Chapter 4

Creative Problem Solving and Decision Making

The Relationship among Objectives, Problem Solving, and Decision Making

Problem
Exists whenever objectives are not being met. What is happening vs. what is wanted to happen

Problem Solving
The process of taking corrective action to meet objectives.

Decision Making
The process of selecting an alternative course of action that will solve a problem. First decision is whether to take corrective action.

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The Decision-Making Model

A six-step process that when properly utilized increases chances of success in decision making and problem solving.

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Decision-Making Styles
Reflexive Style
Makes quick decisions without taking the time to get all the information that may be needed and without considering all the alternatives.

Reflective Style
Takes plenty of time to make decisions, gathering considerable information and analyzing several alternatives.

Consistent Style
Tends to make decisions without either rushing or wasting time.
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Decision Making in the Global Village

U.S.-based decision-making styles are different from the decision-making styles in other cultures due to differences in:
Time orientation The use participative decision making Orientation toward problem solving rather than acceptance of the status quo

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Decision Structure
Programmed Decisions
Recurring or routine situations in which the decision maker should use decision rules or organizational policies and procedures to make the decision.

Nonprogrammed Decisions
Significant and nonrecurring and nonroutine situations in which the decision maker should use the decision-making model.

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Decision Structure Continuum

Nonprogrammed Decision: Significant, nonrecurring, and nonroutine (Longer period of time to make decisions)

Programmed Decision: Nonsignificant, recurring, and routine (Shorter period of time to make decisions)

Exhibit 42
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Decision-Making Conditions
Certainty
Each alternatives outcome is known in advance.

Risk
Probabilities can be assigned to each outcome.

Uncertainty
Lack of information or knowledge makes the outcome of each alternative unpredictable such that no probabilities can be determined.

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Decision-Making Models
Rational Model (Classical Model)
The decision maker attempts to use optimizing, selecting the best possible alternative.

The Bounded Rationality Model

The decision maker uses satisficing, selecting the first alternative that meets the minimal criteria for solving the problem.

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Continuum of Decision-Making Conditions

Exhibit 43
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Potential Advantages and Disadvantages of Using Group Decision Making

Potential Advantages
1. Better-quality decisions 2. More information, alternatives, creativity, and innovation 3. Better understanding of the decision 4. Greater commitment to the decision 5. Improved morale and motivation 6. Good training

Potential Disadvantages
1. Wasted time and slower 2. Satisficing 3. Domination and goal displacement 4. Conformity and groupthink

Continua for Classifying a Problem

Exhibit 45
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Continua for Classifying a Problem (contd)

Exhibit 45 contd
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Define the Problem

Distinguish Symptoms from the Cause of the Problem
List the observable and describable occurrences (symptoms) that indicate a problem exists. Determine the cause of the problem. Removing the cause should cause the symptoms to disappear or cease.
Symptom: Customer dissatisfaction Cause: Poorly trained employees Solution: Implement customer relations training program for employees

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Set Objectives and Criteria

Setting Objectives
Involves establishing clear objectives that will make for better decisions. Objectives state what the decisions should accomplish in solving a problem or taking advantage of an opportunity.

Setting Criteria
Involves setting standards that an alternative must meet to be selected as the decision that will accomplish the objective.

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Generate Creative Alternatives

Innovation
The implementation of a new idea
Product innovation (new things) Process innovation (new way of doing things)

Creativity
A way of thinking that generates new ideas

The Creative Process

Preparation Incubation and illumination Evaluation
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Stages in the Creative Process

Become familiar with the problem; generate as many solutions as possible.

Take some time before working on the problem again to gain additional insight.

Before implementing the solution, evaluate the alternative to be sure it is practical.

Exhibit 46
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Group Decision-Making Techniques That Foster Creativity

Exhibit 47
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Generating Creative Alternatives

Brainstorming
The process of suggesting many possible alternatives without evaluation.

Synectics
The process of generating novel alternatives through role playing and fantasizing.

Nominal Grouping
The process of generating and evaluating alternatives using a structured voting method that includes listing, recording, clarification, ranking, discussion, and voting to select an alternative.
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Generating Creative Alternatives (contd)

Consensus Mapping (Ringi)
The process of developing group agreement on a solution to a problem.

Delphi Technique
The process of using a series of confidential questionnaires to refine a solution.

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Responses That Kill Creativity

It cant be done. Weve never done it. Has anyone else tried it? It wont work in our department (company/industry). It costs too much. It isnt in the budget. Lets form a committee.

