Creative Problem-Creative Problem-solving and Decision-solving and Decision-makingmaking

Creative Problem-Creative Problem-solving and Decision-solving and Decision-makingmaking

Chapter 4Chapter 4Chapter 4Chapter 4

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Learning OutcomesLearning Outcomes

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Learning Outcomes (cont’d)Learning Outcomes (cont’d)

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Christopher Columbus School of Management? (1451-1506)

Christopher Columbus School of Management? (1451-1506)

• “When he left his port, he did not know where he was going to,• When he arrived, he did

not know where he was,• When he returned, he

did not know where he had come from.”

(Management Today,1998:14(4), May)

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Problem-solving and Decision-makingProblem-solving and Decision-making

• Problem–A situation that exists when objectives are not

being met.• Problem-solving–The process of taking corrective action to meet

objectives.• Decision-making–The process of selecting an alternative course of

action that will solve a problem.•Managers need to make proficient decisions

while performing the functions of management.

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Management, Decision-making, and Problem-solving

Management, Decision-making, and Problem-solving

• The Relationship Among Management Functions, Decision-making, and Problem-solving–Managers need to make proficient decisions while

performing the functions of management.

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The Decision-making ModelThe Decision-making Model

• A six-step model that when properly utilized increases chances of success in decision-making and problem-solving.

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Decision-making StylesDecision-making Styles

• Reflexive Style–Makes quick decisions without taking the time to

get all the information that may be needed and without considering all the alternatives.

• Reflective Style–Takes plenty of time to make decision, gathering

considerable information and analyzing several alternatives.

• Consistent–Tends to make decisions without rushing or

wasting time.

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Types of DecisionsTypes of Decisions

• Programmed Decisions–Recurring or routine situations in which the

decision-maker should use decision rules or organisational policies and procedures to make the decision.

• Non-programmed Decisions–Significant and non-recurring and non-routine

situations in which the decision-maker should use the decision-making model.

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Decision-making StructureDecision-making Structure

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Decision-making ModelsDecision-making Models

• Rational Model (Classical Model)–The decision-maker attempts to use optimizing,

selecting the best possible alternative.• The Bounded Rationality Model–The decision-maker uses satisficing, selecting the

first alternative that meets the minimal criteria for solving the problem.

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Which Decision Model to UseWhich Decision Model to Use

Exhibit 4–4a

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Decision-making ConditionsDecision-making Conditions

• Certainty–Each alternative’s outcome is known in advance.

• Risk–Probabilities can be assigned to each alternative.

• Uncertainty–Lack of information or knowledge makes the each

alternative unpredictable such that no probabilities can be determined.

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Decision-making Conditions ContinuumDecision-making Conditions Continuum

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Potential Advantages and Disadvantages of Using Group Decision-making

Potential Advantages and Disadvantages of Using Group Decision-making

Potential Disadvantages

1. Wasted time and slower decision making

2. Satisficing

3. Domination and goal displacement

4. Conformity and groupthink

Potential Advantages

1. Better quality decisions

2. More information, alternatives, creativity, and innovation

3. Better understanding of the decision

4. Greater commitment to the decision

5. Improved morale and motivation

6. Good training

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When to Use Group or Individual Decision-making

When to Use Group or Individual Decision-making

Exhibit 4–4c

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Relationship among:Decision-Making Structure

Nonprogrammed Decision(Significant, nonrecurring and nonroutine) Programmed Decision

(Nonsignificant, recurring, and routine)

Decision-Making ConditionsUncertainty Risk Certainty

Decision-Making Model Bounded Rationality ModelWhich Decision Model to Use

(Outcome of alternatives unpredictable) (Outcome of alternatives predictable)

(Optimizing) ( Satisficing)

When to Use Group or Individual Decision-makingGroup Decisions Individual Decisions

Classifying the Opportunity or Problem Continuums

Classifying the Opportunity or Problem Continuums

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Define the Opportunity or ProblemDefine the Opportunity or Problem

• Distinguish Symptoms from the Cause of the Problem–List the observable and describable occurrences

(symptoms) that indicate a problem exists.–Determine the cause of the problem.–Removing the cause should cause the symptoms

to disappear or cease.• Symptom: Customer dissatisfaction• Cause: Poorly trained employees• Solution: Implement customer relations training

program for employees

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Set Objectives and CriteriaSet Objectives and Criteria

• Setting Objectives–Involves establishing clear objectives that will

make for better decisions.–Objectives state what the decisions should

accomplish in solving a problem or taking advantage of an opportunity.

