2. Points to be covered
• Types of decisions
• Models of decision making
• The decision making process
• Creativity
3. Understanding Decision Making
• Decision
• A choice made between available alternatives.
• Decision Making
• The process of developing and analyzing alternatives
and choosing from among them.
• Judgment
• The cognitive, or “thinking,” aspects of the decision-
making process.
4. Types of Decisions
• Programmed Decision
• A decision that is repetitive and routine and can be made by using
a definite, systematic procedure.
• Nonprogrammed Decision
• A decision that is unique and novel.
• The Principle of Exception
• “Only bring exceptions to the way things should be to the
manager’s attention. Handle routine matters yourself.”
Programmed
Decisions
Nonprogrammed
Decisions
5. Decision-Making Models
• The Classical Approach
• Have complete or “perfect” information about the situation.
• Distinguish perfectly between the problem and its symptoms.
• Identify all criteria and accurately weigh all the criteria
according to preferences.
• Accurately calculate and choose the alternative with the highest
perceived value.
The problem is
clear and
unambiguous
A single, well-
defined goal is to
be achieved
All alternatives
and consequences
are known
Preferences are
clear
Preferences are
constant and
stable
No time or cost
constraints exist
Final choice will
maximize
economic payoff
6. Decision-Making Models
• The Administrative Approach
• Bounded Rationality (Herbert Simon)
• The boundaries on rational decision making imposed by one’s
values, abilities, and limited capacity for processing
information.
• Satisfice
• To stop the decision-making process when satisfactory
alternatives are found.
7. The Decision-Making Process
Define the problem.
Clarify your objectives.
Identify alternatives.
Analyze the consequences.
Make a choice.
8. Step 1. Define the Problem
1. Start by writing down your initial assessment of
the problem.
2. Dissect the problem.
• What triggered this problem (as I’ve assessed it)?
• Why am I even thinking about solving this problem?
• What is the connection between the trigger and the
problem?
9. Step 2. Clarify Your Objectives
1. Write down all the concerns you hope to
address through your decision.
2. Convert your concerns into specific, concrete
objectives.
3. Separate ends from means to establish your
fundamental objectives.
4. Clarify what you mean by each objective.
5. Test your objectives to see if they capture your
interests.
10. Step 3. Identify Alternatives
1. Generate as many alternatives as you can
yourself.
2. Expand your search, by checking with other
people, including experts.
3. Look at each of your objectives and ask, “how?”
4. Know when to stop.
11. Step 4. Analyze the
Consequences
1. Mentally put yourself into the future.
• Process Analysis
• Solving problems by thinking through the process involved
from beginning to end, imagining, at each step, what actually
would happen.
1. Eliminate any clearly inferior alternatives.
2. Organize your remaining alternatives into a
table (matrix) that provides a concise, bird's-eye
view of the consequences of pursuing each
alternative.
12. Step 5. Make a Choice
• Analyses are useless unless the right choice is
made.
• Under perfect conditions, simply review the
consequences of each alternative, and choose the
alternative that maximizes benefits.
• In practice, making a decision—even a relatively simple
one like choosing a computer—usually can’t be done so
accurately or rationally.
13. How To Make Better Decisions
1. Increase Your Knowledge
• Ask questions.
• Get experience.
• Use consultants.
• Do your research.
• Force yourself to recognize the facts when you see
them (maintain your objectivity).
1. Use Your Intuition
• A cognitive process whereby a person instinctively
makes a decision based on his or her accumulated
knowledge and experience.
14. How To Make Better Decisions
(cont’d)
3. Weigh the Pros and Cons
• Quantify realities by sizing up your options, and
taking into consideration the relative importance of
each of your objectives.
3. Don’t Overstress the Finality of Your Decision
• Remember that few decisions are forever.
• Knowing when to quit is sometimes the smartest
thing a manager can do.
3. Make Sure the Timing Is Right
15. Decision Matrix
• Use weights to provide adjustments for importance
of criteria
• Often subjective, but helps to prioritize
16. Creativity and Decision Making
• Creativity
• The process of developing
original, novel responses to a
problem.
• Brainstorming
• A creativity-stimulating
technique in which prior
judgments and criticisms are
specifically forbidden from
being expressed in order to
encourage the free flow of ideas
which are encouraged.
Creativity
Task motivation
Creativity
skillsExpertise