Decision Making Decision Making & &

Problem SolvingProblem Solving

Muhammad Zeeshan Khan

Decision MakingDecision Making

• We use our decision making skills to solve problems by selecting one course of action from several possible alternatives. Decision making skills are also a key component of time management skills.

Decision MakingDecision Making

• Just as people are different, so are their styles of decision making. Each person is a result of all of the decisions made in their life to date. Recognizing this, here are some tips to enhance your decision making batting average

Decision MakingDecision Making• Do not make decisions that are not yours to make.• When making a decision you are simply choosing

from among alternatives. You are not making a choice between right and wrong.

• Avoid snap decisions. Move fast on the reversible ones and slowly on the non-reversible.

• Choosing the right alternative at the wrong time is not any better than the wrong alternative at the right time, so make the decision while you still have time.

• Do your decision making on paper. Make notes and keep your ideas visible so you can consider all the relevant information in making this decision.

Decision MakingDecision Making• A significant part of decision making

skills is in knowing and practicing good decision making techniques. One of the most practical decision making techniques can be summarized in those simple decision making steps:

• Identify the purpose of your decision. What is exactly the problem to be solved? Why it should be solved?

Decision MakingDecision Making• Gather information. What factors

does the problem involve? • Identify the principles to judge the

alternatives. What standards and judgment criteria should the solution meet?

• Brainstorm and list different possible choices. Generate ideas for possible solutions.

Decision MakingDecision Making• Evaluate each choice in terms of its

consequences. Use your standards and judgment criteria to determine the cons and pros of each alternative.

• Determine the best alternative. This is much easier after you go through the above preparation steps.

• Put the decision into action. Transform your decision into specific plan of action steps. Execute your plan.

• Evaluate the outcome of your decision and action steps. What lessons can be learnt? This is an important step for further development of your decision making skills and judgment

Decision MakingDecision Making• Decision making can be stressful. At

times you take decisions with significant risk & uncertainty, & often without full information.

• Sometimes you have to trust or rely on others for making decision, but the responsibility is ultimately yours.

• There are situations that require painful decisions to be made.

Types of decision:Types of decision:

• People can face situations which require different forms of decisions to be made:• Routine matters for which you have an

established rule are called “PROGRAMMED DECISIONS”

• Decisions that require creative solutions are called “UNPROGRAMMED DECISONS”.

Models of decision Models of decision making:making:

• Rational model:• This model has the following

assumptions:• The outcome will be completely rational• The decision maker has a consistent system

of preferences, which is used to choose the best alternative

• The decision maker is aware of all the possible alternatives

• The decision maker can calculate the probability of success for each alternative.

Rational model:Rational model:

• According to the rational model, the decision maker will strive to optimize, that is, to select the best possible alternative.

Bounded rationality Bounded rationality model:model:

• According to Herbert Simon, there are limits on how rational a decision maker can actually be. His theory rests on the idea that there are constraints that force a person to be less than completely rational.

Assumptions of the Assumptions of the model:model:

• Managers select the first alternative that is satisfactory

• Managers recognize that their conception of the world is simple.

• Managers are comfortable making decisions without determining all the alternatives

• Managers make decisions by rules of thumb, or heuristics.

Assumptions of the Assumptions of the modelmodel

• Heuristics are short cuts which have been developed to save mental energy. They are rule of thumb that allow a person to make decisions based on what has worked in the past.

• One of the reasons why a person faces limits to the rationality is that he must make decisions under risk & time pressure.

• The situation can be highly uncertain, with possibility of success unknown.

Garbage can model:Garbage can model:

• According to the model, the decisions are random & unsystematic.

• According to this model, the organization is like a garbage can in which problems, solutions, participant & choices are floating around randomly.

• If these 4 factors happen to connect, a decision is made.

Decision making & risk:Decision making & risk:

• People differ in their willingness to take risk.• Risk aversion: people who experience

this choose options that entail fewer risks, preferring familiarity & certainty.

• Risk takers: accept greater potential for loss in decisions, tolerate greater uncertainty, & are more likely to make risky decisions.

Escalation of Escalation of commitmentcommitment

• Continuing a failing course of action .

• Substantial costs are incurred.• Why? • Optimism and control.• Sunk costs

How to deal with How to deal with escalation of commitmentescalation of commitment

• Split responsibility• Closely monitor decision makers• Grace full exit from poor decisions• Reward people who admit to poor

decisions before escalating their commitment to them

Techniques for Group Techniques for Group Decision makingDecision making

• Brainstorming• A technique for generating as

many ides as possible on a given subject while suspending evaluation until all the ideas have been suggested.

Techniques for Group Techniques for Group Decision makingDecision making

Nominal Group technique• A structured approach to group

decsion making that focuses on generating alternatives and choosing one

Techniques for Group Techniques for Group Decision makingDecision making

Delphi technique• Gathering the judgments of

experts for use in decision making

Techniques for Group Techniques for Group Decision makingDecision making

Devil’s Advocacy• A technique for preventing

groupthink in which a group or an individual is given the role of a critic during decision making.

Techniques for Group Techniques for Group Decision makingDecision making

• Quality Circles • Quality circles are small groups

that voluntarily meet to provide input for solving quality or production problems

Problem solving:Problem solving:

• The first step in problem solving is to categorize your problem.

• Categorizing problems help you see their nature, in terms of seriousness & how long it will take to solve them.

Types of problems:Types of problems:

• Factual: factual problems have answers that are right or wrong. And you have to find the right answer.

• Operational: these problems are related to the systems, work processes, & technology.

• Tactical: these problems are often knotty, & require a great deal of analysis.

• Strategic: these involve decisions of the highest order. They are about organization’s broadest goals.

• People: people problems are often easy & quick to solve.

Superficial solutions are Superficial solutions are no solutions:no solutions:

• Any problem is usually a symptom of something deeper. And a quick fix may not address the real situation.

• Superficial solutions barely address a problem, therefore the problem is bound to recur.

Put the problem in Put the problem in question form:question form:

• Putting problems in question form can help you get beyond the symptoms your are faced with.

• It also helps you in establishing a cause & effect relationship between the situation & its reasons.

Gather opinions:Gather opinions:

• Gather information from those who understand the situation best. Or who are the closest to the problem.

• Asking them about the root cause of the problem can provide you with helpful information.

• Also talk to people who are remotely connected with the situation--- people in other parts of the organization, or outside the organization

Focus on elements you Focus on elements you can control:can control:

• When defining the decision to be made, take stock of its elements & focus on those you can control.

• For e.g. if you are having trouble in selling a product, you can control its price, & marketing methods. But you can’t control people’s reaction to the product or their taste & preference.

Generating potential Generating potential solutions:solutions:

• The following things should be kept in mind while generating solutions to the problem• Your strengths & weaknesses

• The resources you have (money, time, people, technology)

Brainstorm:Brainstorm:

• Its one of the most common methods for generating alternatives.

• Studies have shown that groups come up with better solutions than if you work alone.

• You have to follow certain guidelines while brainstorming:

• Forbid critical comments• Set a time limit• Invite people from different fields• Analyze afterwards

Evaluate decisions:Evaluate decisions:

• Listen to your intuition: you know things that haven’t reached your conscious mind. Your brain picks up evidence & signals from a variety of sources & wants you to be aware of its knowledge & conclusions.

• List the pros & cons• Set & weigh criteria