BUSM3150

Applied Management

Week 7
Decisions, decisions, decisions?
Managing information and decision making
 Information and Decision Making
Are you a ‘good’ decision-maker?
“A man without decision can never be said to
belong to himself”
(i.e. You’ll be judged by the quality of the decisions you make)
John W. Foster (1836-1917)
an American diplomat and
military officer, as well as
lawyer and journalist &
USA Secretary of State (1892-3)
We all make good-average and poor decisions –
no-one always gets it right all of the time –
however…………………..
A 5min video; Decision-Making Strategies – a general approach:
[Link]
 The ‘Art’ of making a good decision?
How do YOU arrive at a good decision?
Some decisions you may arrive at – MAY guarantee a bad/poor
outcome b/c:
1. You do not have any alternatives (or fail to see them): i.e.
“They’ve got Buckley’s”……?

2. Are frightened of making a wrong or poor decision amongst

the alternatives so they may ‘leave it to chance’ (fingers-
crossed?)

3. Might put the choices into a box and play the children’s
game: ‘eeney-meeney-miney-moe’ (choose any alternative
– first out we go with OR “Shortest straw?”)

4. Make a decision and go with-it “come hell or high water!”

(my way or the highway)
Q. Are these decision-processes a good way to manage an
activity or business?
A. No – but SURPRISINGLY, they are commonly followed
by managers as legitimate methods of getting to a
decision
 The ‘Art’ of making a good decision
Poor/Bad decisions are very common in the
business world
Your business decision can mean = failure or
success?
….and no-one gets it right 100% of the time – but
it is the severity of the outcome that finally counts
& by which you are judged.

*Areas where most bad decisions often occur in business are with:
• Bad Strategy = poor preparation
• Poor Execution/implementation
• Missing the Market = timing
• Fraud &
• Bad Luck

•*Source: Stanford University 57min Video: Decision Quality: The Art and Science of Good Decision-
Making: [Link]
 How do we make good decisions = a “Skill”
….and this ‘skill’ can make or break a firm’s operations, so
today following a LOT of research & experimentation we
have developed ‘processes’ that can help us make better
decisions.
The ORIGINAL Research developed the Classical Model
of (Rational) Decision-making
Source; HBR; A Brief History of Decision Making (2006):
[Link]
(via Rene Descartes 17thC Fr. (Top LHS) – credited as the “Father of Modern
Philosophy”, first coined the ‘phrase’ – “Rational (Thinking) Man” suggesting that is
what sets “us” apart from other species.
Studies showed that the act of rational “Decision-making” followed a 5 part-process
1. Identify your goal.
2. Gather relevant information.
3. Generate options and evaluate them.
4. Make your choice & implement it.
5. Evaluate your decision.
This 5-step process is known as the (Rational) Classic Model of Decision-making.
However, there are MANY criticisms of this ‘approach’
Globally research into this “model” showed the imperfectability of RATIONAL
decision making. Let’s expand on this model & see if you can tell me why &
where it has “imperfections’
Expanding the “Classic” (Rational) Decision Making” Process
Step 1: Identification of the purpose of the decision (i.e. Identify a
problem to be solved or an opportunity to be made)
Step 2: Information gathering – the research factor.
Step 3: Analyse the situation – this requires quality analytics – can you
do this? (Analysis = develops the principles for judging the alternatives)
Step 4: The better your research AND analysis creates more choice or
options – alternatives (Brainstorm and analyse the different
choices/options) = critical stage
Step 5: Evaluation of these alternatives – analytics AGAIN
Step 6: Select the best alternative…. Again using analytical approaches
– to give reasons why you’ve made that choice/selection....BUT always
consider/outline the ‘risks’
Step 7: Act on and execute the decision – i.e. Implementation
(Organising & Controlling)
Thus this Decision-making process is a cognitive process resulting in
the selection of a belief in a course of action among several
alternative possibilities.
Imperfections? Anyone see possibilities?
 Applied Activities
…. let’s test your Decision-Making skill……
You are the newly appointed Operations Manager at a small
firm. One of your tasks is to decide whether the firm should
invest in expensive new information technology to increase
the effective workflow of staff. However, doing this will
mean that one junior staff member who is the sole income
earner of her family may lose her job because her tasks
would mainly be taken over by automating the existing
processes.
Q. Should you do it…or not?
Consider this……..is this a black & white solution…….what process of decision-making
will you follow in deciding what to do?
A. There are always many
different alternatives to such
a situation.
Use the classical 5 step decision-
making process to help you arrive
at “OTHER possible solutions”.
Criticism of the Classic (Rational) Model of Decision-making?
Research has shown that such an approach is rarely found in practice.
It is, in actuality, an idealistic approach – it is based on the assumption
of ‘a perfect world’.
There are four main assumptions behind the classical model:
• First is a clearly defined problem. The model assumes that the
decision-maker has an absolute idea of what the REAL problem is
• Next is a certain environment. The model further suggests a
constant & unchanging environment - as a result, there are minimal &
known risks to account for.
• The third assumption is the DM has access to complete (total)
information. The decision-maker is therefore able to identify all
alternatives available to them and to evaluate and rank them
objectively.
• The final assumption is that the final decision will be a rational &
equitable-transparent decision. The decision-maker is believed to
always be acting in the best interests of the organization and totally
objective
Thus = the Model is unrealistic & therefore not (always) a practical
approach (Source; Classical Approach to Decision Making; detailed article:
[Link]
 How do we make decisions?
When making a decision, do we ALWAYS use a rational
approach? Are there “other ways” that we make them?
(The very intuitive) Henry Mintzberg on Decision Making (Video
4mins):
N.B. Thinking First is the Classical
Approach (Big Organisations do it this
way), Seeing First is the ‘way’ of the
Entrepreneur & Doing First is his
suggestion – incremental Design: https://
[Link]/watch?v=DyvXu3lSSG0

