nitar! approaches to decision making posit a general agreement about goals and the
best means to achieve them. "luralist approaches to decision making emphasize conflict and
power struggles between individuals coalitions in organizations in circumstances in which
participants have substantial knowledge and information.
The basis of most of the traditional models of decision making, as we have observed, is
choice. Decision making in this approach can be defined as a response to a situation re#uiring a
choice. This is made after evaluation of alternatives on the basis of relevant choice criteria.
?#amples of such criteria could be ma#imum contribution to profitability!, must complement
e#isting product range! or must have an engine capacity of two litres!. 3n practice, however, as
we have also noted, decision making is not always as objective and rational as this suggests. 3t
may be influenced by values and institutional arrangements which bias data collection and
evaluation, and affect the formulation of choice criteria $/arch, &'+B-. 9arties to a decision
process may be unaware of the influence of these factors or may be outflanked because of their
ignorance. 3f one accepts that organizational participants pursue objectives then the .uestion of
choice inevitably arises because there will not always be agreement about goals or the means to
achieve them. ?ven if there is agreement on these things, the constrained nature of organizational
resources is such that there will always be a weighing of pros and cons about particular courses of
action. Decision situations in organizations range from relatively simple within policy! matters of
staffing and operations to more open-ended concerns about goals, missions and strategic
direction.
2ome approaches to decision making focus on identifying the types of choices available to
managers. These are6 clear choice, competing choice, choice avoidance and choice suppression.
8n e#ample of a relatively clear choice would be that between which of two new products to
adopt, 8 or 4. This type of choice is straightforward because the same decision-making
methodologies can be applied to each alternative. 3f the choice criterion to be applied in this case
is ma#imum contribution to profitability!, it should be a relatively simple matter to estimate the
e#pected returns for each alternative and calculate contribution to profitability. This e#ample
assumes that agreement has already been reached that there should be a new product, and that
choice is limited to determining the best one financially. 8n e#ample of a competing choice
would be the alternatives of improving profitability by either launching a new product or
upgrading computing facilities in order to improve bad debt collection. This type of choice is
more open-ended than the previous e#ample, and though it is still possible to evaluate each
alternative in terms of profitability, it involves different assumptions and affects different interests
within the organization. 3t might therefore be more problematical and conflict ridden. $hoice
avoidance occurs when issues arise re.uiring resolution but this does not occur. Non-action in
this situation is itself a decision. $hoice suppression is when information is distorted or
suppressed in such a way that any decision made on an issue entails a predetermined outcome.
This is a form of non-decision making, or to put it another way, the decision in pre-fabricated so
that, as the e# 4ritish 9rime /inister, /argaret Thatcher, was fond of saying, There is no
alternative!.
Ather approaches to decision making have sought to identify or categorize decisions into
various types. Ane advantage of looking at decisions in this way is that it helps highlight the
varying comple#ity of decisions that managers have to deal with. 3t also overcomes the tendency
to simplify this aspect of decision making. *ater when we e#amine various models of decision
making, it will become apparent that many of these focus on certain types of decisions to the
e#clusion of others. 3n doing so, they tend to simplify the decision-making aspect of management
by focussing upon only those types of decisions that can be e#plained by the particular theory
being posited.
Decision types
3n the largest study of decisions to date $undertaken by David 0ickson, :ichard 4utler, David
%ray, Ceoffrey /allory and David "ilson $&'+1--, the researchers found it necessary to describe
the processes of decision making by categorizing decisions. The 4radford researchers $i.e. from
4radford Dniversity in the D>- argued that the categorization was related to the content of the
decision. They identified three types of categorization for decisions6 sporadic, fluid or constricted,
and these are illustrated in <igure &E.&.
%poradic decision processes are those which are informal, and will suffer from delays through
being impeded by all sorts of things from waiting for information to overcoming resistance or
opposition. There is often a variability in information because it is gathered from various sources
of e#pertise, some better than others. 8s a result information sources are not usually regarded
with confidence and more information may be re.uested. There will usually be scope for
negotiation which takes place informally through personal contacts. The decision will take a long
time to make $between one and a half and three years- and will eventually be made at the highest
level. 9olitical activity may well come to the fore in these decisions, and managers often find
themselves involved in more than one of these processes at any one time. 8n e#ample may be a
decision to purchase a stake in a supplier, where there is uncertainty about the future of the
market. This kind of decision does not happen on a routine basis and tends to entail weighty and
controversial considerations, what 0ickson et al. call vortex matters.
Fluid decision processes, in contrast and as their name suggests, flow. They are formally
channelled, and relatively speedy and predictable. 2ources of information are fewer, more
familiar and seen to be reliable. %onse.uently, there are fewer delays. There will be some, but not
much, negotiation, more formal meetings, but, as with the sporadic type, the decision will
eventually be made at the highest level. 8n e#ample given by 0ickson et al. $&'+16 &(;=&- is the
decision of a metropolitan authority to launch a lottery, which went through all the necessary
committees very smoothly. The smoothness of passage of the decision in this e#ample is likely to
depend on the degree of political support it has and the majority of the dominant party. 3n other
less formally political situations the known sponsorship of a dominant coalition can help to
ensure that the process runs smoothly, if all other things are e.ual. Decision processes will be
fluid when confronting unusual, but non-controversial, tractable matters.
$onstricted decision processes are narrowly channelled. There is a need for more sources of
information, but this is usually technical and there is less effort needed to ac.uire it as it is readily
available. There is scope for negotiation but there are fewer meetings, and the decision can
usually be made at the local level or at least at a lower level than the top of the hierarchy. 8n
e#ample given by 0ickson et al. is that of an insurance company which wanted to modernize its
processes. These kind of decisions deal with familiar matters.
The attempt to typologize decisions according to their characteristics by the 4radford 2tudies
yielded some useful insights into the differences between decisions, and the conditions under
which organizational politics were likely to have more impact. "e go on to e#amine various
models of decision making. ?ach of these makes different assumptions about various aspects of
decision making such as6 the preferences and goals of participants) the types of conditions with
which different styles and processes of decision making are associated) the nature of power and
authority implicit in them) e#pected results and outcomes) the nature of the technology employed)
and the underlying values, beliefs and dominant rationale. Table &E.& in the te#t $see below-
summarizes the key dimensions on which these approaches vary. Different types of choice criteria
are implicit in each model. Table &E.& also includes what we have termed the postmodern
$textual& approach to decision making, which was not originally mentioned by 7effrey 9feffer
$&'+&-, whose work forms the basis of the Table.
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