The Kaizen ForumTHE KAIZEN FORUM

DECISIONMAKING

The Kaizen Forum DECISION

MAKING

““A manager by A manager by profession is a decision profession is a decision

maker; Uncertainty is his maker; Uncertainty is his opponent, overcoming it opponent, overcoming it

is his mission.”is his mission.”

““A decision is a judgement. It is A decision is a judgement. It is a choice between alternatives. It a choice between alternatives. It is rarely a choice between right is rarely a choice between right and wrong. It is at best a choice and wrong. It is at best a choice

between “almost right” and between “almost right” and “probably wrong”.“probably wrong”.

““DRUCKERDRUCKER””

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CONCEPTS TO BE COVERED

““When making decisions don’t When making decisions don’t get paralysis through get paralysis through

analysis”.analysis”.

Limitations of rational decision making model Models of decision making. Individual vs Group decision making.. Your individual decision making style? Why decision fails? Guidelines for decision making.

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DECISION PROCESS

RRecognizeecognizeProblemProblem

GATHER GATHER FACTSFACTS 11

22

33

GENERATEGENERATE

DECISIONDECISION

MONITORMONITOR

DEFERDEFER

DELEGATEDELEGATE

IMPLEMENTIMPLEMENT

MAKEMAKE

ASSESS RESULTASSESS RESULT

MATCHMATCH

The Kaizen ForumCONSTRAINTS OF

RATIONAL DECISION MAKING

1. PROBLEM• Seldom consensus as to the definition of the problem.

• Differentiate fact from opinion.

• Identify what standard is violated.

2. GENERATE ALTERNATIVE SOLUTION• The first acceptable solution is usually accepted.

• Alternatives are based on what was successful in the past.

• Specify alternatives that are consistent with goals

““I never sit on a fence.Iam I never sit on a fence.Iam either on one side or another”either on one side or another”

Harry TrumanHarry Truman

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3. EVALUATE ALTERNATIVES

• Limited information available about each alternative.

• Satisfactory solutions, not optimal ones, are usually accepted.

• Do not evaluate main effects and side effects.

CONSTRAINTS OF RATIONAL DECISION MAKING

4. IMPLEMENT AND FOLLOW UP

• Resistance to change is a universal phenomenon.

• Not always clear what part of the solution should be monitored or measured in follow-up.

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PROGRAM M ED NON PROGRAM M ED

DECISION

CLASSICAL ADM INISTRATIVE

M O DEL

1.1. ApproachApproach

2.2. TypeType

3.3. KnowledgeKnowledge

4.4. Probability of riskProbability of risk

5.5. Alternatives availableAlternatives available

6.6. GoalsGoals

Rational/ObjectiveRational/Objective

Prescriptive (Idealized situation)Prescriptive (Idealized situation)

CompleteComplete

LowLow

ManyMany

DefinedDefined

Satisficing ApproachSatisficing Approach

Descriptive (Reality Based)Descriptive (Reality Based)

FragmentaryFragmentary

HighHigh

Only a fewOnly a few

Broad SpectrumBroad Spectrum

ON GOING / RULES ON GOING / RULES STRUCTURED EMPRICALSTRUCTURED EMPRICAL

REQUIRES THINKING UN-REQUIRES THINKING UN-STRUCTURED NOT UNIQUESTRUCTURED NOT UNIQUE

MODEL OF DECISION MAKING

The Kaizen ForumMODELS

CRISES SPEEDY ACTIONCRISES SPEEDY ACTION INTUITIVE INTUITIVE

RIGID RIGID TIGHT CONTROLTIGHT CONTROL

SHORT RANGESHORT RANGE

SINGLESINGLE COMPLETECOMPLETENOT SH SHAREDNOT SH SHARED

AIMED ATAIMED ATPERFECTIONPERFECTION

DEFINED GOALSDEFINED GOALS

ANALYTICALANALYTICALSNAPSNAPMINMIN MAXMAX

PARTICIPATIVEPARTICIPATIVEADAPTIVEADAPTIVE

CHANGEABLECHANGEABLEEXPLOITIVEEXPLOITIVESHIFT FOCUSSHIFT FOCUS

FLEXFLEX MULTIPILEMULTIPILE CONTINGENCYCONTINGENCY

CREATIVECREATIVECOOPERATIVECOOPERATIVEBROAD GOALSBROAD GOALSTEAM WORKTEAM WORK

““The ideal number for a hard The ideal number for a hard decision-making meeting is decision-making meeting is two--- with one on holiday !”two--- with one on holiday !”

INFORMATIONINFORMATION

CONCLUSION

The Kaizen ForumDIFFERENCES

WESTERN

1. Finding an answer.2. Adhere to group

think.

3. Struggle for the right answer.

4. Have to sell decision.

5. Always in a hurry to decide quickly.

6. Plans run into problem.

JAPANESE

1. Defining the question.

2. Consensus – encourage dissenting opinions.

3. Focus on alternatives

4. Process delegates authority.

5. Take longer time to decide.

6. Execute with speed

The Kaizen ForumGROUP THINK

A good CEO will try and anticipate a difficult problem requiring logical analytical decision making and set in motion the machinery for

providing necessary information.”

