virtual group # 2 decision making: theory & praxis victoria aleman vicki barber michael goold...

Virtual Group # 2Decision Making:

Theory & Praxis

Virtual Group # 2Decision Making:

Theory & Praxis

• Victoria Aleman• Vicki Barber• Michael Goold• Michael McDowell• Britta Skavdahl• Laurie Wellner

• Victoria Aleman• Vicki Barber• Michael Goold• Michael McDowell• Britta Skavdahl• Laurie Wellner

Decision MakingDecision Making

The process of reaching a conclusion or making a choice.

(Schwarz, 2002)

The process of reaching a conclusion or making a choice.

(Schwarz, 2002)

Decision-Making Theories

Rational Bounded rationality

Unstructured

Decisionmaking

Decision Making TheoriesDecision Making Theories

• Rational Model • Bounded Rationality • Decision Irrationality

• Rational Model • Bounded Rationality • Decision Irrationality

Rational ModelRational Model

• Model used before 1947• Created from the frame of Economics• Consists of five (5) steps

• Model used before 1947• Created from the frame of Economics• Consists of five (5) steps

Rational Model – 5 Steps

Rational Model – 5 Steps

• Define the problem• Collect/analyze relevant data that serves as a

frame for decision making.• Generate/evaluate as many alternatives as

possible. a) consider the positive & negative of all• Selection (based on pre-established criteria

related to organizations objectives.• Implementation of the decision (Hatch, 1997)

• Define the problem• Collect/analyze relevant data that serves as a

frame for decision making.• Generate/evaluate as many alternatives as

possible. a) consider the positive & negative of all• Selection (based on pre-established criteria

related to organizations objectives.• Implementation of the decision (Hatch, 1997)

Bounded RationalityBounded Rationality

• Herbert Simon(1947) – questions the Rational Model because:

1. assumes decision makers have full knowledge of all alternatives and consequences of each.

2. ignores political factors 3. assumes there is a consistent preference

ordering by all decision makers

• Herbert Simon(1947) – questions the Rational Model because:

1. assumes decision makers have full knowledge of all alternatives and consequences of each.

2. ignores political factors 3. assumes there is a consistent preference

ordering by all decision makers

Instead…..Instead…..Simon posits that organizations:1. Have only incomplete information to

work with.2. Deal with complex problems3. Limited ability by humans to process

information4. Limited time availability with which to

make decision.5. Have conflicting goals and preferences

Simon posits that organizations:1. Have only incomplete information to

work with.2. Deal with complex problems3. Limited ability by humans to process

information4. Limited time availability with which to

make decision.5. Have conflicting goals and preferences

Bounded RationalityBounded Rationality

• Two factors limit an organizations ability to be rational.

1. Often decision makers have too little information to meet the test for using the rational model

a) complexity or rapid change may be a factor in this area.

• Two factors limit an organizations ability to be rational.

1. Often decision makers have too little information to meet the test for using the rational model

a) complexity or rapid change may be a factor in this area.

2. Conflicting Goals a) with agreement the rational

model works well. b) without agreement things are

more ambiguous. 1) Disagreement has two factors

a) Disagreement about goals = ambiguity. b) Disagreement about what knowledge to consider

= Uncertainty

2. Conflicting Goals a) with agreement the rational

model works well. b) without agreement things are

more ambiguous. 1) Disagreement has two factors

a) Disagreement about goals = ambiguity. b) Disagreement about what knowledge to consider

= Uncertainty

Nils BrunssonNils Brunsson

• Critical of decision making school of thought. Viewed the process as too restrictive. Stated:

1) Decisions are not the primary concern of management – Actions are. 2) Organizational action depends on more than decision making. a) Motivation b) Commitment c) Positive Expectations 3) Process of considering alternatives provokes uncertainty and can paralyze an organization

• Critical of decision making school of thought. Viewed the process as too restrictive. Stated:

1) Decisions are not the primary concern of management – Actions are. 2) Organizational action depends on more than decision making. a) Motivation b) Commitment c) Positive Expectations 3) Process of considering alternatives provokes uncertainty and can paralyze an organization

Decision IrrationalityDecision Irrationality

• Brunsson’s alternative to the Rational Model. 1) Analyze only a few alternative a) best if only 1 alternative had a real chance of being selected.