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Decision Tree

Exhibit 48
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Analyzing the Feasibility of Alternatives

Quantitative Techniques
Break-even analysis Capital budgeting
Payback Discounted cash flow

Linear programming Queuing theory Probability theory

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The Kepner-Tregoe Method

1. Assess each alternative with regard to the must criteria. 2. Rate the importance of each want criterion on a scale of 1 to 10 (10 being the most important). 3. Determine how well each alternative meets the want criterion. 4. Compute the weighted score (WS) for each alternative on each criterion.

5. Select the alternative with the highest total weighted score.

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The Kepner-Tregoe Method for Analyzing Alternatives

Exhibit 49
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Cost-Benefit (Pros and Cons) Analysis

Cost-Benefit Analysis
A technique for comparing the cost and benefit of each alternative course of action using subjective intuition and judgment along with math.

Continuum of Analysis Techniques:

Exhibit 410
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Plan, Implement, and Control

Plan
Develop a plan of action and a schedule of implementation.

Implement the Plan

Communicate and delegate for direct action.

Control
Use checkpoints to determine whether the alternative is solving the problem. Avoid escalation of commitment to a bad alternative.

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Participative Decision-Making: Time-Driven Model

The model is a decision tree that works like a funnel. Define the problem statement; then move from left to right and answer each question by responding either high (H) or low (L), skipping decisions that are not appropriate to the situation and avoiding crossing any horizontal lines. The last column indicates the appropriate leadership decision-making style for that situation.

Source: Adapted from Victor H. Vroom, Leadership and the Decision-Making Process, Organizational Dynamics 28 (4), p. 87. Copyright 2000 with permission from Elsevier.

Exhibit 411a
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Participative Decision-Making: Development-Driven Model

The model is a decision tree that works like a funnel. Define the problem statement; then move from left to right and answer each question by responding either high (H) or low (L), skipping decisions that are not appropriate to the situation and avoiding crossing any horizontal lines. The last column indicates the appropriate leadership decision-making style for that situation.
Source: Adapted from Victor H. Vroom, Leadership and the Decision-Making Process, Organizational Dynamics 28 (4), p. 87. Copyright 2000 with permission from Elsevier.

Exhibit 411b
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Time-Driven versus Development-Driven Model

Time-Driven
Making effective decisions with minimum cost

Development-Driven
Focus
Making effective decisions through maximum development of group members

Emphasizes timely decision making

Value

Emphasizes group development

Has a short-term time horizon

Orientation

Has a long-term horizon, as group development takes time.

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Chapter 4 Back Up

Creative Problem Solving and Decision Making

PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright 2006 Thomson Business and Economics. All rights reserved.

Learning Outcomes
After studying this chapter, you should be able to:
1. Explain the relationship among objectives, problem solving, and decision making. 2. Explain the relationship among the management functions, decision making, and problem solving. 3. List the six steps in the decision-making model. 4. Describe the differences between programmed and nonprogrammed decisions and among the conditions of certainty, uncertainty, and risk. 5. Describe when to use the rational decision-making model versus the bounded rationality model and group versus individual decision making.

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Learning Outcomes (contd)

6. State the difference between an objective and must and want criteria. 7. State the difference between innovation and creativity. 8. List and explain the three stages in the creative process. 9. Describe the differences among quantitative techniques, the Kepner-Tregoe method, and cost-benefit analysis for analyzing and selecting an alternative.

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Learning Outcomes (contd)

10. Define the following key terms: problem problem solving decision making decision making model programmed decisions nonprogrammed decisions decision-making conditions criteria innovation creativity creative process devils advocate brainstorming synectics nominal grouping consensus mapping participative decision-making model

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Ideas on Management at Nike

1. Which young NBA athlete did Nike sign to a large endorsement contract? What was the contracts price tag? How did Nike classify and define the problem or opportunity in making the decision to sign this player? What objectives does Nike meet through its star endorsements? What product is Nike currently marketing under this athletes name? How does Nike demonstrate creativity and innovation?

2. 3.

4.

Which techniques could Nike use to analyze the alternatives in the contract decision? Does the amount of the contract given to the young athlete pose a serious financial risk to Nike?
What unethical and socially irresponsible labor practices have critics accused Nike of in recent years? Which decision style from Vrooms participative decision-making model should Nike have used to make the decision to sign the athlete to a contract?
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5. 6.

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Problem Solving and Decision Making

The Relationship among the Management Functions, Decision Making, and Problem Solving
Managers need to make proficient decisions while performing the functions of management.

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