McGraw-Hill/Irwin

Decision Making and Creativity

Chapter Six

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Decision Making at Radical Ron Sangha/ BC Business Radical Entertainment founder Ian Wilkinson (third from right) meets with employees every week to reinforce the electronic games developer ’ s emphasis on creative decision making and employee involvement.

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Decision Making Defined Ron Sangha/ BC Business 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 6-4

Rational Choice Decision Process Identify problem/opportunity  Problem is a gap between what is and what ought to be Choose decision process  Meta-decision -- e.g. programmed?, involve others?

Develop (and identify) alternatives  Search, then build Choose best alternative  Alternative that maximizes payoff Implement choice Evaluate choice 6-5

Problem Identification Process Problems and opportunities are not announced or pre-defined  need to interpret ambiguous information Problem identification uses both logical analysis and unconscious emotional reaction during perceptual process  need to pay attention to both logic and emotional reaction in problem identification 6-6

No Problem, Houston?

NASA’s space shuttle Columbia disintegrated during re-entry, killing all seven crewmembers. A special accident investigation board concluded that NASA’s 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 1.

Stakeholder framing 2.

Perceptual defense 3.

Mental models 4.

Decisive leadership 5.

Solution-focused problems 6-8

Identifying Problems Effectively Be aware of perceptual and diagnostic limitations Understand mental models Discussing the situation with colleagues -- see different perspectives 6-9

Making Choices: Rational vs OB Views Goals Rational: Clear, compatible, agreed upon OB: Ambiguous, conflicting, lack agreement Processing Information Rational: People can process all information OB: People process only limited information Evaluation Timing Rational: Choices evaluated simultaneously

OB

: Choices evaluated sequentially more 6-10

Making Choices: Rational vs OB (con’t) Standards Rational: Evaluate against absolute standards OB: Evaluate against implicit favorite Info Quality Rational: People rely on factual information OB: Rely on perceptually distorted information Decision Objective Rational: Maximization -- the optimal choice OB: Satisficing - a “good enough” choice 6-11

Emotions and Making Choices Emotional marker process forms preferences before we consciously think about choices Moods and emotions influence the decision process  affects vigilance, risk aversion, etc.

We ‘listen in’ on our emotions and use that information to make our choices 6-12

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 unconscious analysis  Uses action scripts 6-13

Making Choices more Effectively Systematically evaluate alternatives Balance emotions and rational influences Scenario planning 6-14

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 6-15

Evaluating Decisions Better Separate decision choosers from evaluators Establish a preset level to abandon the project Involve several people in the evaluation process 6-16

McGraw-Hill/Irwin

Employee Involvement

Decision Making and Creativity

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Employee 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 6-18

Employee Involvement Defined The degree to which employees influence how their work is organized and carried out Different levels and forms of involvement 6-19

Employee Involvement Model Employee Involvement Contingencies of Involvement Potential Involvement Outcomes Better problem identification Synergy produces more/better solutions Better at picking the best choice Higher decision commitment 6-20

Contingencies of Involvement Higher employee involvement is better when: Decision Structure • Problem is new & complex (i.e nonprogrammed decision) Knowledge Source • Employees have relevant knowledge beyond leader Decision Commitment Risk of Conflict • Employees would lack commitment unless involved 1.

2.

Norms support firm’s goals Employee agreement likely 6-21

McGraw-Hill/Irwin

Creativity in Decision Making

Decision Making and Creativity

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Creative Process Model

Verification Insight Preparation Incubation

6-23

Characteristics of Creative People

Above average intelligence Persistence Relevant knowledge and experience Inventive thinking style 6-24

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 6-25

Redefine the Problem

• Review abandoned projects • Explore issue with other people Creative Activities

Associative Play

• Storytelling • Artistic activities • Morphological analysis

Cross Pollination

• Diverse teams • Information sessions • Internal tradeshows 6-26

McGraw-Hill/Irwin

Decision Making and Creativity

Chapter Six

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin

Solutions to Creativity Brainbusters

Decision Making and Creativity

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Double Circle Problem 6-29

Nine Dot Problem 6-30

Nine Dot Problem Revisited 6-31

Word Search

FCIRVEEALTETITVEERS

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Burning Ropes One Hour to Burn Completely After first rope burned i.e. 30 min.

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