Decision Making and Creativity

McGraw-Hill/Irwin McShane/Von Glinow OB 5e

Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Decision Making at Google

Google is a hotbed of creativity and innovation by giving staff 20 percent of their time to work on pet projects, using evidencebased experiments to test ideas, and involving employees in organizational decisions.

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Decision Making Defined

Decision making is a conscious process of making choices among one or more alternatives with the intention of moving toward some desired state of affairs.

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Rational Choice Decision Process

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Rational Choice Decision Process

Identify problem/opportunity
Symptom vs problem

Choose decision process

e.g. (non)programmed

Develop/identify alternatives
Search, then develop

Choose best alternative

Subjective expected utility

Implement choice Evaluate choice

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Problem Identification Process

Problems and opportunities are not announced or pre-defined Use logical analysis and nonconscious emotional reaction during perceptual process

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No Problem, Houston?
NASAs space shuttle Columbia disintegrated during re-entry, killing all seven crewmembers. A special accident investigation board concluded that NASAs middle management continually resisted attempts to recognize that the Columbia was in trouble, and therefore made no attempt to prevent loss of life.

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Problem Identification Challenges

Stakeholder framing

Perceptual defense
Mental models Decisive leadership Solution-focused problems

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Identifying Problems Effectively

1.

Be aware of perceptual and diagnostic limitations Fight against pressure to look decisive Maintain divine discontent (aversion to complacency) Discussing the situation with colleagues -- see different perspectives

2.

3.

4.

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Making Choices: Rational vs OB Views

Rational Choice Paradigm Assumptions
Goals are clear, compatible, and agreed upon

Observations from Organizational Behavior

Goals are ambiguous, conflicting, and lack agreement

People are able to calculate all alternatives and their outcomes

People have limited information processing abilities

People evaluate all alternatives simultaneously

People evaluate alternatives sequentially

more
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Making Choices: Rational vs OB Views

Rational Choice Paradigm Assumptions
People use absolute standards to evaluate alternatives

Observations from Organizational Behavior

People evaluate alternatives against an implicit favorite

People make choices using factual information

People make choices using perceptually distorted information

People choose the alternative with the highest payoff (SEU)

People evaluate alternatives sequentially

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Biased Decision Heuristics

People have built-in decision heuristics that bias evaluation of alternatives
1. Anchoring and adjustment initial information (e.g.,

opening bid) influences evaluation of subsequent information

2. Availability heuristic we estimate probabilities by how

easy we can recall the event, but other factors influence ease of recall
3. Representativeness heuristic -- we estimate

probabilities by how much they represent something (e.g. stereotypes) in spite of better probability info
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Paralyzed by Choice
Research has found that when decision makers are presented with more options, they are less likely to make any decision at all. This paralysis of choice occurs even when there are clear benefits of selecting any alternative (such as joining a company retirement plan).

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Emotions and Making Choices

1.

Emotions form preferences before we consciously evaluate those choices Moods and emotions influence how well we follow the decision process We listen in on our emotions and use that information to make choices

2.

3.

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Intuitive Decision Making

Ability to know when a problem or opportunity exists and select the best course of action without conscious reasoning Intuition as emotional experience
Gut feelings are emotional signals Not all emotional signals are intuition

Intuition as rapid nonconscious analysis

Uses action scripts

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Making Choices more Effectively

1.

Systematically evaluate alternatives against relevant factors Be aware of effects of emotions on decision preferences and evaluation process Scenario planning

2.

3.

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Postdecisional Justification

Tendency to inflate quality of the selected option; forget or downplay rejected alternatives Results from need to maintain a positive selfidentity Initially produces excessively optimistic evaluation of decision

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Escalation of Commitment

The tendency to repeat an apparently bad decision or allocate more resources to a failing course of action Four main causes of escalation:
Self-justification
Prospect theory effect Perceptual blinders Closing costs

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Evaluating Decisions More Effectively

1. 2.

Separate decision choosers from evaluators Establish a preset level to abandon the project Find sources of systematic and clear feedback Involve several people in the evaluation process

3.

4.

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Involvement at Thai Carbon Black

Thai Cabon Black, the ThaiIndian joint venture, relies on employee involvement to boost productivity and quality. Employees submit hundreds of suggestions in little red boxes located around the site Participatory management meetings are held every month

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Employee Involvement Defined

The degree to which employees influence how their work is organized and carried out Different levels and forms of involvement

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Employee Involvement Model

Potential Involvement Outcomes

Employee Involvement

Better problem identification Synergy produces more/better solutions Better at picking the best choice Higher decision commitment

Contingencies of Involvement

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Contingencies of Involvement
Higher employee involvement is better when:
Decision Structure Knowledge Source Decision Commitment
Problem is new & complex (i.e nonprogrammed decision) Employees have relevant knowledge beyond leader Employees would lack commitment unless involved 1. Norms support firms goals 2. Employee agreement likely

Risk of Conflict

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Going for WOW at NottinghamSpirk

Team members at Nottingham-Spirk Design Associates Inc. give coworker Craig Saunders (standing) a WOW rating for one of the firm's creative products, the SwifferVac. Nottingham-Spirks work environment supports creativity.
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Creativity Defined

Developing an original idea that makes a socially recognized contribution

Applies to all aspects of the decision process

problems, alternatives, solutions

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Creative Process Model

Verification

Insight

Incubation

Preparation

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Characteristics of Creative People

Above average intelligence Persistence Relevant knowledge and experience

Independent imagination traits

Higher openness to experience personality Lower need for affiliation motivation

Higher self-direction/stimulation values

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Creative Work Environments

Learning orientation
Encourage experimentation
Tolerate mistakes

Intrinsically motivating work

Task significance, autonomy, feedback

Open communication and sufficient resources Team competition and time pressure have complex effect on creativity
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Creative Activities
Redefine the Problem Associative Play Storytelling CrossPollination Diverse teams

Review abandoned projects Explore issue with other people

Artistic activities Morphological analysis

Information sessions Internal tradeshows

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Decision Making and Creativity

McGraw-Hill/Irwin McShane/Von Glinow OB 5e

Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Solutions to Creativity Brainbusters

McGraw-Hill/Irwin McShane/Von Glinow OB 5e

Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Double Circle Problem

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Nine Dot Problem

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Nine Dot Problem Revisited

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Word Search

FCIRVEEALTETITVEERS

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Burning Ropes

After first rope burned i.e. 30 min.

One Hour to Burn Completely

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