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 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.
7-2
Rational Choice Decision
Process
3
7-3
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
7-4
Problem Identification Process
Problems and opportunities are not
announced or pre-defined
Use logical analysis and nonconscious
emotional reaction during perceptual process
7-5
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.
7-6
Problem Identification
Challenges
Stakeholder framing
Perceptual defense
Mental models
Decisive leadership
Solution-focused problems
7-7
Identifying Problems Effectively
1. Be aware of perceptual and
diagnostic limitations
2. Fight against pressure to
look decisive
3. Maintain divine discontent
(aversion to complacency)
4. Discussing the situation
with colleagues -- see
different perspectives
7-8
more
Making Choices: Rational vs OB
Views
Goals are ambiguous,
conflicting, and lack agreement
Goals are clear, compatible, and
agreed upon
People are able to calculate all
alternatives and their outcomes
People evaluate all alternatives
simultaneously
People have limited information
processing abilities
People evaluate alternatives
sequentially
Rational Choice
Paradigm Assumptions
Observations from
Organizational Behavior
7-9
Making Choices: Rational vs OB
Views
People evaluate alternatives
against an implicit favorite
People use absolute standards
to evaluate alternatives
People make choices using
factual information
People choose the alternative
with the highest payoff (SEU)
People make choices using
perceptually distorted information
People evaluate alternatives
sequentially
Rational Choice
Paradigm Assumptions
Observations from
Organizational Behavior
7-10
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
7-11
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).
7-12
Emotions and Making Choices
1. Emotions form preferences before we
consciously evaluate those choices
2. Moods and emotions influence how well we
follow the decision process
3. We listen in on our emotions and use that
information to make choices
7-13
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
7-14
Making Choices more Effectively
1. Systematically evaluate alternatives against
relevant factors
2. Be aware of effects of emotions on decision
preferences and evaluation process
3. Scenario planning
7-15
Postdecisional Justification
Tendency to inflate quality of the selected
option; forget or downplay rejected
alternatives
Results from need to maintain a positive self-
identity
Initially produces excessively optimistic
evaluation of decision
7-16
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
7-17
Evaluating Decisions More
Effectively
1. Separate decision choosers from evaluators
2. Establish a preset level to abandon the
project
3. Find sources of systematic and clear
feedback
4. Involve several people in the evaluation
process
7-18
Involvement at Thai Carbon Black
Thai Cabon Black, the Thai-
Indian 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
7-19
Employee Involvement Defined
The degree to which
employees influence how their
work is organized and carried
out
Different levels and forms of
involvement
7-20
Employee Involvement Model
Potential Involvement
Outcomes
Contingencies
of Involvement
Employee
Involvement
Better problem
identification
Synergy produces
more/better solutions
Better at picking the
best choice
Higher decision
commitment
7-21
Contingencies of Involvement
Knowledge
Source
Decision
Commitment
Employees have relevant knowledge
beyond leader
Employees would lack commitment
unless involved
Risk of
Conflict
1. Norms support firms goals
2. Employee agreement likely
Decision
Structure
Problem is new & complex
(i.e nonprogrammed decision)
Higher employee involvement is better when:
7-22
Going for WOW at Nottingham-
Spirk
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.
7-23
Creativity Defined
Developing an original idea that makes a
socially recognized contribution
Applies to all aspects of the decision process
problems, alternatives, solutions
7-24
Preparation
Incubation
Insight
Verification
Creative Process Model
7-25
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
7-26
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
7-27
Creative Activities
Review
abandoned
projects
Explore issue
with other
people

Redefine
the Problem
Storytelling
Artistic activities
Morphological
analysis

Associative
Play
Diverse teams
Information
sessions
Internal
tradeshows
Cross-
Pollination
7-28