Decision Making and Creativity

McGraw-Hill/IrwinMcShane/Von Glinow OB 5e Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Decision Making at Google

Google is a hotbed of creativity and innovation by giving staff 20 percent of their time to work on pet projects, using evidence-based experiments to test ideas, and involving employees in organizational decisions.

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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.

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Rational Choice Decision Process

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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

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Problem Identification Process

Problems and opportunities are not announced or pre-defined

Use logical analysis and nonconscious emotional reaction during perceptual process

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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 Stakeholder framing

Perceptual defense

Mental models

Decisive leadership

Solution-focused problems

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Identifying Problems Effectively1. 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

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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

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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

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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

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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).

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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

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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

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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

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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

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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

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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

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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

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Employee Involvement Defined

The degree to which employees influence how their work is organized and carried out

Different levels and forms of involvement

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Employee Involvement Model

Potential Involvement Potential Involvement OutcomesOutcomes

Contingenciesof Involvement

Employee Employee InvolvementInvolvement

Better problem identification

Synergy produces more/better solutions

Better at picking the best choice

Higher decision commitment

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Contingencies of Involvement

Knowledge Knowledge SourceSource

Decision Decision CommitmentCommitment

• Employees have relevant knowledge beyond leader

• Employees would lack commitment unless involved

Risk ofRisk ofConflictConflict

1. Norms support firm’s goals2. Employee agreement likely

Decision Decision StructureStructure

• Problem is new & complex(i.e nonprogrammed decision)

Higher employee involvement is better when:

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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-Spirk’s work environment supports creativity.

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Creativity Defined

Developing an original idea that makes a socially recognized contribution

• Applies to all aspects of the decision process – problems, alternatives, solutions

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Preparation

Incubation

Insight

Verification

Creative Process Model

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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

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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

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Creative Activities

• Review abandoned projects

• Explore issue with other people

Redefinethe Problem

•• Storytelling

• Artistic activities

• Morphological analysis

AssociativePlay

•• Diverse teamsDiverse teams

•• Information Information sessionssessions

• Internal Internal tradeshowstradeshows

Cross-Pollination

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Decision Makingand Creativity

McGraw-Hill/IrwinMcShane/Von Glinow OB 5e

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Solutions to Creativity Brainbusters

McGraw-Hill/IrwinMcShane/Von Glinow OB 5e

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Double Circle Problem

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Nine Dot Problem

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Nine Dot Problem Revisited

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Word Search

FCIRVEEALTETITVEERS

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Burning Ropes

One Hour to Burn Completely

After first rope burnedi.e. 30 min.

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