Paul C. NuttOhio State University

USA

OverviewHalf the decisions in organization fail. Studies

of 356 decisions in medium to large organizations in US and Canada reveal that these failure can be traced to managers who impose solution, limit the search for alternatives, and use power to implement their plan.

Managers who make the need for action clear at the outset, set objectives carry out unrestricted search for solution, are more apt to be successful.

Why Decisions Fail ?Managers employ poor tactics

Why tactics prone to fail used so often ?Some tactics with a good track record

are commonly known but uncommonly practiced

Decision makers take short cuts when they feel pressure

Subleties. Telling people you want to lower costs is much more powerful than finding the root cause of the problem

Inventory of Managerial DecisionCases a based on 356 decisions made by senior

managers in medium to large organization across the USA and Canada

The managers face day-to-day managerial decision in new products, equipment purchases, staffing, pricing, marketing, controls, planning, personnel policy, construction and customer service

About a quarter were made in public agencies, about a half in private sector profit-making companies, and the remainder in third-sector organizations

Inventory of Managerial Decision (contd.)The steps managers followed were

uncovered and classified into tactics that are used to:

Set directionsFind solutionsImplement solutions The indicator of successful tactics :Long term use (sustained for two years)Degree of use (decision/tactic still in full

use after two years)

Organizational Decision Making

A Solution

ESTABLISHDIRECTION

INFORMATIONGATHERING

ActionRequired

IDENTIFY OPTION

PLANDEVELOPMENT

EVALUATION

IMPLEMENTATION

SIGNALS

stopNo

What’s Wanted

Some IdeasAlternatives

Performance Realized(e.g., use)

MotivatingConcerns

Yes

Findings

Questions about organizational effectiveness

DIAGNOSIS

ACTION

Tactics Used to Set DirectionGenerating IdeasProblem SolvingSetting ObjectivesIntervening in the Process

Generating IdeasThe most common way of establishing a

direction (37%)Managers find what seems to be a useful idea

in the signal motivating action and fashion it into a ready-made solution

The idea tactic prompts managers to focus on a single solution.Managers saw the idea as a pragmatic way to take decisive action, and made no effort to find another option

Solutions derived in this way were fully used in only 42% of the cases and only 56% were used for the entire two years

Problem SolvingUsed in more than 26% of the casesManagers defined a problem and then

analyzed its distinctive features with the hope of quickly uncovering clues that would suggest a remedy

Only 44%of the solutions were fully used and 55% were sustained as long as two years

The low sustainability occurred because it became increasingly obvious over time that more important things had been overlooked

Setting ObjectivesUsed in 30% of the casesThe objective indicates the results that a

manager wants to realize, such as lower cost or increased market share

Resulted in a 70% sustained use and 58% full use

Objectives are commonly known, but uncommonly practiced because managers often have bias toward action and fear being seen as indecisive

Setting objectives can prompt failure if the objective is too demanding

Intervening in the ProcessUsed in just 7% of the casesIt was the most successful (sustained in

96% and fully used in 92% of the cases)To intervene, a manager demonstrates the

imperative to act by comparing current performance to norms that discredited it. This demonstration justifies the new norm by benchmarking the performance levels of respected organization.Managers compare current performance to the new norm and over some ways to improve performance

Lessons for Establishing DirectionThe most successful tactics are infrequently

used, and the least successful frequently usedAvoiding idea and problem-solving tactics

and using objective or intervention tactics will improve the chance of success

Problem solving tactics fail because the search for solutions is narrowed and the defensiveness is evoked

Intervention and setting objectives are effective because they encourage learning and development

ODM

Tactics Used to Identify OptionBenchmarking the Best Practices of OthersSearching For SolutionsDesigning Options

Benchmarking the Best Practices of OthersManagers often benchmark practices that

are being uses by respected organizations to uncover a solution

A single-benchmark (from single source) cropped up 7% of the cases and had both sustained and full use rates of 59%

Integrated benchmarking (amalgamate ideas from multiple sources) observed in 6% of the cases and had sustained rate 71% and full use rate 78%

Searching For Solutions12% of the cases used search aids, such as a

request for proposal, to find prepackage solutions from vendors or consultants.

Managers who feel that they are aware of the standards by which to judge a proposed option carry out a single search (9% of the cases)

Others prefer to learning from sequential searches /multiple search (3% of the cases)

Single search had sustained in 63% and fully used in 51%

Multiple search had sustained and fully used in 100%

Designing OptionsManagers apply design to develop innovative

options in response to the need or the objective guiding the decision-making effort

Design tactics were found in 12% of the cases and produce 63% sustained decisions and 53% fully used decisions

Managers were reluctant to use design because it seemed quite risky, compared with the benchmarking or the searching tactics

Lessons for Identifying OptionManagers who impose just one idea (single

benchmark, single search) should spend considerable time trying to make the idea work.

Single searches opened up the search process but allowed little opportunity for learning

Design produced good results under certain condition such as for important decisions and when multiple alternatives were sought

Nearly every discussion of decision making calls for developing multiple options

ODM

Tactics Used to Implement Decision StagesInterventionParticipationPersuasionEdicts

InterventionImplementation by intervention occurred in

7% of the decision studied, with 98% sustained and 92% fully used

Intervention showed stakeholders that performance has improve and that performance now meets agreed upon norms

ParticipationManagers started other decision-making

efforts by creating task force with key individuals as members. Authority was delegated to the task force to oversee important aspects of the effort.

Implementation by participation occurred in 18% of the decision studied, with 80% sustained and 73% fully used

There were 4 types of implementation (token, delegated, complete, and comprehensive)

PersuasionManager use persuasion in nearly 40% of the

cases with 56% sustained use and 47% full use rate

Managers combined the rational arguments provided by experts with salesmanship to convince people to go along with decision

Failure occurred when the experts’ arguments were unable to sway people

EdictsSome managers use their power to issue a

directive that announces a decision through such as a memorandum, conducted job training, and administrator hiring.

Edicts was observed in 40% of the cases with 53% sustained use and 35% full use rate

Lessons for Implementing DecisionsManagers should become more involved in

decision makingSubstitute intervention for edicts and

persuasionInvolve people affected by a decisionIssuing edicts calls for reward, legitimate,

expert, informational or referent power.

Successful Decision MakingManagers can improve their chances of making

successful decisionsSuggestions:Personally manage your decision-making processesSearch for understandingEstablish direction with an intervention and

objectiveStress idea creation and implementation. A decision-

making process should guide thinking about action and taking action

Identify more than one optionDeals with barriers to action

Thank You