1. CONDITIONS• Highly cohesive group

• Under pressure to make decision

2. SYMPTOMS• Not being critical of each other’s ideas.

• Selective in gathering information.

• Believe in group morale.

• Lack of accountability.

FAULTY DECISION MAKING STYLE WHICH DESIRESFAULTY DECISION MAKING STYLE WHICH DESIRESUNANIMITY AT THE EXPENSE OF QUALITY DECISIONUNANIMITY AT THE EXPENSE OF QUALITY DECISION

The Kaizen ForumEFFECTIVE GROUP DECISION MAKING

LeadershipLeadership 1.Avoid domination.1.Avoid domination. 2.Encourage input2.Encourage input 3.Avoid groupthink 3.Avoid groupthink And satisficng.And satisficng. 4. Remember goals.4. Remember goals.

Constructive conflictConstructive conflict 1. Air legitimate difference1. Air legitimate difference 2.Stay task-related.2.Stay task-related. 3.Be impersonal.3.Be impersonal. 4.Play devil’s advocate.4.Play devil’s advocate.

Effective groupEffective groupDecision makingDecision making

CreativityCreativity 1.Brainstorm1.Brainstorm 2. Avoid criticizing2. Avoid criticizing 3. Exhaust ideas.3. Exhaust ideas. 4. Combine ideas4. Combine ideas

The Kaizen ForumNEMAWASHI! THE TOYOTA WAY

Make decision slowly be Make decision slowly be consensus. Thoroughly consensus. Thoroughly considering all options. considering all options.

Implement rapidlyImplement rapidly1. Thorough Consideration

• Quality of decision

• Asking why? 5 times

• Building Consensus

• Deming Cycle (PDCA)

Contd

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Decide and Announce

Seek Individual Input, then Decide and Announce

Seek Group Input, then Decide and Announce

Group Consensus,

Management Approval

Group Consensus,

with full authority

Time

Lev

el o

f in

volv

emen

t

Preferred

Fallback

Fallback (if consensus not

achieved)

ALTERNATIVE TOYOTA DECISION MAKING METHODS

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2. Considering Alternative Solution

• Follow set based Approach

• Different people-different set of alternatives

• Turn conflict into win / win situation

3. Presenting Decision on one page

• Proposal discussed with all

• Agreement befor presentation

• One page – formal decision only formality

NEMAWASHI! THE TOYOTA WAY

The Kaizen ForumEXAMPLE OF AN A3 REPORT

CURRENT CURRENT SITUATAIONSITUATAION

PROPOSALPROPOSAL

LABOR COST & TIME LABOR COST & TIME ANALYSISANALYSIS

TIME SAVINGSTIME SAVINGS

PLANPLAN

IMPLEMENTATIONIMPLEMENTATION

CONTROLSCONTROLS

TIME LINETIME LINE

The Kaizen ForumDECISION STYLES

HighHigh

LowLow

Tolerance Tolerance for for AmbiguityAmbiguity

RationalRational IntuitiveIntuitiveWay of ThinkingWay of Thinking

Careful decision makersAdapt to new situation

Efficient,logical use less information, few alternative

make decision fast focus on short-term

Broad outlook examine more alternative long range find creative solution

Work well with others Receptive to suggestions Avoid conflicts

Source: Rowe McGrath Modules in Decision Making, 1984

BehavioralBehavioral

ConceptualConceptual

DirectiveDirective

AnalyticalAnalytical

The Kaizen ForumHOW TO IMPROVE YOUR DECISION MAKING

1. ANALYSE THE SITUATION

2. SHOW FLEXIILITY TO INCREASE ACCEPTABILITY

3. BEWARE OF PERSONAL BIASES

4. DON’T BE AFRAID TO IMPOSE YOUR INTUITION ON TOP OF RATIONAL ANALYSIS

5. ADAPT TO JOB REQUIREMENT

6. APPLY ETHICAL DECISION GUIDES

7. LATERAL THINKING

SECOND thoughts are invariably wiser.SECOND thoughts are invariably wiser.

---Euripides (480-405 B.C)---Euripides (480-405 B.C)

The Kaizen ForumWHY DECISIONS FAIL

1. VULNERABILITY OF GROUP-THINK

2. ESCALATION OF COMMITMENT

3. LEVEL OF MORAL DEVELOPMENT

4. CONCEPTUAL BLOCK

PEOPLE who stay in the middle of the road get run over.PEOPLE who stay in the middle of the road get run over.

--- Aneurin Bevan (1897-1960)--- Aneurin Bevan (1897-1960)

The Kaizen ForumGUIDE LINES FOR DECISION MAKING

1. MARSHAL THE FACTS

2. CONSULT YOUR FEELING

3. USE WISE TIMINGS

4. DON’T INFER TOO MUCH

5. KEEP THE DECISION FLEXIBLE

6. FOLLOW THROUGH

7. HAVE COURAGE

8. DECISIONS TO SAVE SKIN, BEWARE OF!

““The responsibility is always The responsibility is always mine but the decision lies with mine but the decision lies with

who ever is on the spot”.who ever is on the spot”.