CHAPTER 7

DECISION MAKING, LEARNING, CREATIVITY AND ENTREPRENEURSHIP

SEMBA 46 C
Nama Anggota Kelompok :
1. Andhika P.C
2. Delvi Agustina S
3. I Gede Arya W. S
4. Gregorio Jordan O.B
5. Roland Joshua P
6. Martina Nagasia
7. Dwi Handoko
LEARNING OBJECTIVES

LO7- Understand the nature of managerial decision making, differentiate between programmed and
nonprogrammed decisions, and explain why nonprogrammed decision making is a complex, uncertain
1 process.
LO7- Describe the six steps managers should take to make the best decisions, and explain how cognitive biases
can lead managers to make poor decisions.
2
Identify the advantages and disadvantages of group decision making, and describe techniques that can
LO7-3 improve it.

LO7- Explain the role that organizational learning and creativity play in helping man- agers to improve their
decisions.
4
Describe how managers can encourage and promote entrepreneurship to create a learning organization,
LO7-5 and differentiate between entrepreneurs and intrapreneurs.
The Nature Of Managerial Decision Making
The process by which managers respond to opportunities and threats by analyzing options and determine about
specific organizational goals and courses of action

1 Programmed Decision Making

Routine, virtually automatic decision making that
follows established rules or guidelines

2 Nonprogrammed Decision Making

Non routine decision making occurs in response to
unusual, unpredictable opportunities and threats.
Relying on intuitions or make reasoned-judgment
The Classical Model
This specifies how decisions should be made and assuming managers have access to all information they need to make optimum decision

classical model A prescript ive

approach to decision making
based on the assumption that
the decision maker can identify
and evaluate all possible
alternatives and their
consequences and rationally
choose the most appropriate
course of action

optimum decision The most

appropriate decision in light
of what managers believe to
be the most desirable
consequences for the
organization
The Administrative Model (1/2)
Explains why decision making is uncertain and risky and why managers usually make satisfactory rather than optimum decision

Bounded Rationality Incomplete Information Satisficing

Cognitive limitations that constrain Caused by risk and uncertainty, Searching for and choosing
one’s ability to interpret, process, ambiguous information, and time acceptable/satisfactory response to
and act on information constraint & information cost problems and opportunities, rather
than trying to make best decision
The Administrative Model (2/2)
Explains why decision making is uncertain and risky and why managers usually make satisfactory rather than optimum decision

Why Information Incomplete 1 Risk The degree of probability that the possible
outcomes of a particular course of action will occur.

Uncertainty Unpredictability

2 Ambiguous information Information that can be

interpreted in multiple and often conflicting
ways.

3 Time Constraints & Information Costs

Managers have neither the time nor the money
to search for all possible alternative solutions
and evaluate all the potential consequences of
those alternatives.
Steps in Decision Making
Researchers have developed a step-by-step model of the decision-making process and the issues and problems that managers confront at each step

Six Steps in Decision Making

Cognitive Biases and Decision Making
Systematic errors cause cognitive biases which may lead to poor decision making

Representativeness Bias
Confirmation Bias
Resulting from the tendency to
Resulting from tendency to base decisions on
01 one’s existing beliefs even evidence shows that 02 generalize inappropriately from
a small sample or from a single
those beliefs are wrong
event

Illusion of Control Escalating Commitment

Resulting from tendency to overestimate one’s Resulting from tendency to

03 own ability to control activities and events 04 commit additional resources to a
project even if evidence shows
that project is failing
Group Decision Making
Group Decision Making comes with several advantages and disadvantages in advance

Advantages (+) Disadvantages (-)

Best Alternative Groupthink

Managers that work as a team to make decisions and
Groupthink is a pattern of faulty and biased decision
solve problem, the alternative solution can accumulate
making that occurs in groups whose members strive for
many knowledge, source and perspective
agreement among themselves at the expense of
accurately assessing information relevant to a decision

Strong Implementation
When a managers choose a group decision making, the
probability that decision will be implemented
successfully increases rather than others manager who
done individually
Good Engagement
Group decision making can encourage employee
participation that affect in engagement and retain the best
collaborative employees
Wasting Time
Groups often take much longer than individuals to make
decisions due to series of meeting and FGD
Difficult in Decision
Getting two or more managers to agree to the same
solution can be difficult because manager’s interest and
preferences often different
How to Improve Decision Making
There are two common practices to improve on decision making strategy, called devil’s advocacy and dialectical inquiry

Devil’s Advocacy Dialectical Inquiry

Is a critical analysis of a preferred alternative, made in response
to challenges raised by a group member who, playing the role
of devil’s advocate, defends unpopular or opposing alternatives
for the sake of argument
Is a critical analysis of two preferred alternatives
in order to find an even better alternative for the
organization to adopt
Organizational Learning and Creativity
The quality of managerial decision making ultimately depends on innovative responses to opportunities and threats

Senge’s Principles for Creating a Learning Organization

Senge’s Principle
Peter Senge identified five principles for
creating a learning organization

Promoting Group Creativity

There are three group decision technique
Entrepreneurship and Creativity
Managers can encourage and promote entrepreneurship to create a learning organization and differentiate between entrepreneurs and intrapreneurs

How
can organizations promote
organizational learning and
intrapreneurship?
PRODUCT CHAMPIONS
One way to promote intrapreneurship is to encourage individuals to assume the role of
product champion, a manager who takes ownership of project and provides the leadership
and vision that take a product from the idea stage to the final customer

SKUNKWORKS
A skunkworks is a group of intrapreneur who are deliberately separated from normal
operation of an organization – for example, from the normal chain of command – to
encourage them to devote all their attention to developing new products

REWARDS FOR INNOVATION

To encourage managers to bear the uncertainty and risk associated with the hard work of
entrepreneurship, it is necessary to link performance to rewards
“Whenever you see a successful business, someone once made a courageous decision.”

- Peter F. Drucker -