Decision Making Processes

INTRODUCTION

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 A Management Team
 Leader/Entrepreneur - aggressive,
driven, quick
 Finance - analytically focused, thorough
 Sales - enthusiastic, sometimes
impatient
 R&D - balance between feasible and
desirable
 Production - reality driven
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 The Paradox
 We need this diversity on a
management team to provide the
necessary expertise to make the
organization successful.
 BUT, with so many different mindsets,
how can we coordinate their efforts in
an effective and efficient way.

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 The Solution
 We need simple, common, sensible
guidelines and procedures expressed in
commonly understood language.
 for gathering, sharing, and using
information
 for solving problems
 for making decisions
 for protecting the organization’s future

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 The Human Nature Aspect
 People generally resist change
 BUT, people will embrace change that
seems good for them and the things
they care about.
 A system for change must
 facilitate introduction of ideas
 provide means for implementation
 offer rewards

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 Four Basic Patterns of
Thinking
 EVERY productive activity is related to one of
four basic patterns of thinking.
(1) What is going on? - clarification
(2) Why did this happen? – cause and effect
(3) Which course of action should we take? -
choice
(4) What lies ahead? – looks into future

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 The Four Thinking Patterns
Just How Important Are They?
 These four patterns have not altered
substantially since the emergence of the
human race.
 They are universally applicable to any
situation.
 Survival is guaranteed by the ability to
use these patterns.

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 The Four Basic Rational
Processes
 Applying the four basic thinking
patterns in an organizational setting
leads to systematic procedures for using
and sharing information about
organizational concerns.
 Known as the 4 basic rational processes,
they are universally applicable
regardless of cultural setting or content.
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 The Four Basic Rational
Processes
 Situation Appraisal
 What is Going On?
 Breaks down complex into components
 Separates relevant from irrelevant

 Sets priorities and delegates responsibilities

 Identifies
 Problems to be solved
 Decisions to be made

 Future events to be analyzed

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 The Four Basic Rational
Processes
 Problem Analysis
 Why Did This Happen?
 Based on the cause-and-effect thinking pattern
 Enables us to:
 identify, describe, analyze, and resolve
 situation in which something has gone wrong
without explanation
 Methodical means to extract relevant and
useful information about a situation
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 The Four Basic Rational
Processes
 Decision Analysis
 Which Course of Action?
 Based on the choice-making thinking pattern
 Methodical means to examine:
 the purpose of the decision
 the available options

 the risks of each alternative

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 The Four Basic Rational
Processes
 Potential Problem Analysis
 What Lies Ahead?
 Based on the anticipating the future thinking
pattern
 Methodical means to:
 avoid possible negative consequences
 turn situations to our advantage

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Problem Solving / Decision Making Chapter 1 - 13
 Problem Solving /
Decision Making

SITUATION APPRAISAL

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 Evaluative Techniques of
Situation Appraisal
 Where to Begin
 How to recognize situations that require
action
 How to break apart overlapping and
confusing issues
 How to set priorities
 How to manage a number of simultaneous
activities efficiently

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 Where to Begin?
 When faced with a situation, we may
experience confusion and uncertainty
over where to begin.
 We may struggle to recognize and
break apart actions that overlap and are
required to address the situation.

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 Where to Begin
A manager who is skilled at the three basic
rational processes of PA, DA, and PPA is
more efficient than one who is not.
 These three rational processes are analytical in
nature - there purpose is to analyze and resolve
 But to be more effective, a manager must also
be skilled at another rational process:
Situation Appraisal (SA)
 SA is an evaluative technique leading to the
proper selection and use the analytical techniques
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 Stages of Situation Appraisal

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 Recognize Concerns
Four Activities
 Listcurrent deviations, threats, and
opportunities
 Review progress against goals
 Look ahead for surprises
 Search for improvement

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 Recognize Concerns
Specific Questions
 Where are we not meeting standards?
 What problems remain unsolved?
 What recommendations are we working
on?
 What decisions need to be made?
 What major projects, systems, or plans are
about to be implemented?
 What bothers us about …..?

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 Separate and Clarify
Concerns
 Most issues are more complex than they
first appear
 “It is unlikely that employing the
separation step of Situation Appraisal
will be a waste of time.”

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 Separate and Clarify
Specific Questions
 Do we think one action will resolve this?
 Do we agree on the reason for our concern?
 What evidence do we have that this is a
concern?
 What do we mean by ….?
 What is actually happening in this
situation? Anything else?
 What actions are suggested?

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 Separate and Clarify
Specific Questions
 Together, these questions get below the
surface
 They shift us from subjective opinion to
verifiable information
 FACTS and DATA!

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 Separate and Clarify
Specific Questions
 “Without the separating questions, it is
entirely possible for people to sit
through an entire meeting in the
mistaken certainty that their individual,
disparate assessments of a situation
represent the understanding of the
group at large.”

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 Setting Priority
A practical and systematic process for
determining dimensions of importance
 How much time urgency does it have to keep the
concern from becoming difficult, expensive, or
impossible to resolve – TIMING
 Will the concern get worst? What is the best
estimate of its probable growth? - TREND
 How serious is the current impact on people,
safety, cost, productivity, organization etc.? -
IMPACT

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 Setting Priority
 Each dimension is evaluated based on 3
degrees of concern:
 High (H)
 Medium (M)
 Low (L)

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 Setting Priority
 Postpone any concern that ranks low in
all three dimensions
 “Experienced managerial teams …. can
usually pick out the top five (concerns)
in a relatively short time.”
 Don’t be unnecessarily swayed by
activities you enjoy or activities from
demanding people.
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Problem Solving / Decision Making Chapter 1 - 28
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 Plan for Resolution:
Problem Analysis
 Does the situation require explanation?
 Is there a deviation from expected
performance?
 Is the cause of the deviation unknown?
 Would knowing the cause help us to
take more effective action?

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 Plan for Resolution:
Decision Analysis
 Does a choice have to be made?
 Is there a dilemma around the best
action to take?
 Do objectives need to be set in order to
undertake some activity?

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 Plan for Resolution:
Potential Problem Analysis
 Has a decision been made that has not
been implemented, and is it necessary
to act now to avoid possible future
trouble?
 Does a plan need to be made to
safeguard a decision or future activity?
 Can we generate additional value by
implementing a plan or decision?
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 Selecting the Right Rational
Process
 The kind of answer we need determines
the choice of Rational Process
 How much of an answer we need
determines whether we will use all the
process or only part of it.
 Partial use of the rational processes is
common

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Problem Solving / Decision Making Chapter 1 - 34
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 Determine Help Needed
 Often responsibility for resolving
concerns must be shared or assigned to
others
 Who needs to be involved for:
 Information Approval
 Commitment Development
 Implementation Creativity
 Analysis Presentation

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 Determine Help Needed
(continued)
 What needs to be done and when?
 Who will do it?
 Who will document the process and the
results?

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 Summary
 “Far too much time is wasted trying to
make sense of concerns that are
unactionable collections of concerns,
each with its own unique features and
requirements.”
 Formal and informal use of SA can
significantly reduce this waste of time
and energy.
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Problem Solving / Decision Making Chapter 1 - 39