Ch.7 Decision Making and Creativity

Ch.7 Decision Making and Creativity

1. RATIONAL CHOICE PARADIGM OF DECISION MAKING

   • Rational choice paradigm
     • The view in decision making that people should-and typically do-use logic and all available information to choose the alternative with the highest value
     • The ultimate principle of the rational choise paradigm is to choose the alternative with the highest:
       • Subjetive expected utility
         • The probability (expectation) of satisfaction (utility) resulting from choosing a specific alternative in a decision
       • Rational Choice Decision Making Process
         • 1. Identify problem or opportunity
           • "what is" "what ought to be"
         • 2. Choose the best decision process
           • Deciding how to decide
         • 3. Discover or develop possible choices
         • 4. Select the choice with the highest value
           • Possible information and possible alternatives
         • 5. Implement the selected choice
         • 6. Evaluate the selected choice
           • Evaluated "what is" and "what ought to be"
       • Decision making
         • The conscious process of making choices among alternatives with the intention of moving toward some desired state of affairs

2. IDENTIFY PROBLEMS AND OPPORTUNITIES

   • Stakeholder framing
     • Employees, suppliers, customers and other stakeholders have vested interest when bringing good or bad news to corporate decision makers
   • Mental models
     • Mental models are visual or retaional images of the external world, they fill in information that we don't immediately see, which helps us undestand and navigate in our surrounding environment
   • Decisive leadership
     • Being decisive inclues quickly forming an opinion of whether an event signals a problem or opportunity
   • Solution-focused problems
     • This statement doesn't describe the problem; it's really a slightly rephrased presentation of a solution to an ill-defined problem
   • Perceptual defense
     • People sometimes block out bad news as coping mechanism

3. SEARCHING FOR, EVALUATING, AND CHOOSING ALTERNATIVES

   • Bounded rationality
     • The view that people are bounded in their decision-making capabilities, including access to limited information, limited information processing, and tendency toward satisficing racing than maximizing when making choices
   • Biased Decision Heuristics
     • Anchoring and adjustment heuristic
       • A natural tendency for people to be influenced by an initial anchor point such that they don't sufficiently move away from that point as new information is provided
     • Availability heuristic
       • A natural tendency to assign higher probabilities to objetcs or events that are easier to recall from memory, even though ease of recall is also affected by nonprobability factors (e.g. emotional response, recent events)
     • Representativeness heuristic
       • A natural tendency to evaluate probabilities of events or objects by the degree to which they resemble (are representative of) other events or objects rather than on objetive probability information
   • Problems with maximization
     • Selecting an alternative that is satisfactory or "good enough" rather than the alternative with the highest value (maximization)
   • Evaluating Opportunities
     • Emotions and making choices
       • Emotions form early preference
       • Emotions change the decision evaluation process
       • Emotions serve as information when we evaluate alternatives
         • Intuition
           • The ability to know when a problem or opportunity exists and to select the best course of action without conscious reasoning
       • Making choices more effectively
         • Scenario planning
           • A systematic process of thinking about alternative futures and what the organization should do to anticipate and react to those enviroments

4. Problems with goals

   • Sacar tabla del libro pagina 199

5. Problems with information processing

   • A preferred alternative that the decision maker uses repeatedly as a comparison with other choices

6. EVALUATING DECISION OUTCOMES

   • Escalation of Commitment
     • Causes of escalating commitment
       • Self justification
         • Decision makers typically want to appear rational and effective
       • Prospect theory effect
         • A natural tendency to feel more dissatisfaction from losing a particular amount that satisfaction from gaining an equal amount
       • Perceptual blinders
         • Escalation disincentive to axing a failing project is the cost of doing so
       • Closing costs
         • Another disincentive to axing a failing project is the cost of doing so
     • The tendency to repeat an apparently bad decision or allocate more resources to a failing course of action

7. CREATIVITY

   • The development of original ideas that make a socially recognized contribution
   • The creative process
   • Divergent thinking
     • Reframing a problem in a unique way and generating different approaches to the issue
   • Characteristics of creative people
     • Cognitive and practical intelligence
       • Creative people have above-average intelligence to synthesize information, analyze ideas and apply their ideas
     • Persistence
       • Creative people have persistence, which is based on a higher need for achievement, a strong motivation from the task itself, and a moderate or high degree of self-esteem
     • Knowledge and experience
       • Creative people require a foundation of knowledge and experience to discover or acquire new knowledge
     • Characteristics of creative people
       • Mapa pagina 209
     • Organizational conditions supporting creativity
     • Activities that encourage creativity

8. EMPLOYEE INVOLVEMENT IN DECISION MAKING

   • Employee involvement
     • The degree to which employees influence how their work is organized and carried out
     • Decide alone
     • Receive information from individualds
     • Consult with individuals
     • Consult with the team
     • Facilitate the team's decision
   • Benefits of employee involvement
     • Model of employee involvement in decision making
       • Página 215
   • Contigencies of employee involvement
     • Decision structure
     • Source of decision knowledge
     • Decision commitment
     • Risk of conflict

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