2. Consider the positive & negative of only the favored solution 3. Avoid formulating objectives in advance a) reformulate predicted consequences of the favored alternative

4. Limit use of rational model to insignificant decisions

• Brunsson’s alternative to the Rational Model. 1) Analyze only a few alternative a) best if only 1 alternative had a real chance of being selected.

2. Consider the positive & negative of only the favored solution 3. Avoid formulating objectives in advance a) reformulate predicted consequences of the favored alternative

4. Limit use of rational model to insignificant decisions

A Successful Decision-Making

Process

A Successful Decision-Making

Process

Shapiro & Lorenz (2000)

Frame the DecisionFrame the Decision

• A frame is a window for which we see the decision and it puts it into context.

• Sets the scope and decides what aspects of the problem are the most important to assess in the process.

• Framing is the key factor in the decision-making process and cannot be delegated.

• Framing is a natural process, that most people tend to do without even thinking about it.

• Avoid – Falling back on old familiar frames before consideration if they are appropriate for the given situation.

(Shapiro & Lorenz, 2000, p. 4)

• A frame is a window for which we see the decision and it puts it into context.

• Sets the scope and decides what aspects of the problem are the most important to assess in the process.

• Framing is the key factor in the decision-making process and cannot be delegated.

• Framing is a natural process, that most people tend to do without even thinking about it.

• Avoid – Falling back on old familiar frames before consideration if they are appropriate for the given situation.


Gather InformationGather Information

• Once the frame has been set by the leader, the gathering of information can then be delegated.

• A well-defined and understood frame sets the stage for what information needs to be applied in every situation.

• When gathering information, it is important to know what is unknown. Thus, the first step in gathering information is to assess what is known and what you do not know.

• Look at future trends when you are gathering information (political, economic, social, technological factors) for possible areas of change in the future.

• Avoid – Overconfidence in your assumptions and what “is known” can lead to a failure to collect key information.

(Shapiro & Lorenz, 2000, p. 4-5)

• Once the frame has been set by the leader, the gathering of information can then be delegated.

• A well-defined and understood frame sets the stage for what information needs to be applied in every situation.

• When gathering information, it is important to know what is unknown. Thus, the first step in gathering information is to assess what is known and what you do not know.

• Look at future trends when you are gathering information (political, economic, social, technological factors) for possible areas of change in the future.

• Avoid – Overconfidence in your assumptions and what “is known” can lead to a failure to collect key information.


Analyze the Information Analyze the Information

• Analyzing information can be delegated.• It is systematic. • Analyze data considering its resourcing/people, market/financial & technology

impacts.• Use SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to

organize analysis. Strengths and Weaknesses are internal to your organization – know what your organization can accomplish and what it cannot. Opportunities and Threats are environmental – understand the market opportunities and the threats from competition.

• Avoid – Failing to be systematic in combining information, and over-or under-weighing a piece of information because it is salient or was relevant in the past.


• Analyzing information can be delegated.• It is systematic. • Analyze data considering its resourcing/people, market/financial & technology

impacts.• Use SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to

organize analysis. Strengths and Weaknesses are internal to your organization – know what your organization can accomplish and what it cannot. Opportunities and Threats are environmental – understand the market opportunities and the threats from competition.

• Avoid – Failing to be systematic in combining information, and over-or under-weighing a piece of information because it is salient or was relevant in the past.