Decision-making today?
Well it’s the best and worst of times for decision makers.
• The best? Swelling stockpiles of data, advanced analytics, and intelligent
algorithms (with AI) are providing organizations with powerful new inputs and
methods for making all manner of decisions (e.g. Understanding Generative
Adversarial Networks GANs – article:
[Link]
ns-cd6e4651a29
)
• The worst? In many companies, growing organizational complexity has clouded
accountabilities meaning leaders are less able to delegate decisions cleanly and,
adding even more difficulty, the number of decision makers in every organisation
has risen dramatically.
 Information and Decision Making
Decision-making? Are you really good at it?
Why is this an important skill for managers?
• If you want to lead effectively, you need to be
able to make good decisions.
• If you can learn to do this in a timely and well-considered way,
then you can lead your team/organization to spectacular and
well-deserved success – so “…stand on the shoulders….”
(look at the MANY “Decision tools” that are available and
learn to use-apply them – next slide)
• However, if you dither or make poor decisions, your
team/organization risks failure and your time as a leader will
probably be brutally short.

How can you make better decisions? A

Series of Tests: Start with “How to make
decisions”
[Link]
(accessed 13/08/2014)
Some current decision-making & problem-solving tools commonly
used today include:
Free Analytical Tools used by managers & decision-makers
[Link]: [Link] “Explore the Toolkit” e.g. Decision Making
Q: How many tools are available?
A = 55+
2. 12Manage: [Link] Click on “more” under “Decision Making & Valuation”
Q: How many tools are available?
A = countless numbers
There are MANY tools that can help you in decision-making, but particularly -
 Selecting the most important changes to make - Pareto Analysis
 Evaluating the relative importance of different options -
Paired Comparison Analysis
 Selecting between good options - Grid Analysis
 Choosing between options by projecting
likely outcomes - Decision Trees
 Weighing the pros and cons of a decision –
PMI (DeBono)
 Analyzing the pressures for and against
change - Force Field Analysis (Lewin)
 Looking at a decision from all points of view
- Six Thinking Hats (DeBono)
 Seeing whether a change is worth making -
Decision-making & Problem-solving Tools (continued)
Some current tools commonly used today include:
 Avoiding GroupThink - Avoiding fatal flaws in group decision making.
 Impact Analysis - Identifying the "unexpected" consequences of a decision
 Inductive Reasoning - Drawing good generalized conclusions
 The Kepner Tregoe Matrix - Making unbiased, risk assessed decisions.
 The Ladder of Inference - Avoiding "jumping to conclusions".
 Nominal Group Technique - Prioritizing issues and projects to achieve
consensus.
 Prioritization - Making best use of your time and resources.
 Reactive Decision Making - Making good decisions under pressure.
& MANY more…these are just from one public source….all, if applied
appropriately, will help you get BETTER at making effective decisions

Note: Let’s see some examples where using an analytical tool can help
us make better decisions – using GLOBALLY used analytical Tools like:
• The McKinsey 7-S Framework
• The Dunphy-Stace Decision matrix
 Decision-making & Problem-solving Tools – examples
Using the McKinsey 7-S model
Q: How do you go about analysing how well your organization is positioned to
achieve its intended strategy?
A: You could use the McKinsey 7-S model
This 7-S model can be used in a wide variety of situations where it can help you make
better decisions to:
• Improve the performance of your company.
• Examine the likely effects of future changes within a company.
• Align departments and processes during a merger or acquisition.
• Determine how best to implement a proposed strategy.
• it can also be applied to elements of a team or a project as well
What is the McKinsey 7-S model ?
The McKinsey 7-S model involves seven
interdependent factors which are categorized as either
"hard" (3 x Grey) or "soft" (4 x Blue) elements.
e.g. Video (5mins): New Balance using
McKinsey's 7S Framework: https://
[Link]/watch?v=fdPEyNilkYI

So research each area, & then make your decision

based on the outcome of your analysis
 Foster’s path of change 1992 -2007
Do they have the right senior management skills to successfully manage
2 x Decision- change?
Using the
criteria One CEO - multiple skilled capability Dunphy-Stace
1. Style of
management Vs Decision matrix
2. The Scale of the
change

Source: Adapted from Dunphy and Stace, 2001

CSR = are the leaders equipped to manage change?
N.B. One person – single competence?