• Setting Criteria–Involves setting standards that an alternative must

meet to be selected as the decision that will accomplish the objective.

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Generate Creative AlternativesGenerate Creative Alternatives

• Innovation–The implementation of a new idea• Product innovation (new things)• Process innovation (new way of doing things)

• Creativity–A way of thinking that generates new ideas

• The Creative Process–Preparation–Incubation and illumination–Evaluation

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Stages in the Creative Process

Stages in the Creative Process

Become familiar with the problem; generate as many alternatives as possible.

Take some time before working on the problem again to gain additional insight.

Before implementing the solution, evaluate the alternative to be sure it is practical.

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Characteristics of Useful InformationCharacteristics of Useful Information

• Timeliness• Quality (Accuracy)• Completeness (Amount)• Relevance

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Group Decision-making Techniques That Foster Creativity

Group Decision-making Techniques That Foster Creativity

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Generating Creative AlternativesGenerating Creative Alternatives

• Brainstorming–The process of suggesting many possible

alternatives without evaluation.• Synectics–The process of generating novel alternatives

through role playing and fantasizing.• Nominal Grouping–The process of generating and evaluating

alternatives using a structured voting method that includes listing, recording, clarification, ranking, discussion, and voting to select an alternative.

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Generating Creative AlternativesGenerating Creative Alternatives

• Consensus Mapping (Ringi)–The process of developing group agreement on a

solution to a problem.• Delphi Technique–The process of using a series of confidential

questionnaires posed to experts to refine a solution.

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Responses That Kill CreativityResponses That Kill Creativity

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Analyzing the Feasibility of AlternativesAnalyzing the Feasibility of Alternatives

• Quantitative Techniques–Break-even analysis–Capital budgeting• Payback• Discounted cash flow

–Linear programming–Queuing theory–Probability theory

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The Kepner-Tregoe MethodThe Kepner-Tregoe Method

1. Compare each alternative to the “must” alternative.

2. Rate each “want” criterion on a scale of 1 to 10 (10 being the most important).

3. Assign a value of 1 to 10 (10 being the highest) to how well each alternative meets the “want” criteria.

4. Compute the weighted score (WS) for each alternative.

5. Select the alternative with the highest total WS.

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The Kepner-Tregoe Method for Analyzing AlternativesThe Kepner-Tregoe Method for Analyzing Alternatives

Must Criteria Car 1 Car 2 Car 3 Car 4

<R30 000 Y Y Y Y

Within one week Y Y Y N

Want Criteria NB Meets criteria

Economy 7x 5 = 35 7 = 49 8 = 56

Low km 6x 6 = 36 4 = 24 5 = 60

Condition 10x 5 = 50 6 = 60 8 = 80

Cruise control 2x 1 = 2 0 = 0 0 = 0

Blue 3x 10 = 3 0 = 0 0 = 0

Total W.S. 126 133 136

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Cost-Benefit (Pros and Cons) AnalysisCost-Benefit (Pros and Cons) Analysis

• Cost-Benefit Analysis–A technique for comparing the cost and benefit of

each alternative course of action using subjective intuition and judgment along with math.

• The Alternative Analysis Techniques Continuum:

Exhibit 4–10

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Plan, Implement, and ControlPlan, Implement, and Control

• Plan–Develop a plan of action and a schedule of

implementation.• Implement the Plan–Communicate and delegate for direct action.

• Control–Use checkpoints to determine whether the

alternative is solving the problem.–Avoid escalation of commitment to a bad

alternative.

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Decision TreeDecision Tree

Exhibit 4–11

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Situational Management: Decision-making (1)Situational Management: Decision-making (1)

Model 4–2a

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Situational Management: Decision-making (2)Situational Management: Decision-making (2)

Model 4–2b

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TutorialTutorial

• Use a method that applies both quantitative and qualitative techniques for your decision to study in the Postgraduate Programme of the Department of Management, UWC.

• Method:

·    Develop two “MUST” criteria

·    Identify three other tertiary institutions.

·    Each member of the group identifies criteria.

·    The group reaches consensus on the 10 most appropriate “WANT” criteria.

·    Use the Kepner-Tregoe Method

• At the end of the Tutorial Session, hand in your groupwork with each student’s details

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