Decision Making, Learning,

Creativity, and Entrepreneurship

chapter seven

Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning Objectives

1. Understand the nature of managerial decision making, differentiate between programmed and non-programmed decisions, and explain why non-programmed decision making is a complex, uncertain process.

2. Describe the six steps that managers should take to make the best decisions and explain how cognitive biases can lead managers to make poor decisions.

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Learning Objectives

3. Identify the advantages and disadvantages of group decision making, and describe techniques that can improve it.

4. Explain the role that organizational learning and creativity play in helping managers to improve their decisions.

5. Describe how managers can encourage and promote entrepreneurship to create a learning organization and differentiate between entrepreneurs and intrapreneurs

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The Nature of Managerial Decision Making

Decision Making The process by which managers respond to

opportunities and threats that confront them by analyzing options and making determinations about specific organizational goals and courses of action.

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Decision Making

Programmed Decision Routine, virtually automatic process

Decisions have been made so many times in the past that managers have developed rules or guidelines to be applied when certain situations inevitably occur

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The Classical Model

Optimum decision The most appropriate decision in light of what

managers believe to be the most desirable future consequences for their organization.

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The Classical Model of Decision Making

Figure 7.1

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Why Information Is Incomplete

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Figure 7.2

Causes of Incomplete Information

Ambiguous Information Information that can

be interpreted in multiple and often conflicting ways.

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Figure 7.3

Young Woman or Old Woman

Six Steps in Decision MakingFigure 7.4

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Group Decision Making

Superior to individual makingChoices less likely to fall victim to biasAble to draw on combined skills of group

membersImprove ability to generate feasible

alternatives

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Devil’s Advocacy and Dialectical Inquiry

Figure 7.7

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Organizational Learning and Creativity

Creativity A decision maker’s

ability to discover original and novel ideas that lead to feasible alternative courses of action.

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Senge’s Principles for Creating a Learning Organization

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Figure 7.8

Entrepreneurship and Management

Frequently, founding entrepreneur lacks the skills, patience, and experience to engage in the difficult and challenging work of management

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