CHAPTER 5: Making, Learning, Creativity, and Entrepreneurship.
I- The Nature of Managerial Decision Making.
Decision making: The process by which managers respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action.
A) Programmed and Nonprogrammed Decision Making.
Programmed decision making: Routine, virtually automatic decision making that follows established rules or guidelines.
Nonprogrammed decision making: Nonroutine decision making that occurs in response to unusual, unpredictable opportunities and threats.
Intuition: Feelings, beliefs, and hunches that come readily to mind, require little effort ...view middle of the document...
Risk and uncertainty: - Risk: The degree of probability that the possible outcomes of a particular course of action will occur.
- Uncertainty: Unpredictability.
Ambiguous Information: Information that can be interpreted in multiple and often conflicting ways.
Satisficing: Searching for and choosing an acceptable, or satisfactory, response to problems and opportunities, rather than trying to make the best decision.
Summary: Programmed decisions are routine decisions made so often that mangers have developed decision rules to be followed automatically. Nonprogrammed decisions are made in response to situations that are unusual or novel; they are nonroutine decisions. The classical model of decision making assumes that decision makers have complete information, are able to process that information in an objective, rational manner, and make optimum decisions. March and Simon argued that mangers exhibit bounded rationality, rarely have access to all the information they need to make optimum decisions, and consequently satisfice and rely on their intuition and judgment when making decisions.
II- Steps in the Decision-Making Process.
Summary: When making decisions, managers should take these six steps: recognize the need for a decision, generate alternatives, assess alternatives, choose among alternatives, implement the chosen alternative, and learn from feedback.
III- Group Decision Making.
A) The Perils of Groupthink.
Groupthink: A pattern of faulty and biased decision making that occurs in groups whose members strive for agreement among themselves at the expense of accurately assessing information relevant to a decision.
B) Devil’s advocacy.
Devil’s advocacy: Critical analysis of a preferred alternative made in response to challenges raised by a group member whom playing the role of devil’s advocate, defends unpopular or opposing alternatives for the sake of argument.
C) Diversity among Decision Makers.
Another way to improve group decision making is to promote diversity in decision-making groups.
Summary: Many advantages are associated with group decision making, but there are also several disadvantages. One major source of poor decision making is groupthink. Afflicted decision makers collectively embark on a dubious course of action without questioning the assumptions that underlie their decision. Managers can improve the quality of group decision making by using techniques such as devil’s advocacy and dialectical inquiry and by increasing diversity in the decision-making group.
IV- Organizational Learning and Creativity.
Organizational learning: The process through which managers seek to improve employees’ desire and ability to understand and manager the organization and its task environment.
Learning organization: An organization in which managers try to maximize the ability of individuals and groups to think and behave creatively and thus maximize the potential for organizational learning to take place.