Scale of Change

Incremental Adjustment Modular Transformation Corporate Transformation

Fine Tuning

Collaborative
Style of Change Management

3
5
Consultative 2
1970-1983 Jackson

4
1983-1987 Kelman
7

Directive 1987-1993 Burgess

1

6
1993-1999 Kells

1999-2003 Kirby
Coercive

2003-Present Brennan
 The ‘Art’ of making a good decision
The two ‘types’ of decisions managers
are asked to make?

1. Programmed decisions
Here we ‘learn from the past’. This approach is usually applied to
situations where the ‘problem’ is familiar, straightforward, routine and re-
occurring. These problem-types are common place to most functional
managers – organising a Fashion-show (Been there before – essentially
‘simple’ to make the ‘right decisions’)
2. Non-programmed decisions
These types of solutions are applied where the problem is unique, new
or unexpected. They must therefore be dealt with in different ways.
Often they require novel solutions. These types of situations often
confront higher levels of management – where SOME of you are
headed
 Applied Activities; Test Questions

Q 4. How can a manager double-check the ethics of a decision?

A. Use the “Ethics Double-check Q’s”. So, ask 2 questions =
• How would I feel if my family found out about this
decision?
• How would I feel if this decision was published in the local
newspaper?

But I’d add some others:

• Is it legal?
• Will it affect my business negatively?
• Is it a correct & good decision (Morality)?
 An Exercise in Decision Styles
What is your Personal Decision Making Style?
Personal decision style refers to differences among people with
respect to how they perceive problems and make decisions.
Research has identified four major decision styles:
[Link] style. Used by people who prefer simple, clear-cut
solutions to problems.
[Link] style. Used by those who like to consider complex
solutions based on as much data as they can gather.
[Link] style. Used by people who tend to like to consider
a broad amount of information.
[Link] style. Used by those characterised by having a
deep concern for others as individuals.
Please undertake the “Leadership & participation through
decision-making”
Exercise: Leadership and participation through decision making
• For each of the situations described, which of the
three styles you would use for that unique situation.
• Place letters I, C or G in the margin to indicate an
• individual decision/Autocratic style (I),
• consultative decision (C) or
• group decision/ Collaborative style (G).

• Use the The Vroom-Yetton-Jago Decision Model

• Mindtools: [Link]
 The Vroom-Yetton-Jago Decision Model
Leadership Style Description
Using an autocratic style of leadership, the leader will make the
Autocratic (A1) decision by himself or herself, using the information readily
available.

Using a less stringent autocratic leadership style, the leader will

Autocratic (A2)
consult the group members to gain more information. then will
make the decision himself or herself. The final decision may or
may not be shared with the group.

Using a consultative leadership style, the leader will consult

Consultative (C1) individuals to seek their opinion. The leader will make the
decision himself or herself.

Using a consultative leadership style, the leader will consult the

Consultative (C2) group to seek individual opinions and suggestions. The leader will
make the decision himself or herself.

Using a collaborative leadership style, the group will make the

Collaborative (G2) decision. The leader will play a supportive role to ensure that
everyone agrees on the decision.
 Digital learning resources: YouTube video clips
• Ellen’s monologue – Way too many choices:
[Link]
• How to improve your daily decision making: Top 4 cognitive biases you
should avoid. [Link]
• Ten worst business decisions
[Link]
• Henry Mintzberg on Decision Making:
[Link]
• Entrepreneurs can change the world:
[Link]
• Bad decision making by the Ministry of Defence in USA:
[Link]
As you view these videos, look for themes that relate to this week’s topic.
What does this mean for you as a potential manager?
Consider challenges and opportunities.
 Week 7 Readings
There are three (3) compulsory readings this week
Jones, G.R. and George. J.M. (2016). Contemporary management (8th
ed.). New York, NY: McGraw Hill Irwin, Chapter 7.

Davenport, T.H. (2009). Make better decisions, Harvard Business

Review, 87(11), 117-123.

Polasky, S., Carpenter, S., Folke, C. & Keeler (2011). Decision making
under great uncertainty: Environmental management in an era of global
change, Trends in Ecology and Evolution, 26(8), 398- 404.

Suggested source: McKinsey Quarterly; Untangling your

organization’s decision making:
[Link]
ecision-making?cid=other-eml-nsl-mkq-mck-oth-1707&hlkid=f7e34b8d06f74b13a7a8e1a766c748b2&h
ctky=9490299&hdpid=99b1af87-31df-4500-903f-f651be5dcf8f

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