Draw ConclusionsDraw Conclusions

• Drawing conclusions cannot be delegated. • The leaders must see the “big picture” and use the analyzed

data to draw the effective conclusions for the organization.• The analyst, who gathers the information and analyzes it, is

often an expert in one field.• Avoid – Getting into too many details and failing to put the

decision-making in the hands of the organizational unit. (Shapiro & Lorenz, 2000, p. 5-6)

• Drawing conclusions cannot be delegated. • The leaders must see the “big picture” and use the analyzed

data to draw the effective conclusions for the organization.• The analyst, who gathers the information and analyzes it, is

often an expert in one field.• Avoid – Getting into too many details and failing to put the

decision-making in the hands of the organizational unit. (Shapiro & Lorenz, 2000, p. 5-6)

Take ActionTake Action

• In many decisions, it may not be the role of the decision-maker to take action. • Typically the action is delegated to professionals in technology, manufacturing,

finance or other areas. Commitment on the part of those professionals is essential to success. Without it the best decision will fail.

• Fair Process, as defined by Kim & Mauborgne (1997), builds the trust and commitment necessary to succeed in the knowledge economy. It is a key leverage point for employee commitment to a decision. They define three steps to Fair Process: Engagement, Explanation, and Expectation.• Engagement - Involve affected individuals in the decisions. Everyone should

be heard and understood.• Explanation - Explain the thinking behind the decision. Helps people support

a decision when their ideas have been rejected.• Expectation - State clearly the new rules of the game and what is expected

from those affected.• Avoid – Not involving critical players affected by the decision in the decision

process, and expecting them to carry out a decision that they do not fully understand.


• In many decisions, it may not be the role of the decision-maker to take action. • Typically the action is delegated to professionals in technology, manufacturing,

finance or other areas. Commitment on the part of those professionals is essential to success. Without it the best decision will fail.

• Fair Process, as defined by Kim & Mauborgne (1997), builds the trust and commitment necessary to succeed in the knowledge economy. It is a key leverage point for employee commitment to a decision. They define three steps to Fair Process: Engagement, Explanation, and Expectation.• Engagement - Involve affected individuals in the decisions. Everyone should

be heard and understood.• Explanation - Explain the thinking behind the decision. Helps people support

a decision when their ideas have been rejected.• Expectation - State clearly the new rules of the game and what is expected

from those affected.• Avoid – Not involving critical players affected by the decision in the decision

process, and expecting them to carry out a decision that they do not fully understand.


Learn from ExperienceLearn from Experience

• All learning depends on feedback. • Decisions can have effects within the company and in the marketplace.

Both are sources of vital information. Using this information can improve future decisions.

• However, there are both individual and organizational barriers to getting and then using feedback.

• Every decision made and every action taken is an opportunity to learn. • Avoid – Losing vital information by not keeping track of decisions and

their outcomes and checking for trends and possible biases.


• All learning depends on feedback. • Decisions can have effects within the company and in the marketplace.

Both are sources of vital information. Using this information can improve future decisions.

• However, there are both individual and organizational barriers to getting and then using feedback.

• Every decision made and every action taken is an opportunity to learn. • Avoid – Losing vital information by not keeping track of decisions and

their outcomes and checking for trends and possible biases.


Methods for Decision MakingMethods for Decision MakingThere are different methods for decision-making, especially when

you focus on teams within an organization. A clear

understanding of the decision-making model allows individuals,

teams, and groups within an organization to make valuable

decisions. The “best-decision” is described as a decision that (1)

would not have been thought by an individual alone, (2) is a sound

solution or problem, (3) is a decision based upon input, as

unbiased as possible from each team member, and (4) addresses

the team’s goals for the decision-making process. Johnson and

Johnson describe seven methods/processes a team might use to

make a decision.

(Foundation Coalition, 2001)

There are different methods for decision-making, especially when

you focus on teams within an organization. A clear

understanding of the decision-making model allows individuals,

teams, and groups within an organization to make valuable

decisions. The “best-decision” is described as a decision that (1)

would not have been thought by an individual alone, (2) is a sound

solution or problem, (3) is a decision based upon input, as

unbiased as possible from each team member, and (4) addresses

the team’s goals for the decision-making process. Johnson and

Johnson describe seven methods/processes a team might use to

make a decision.


Method 1: Decision made by authority without group

discussion

Method 1: Decision made by authority without group

discussion

Process: the designated leader makes all decisions without consulting the group members.Strengths: takes minimal time to make a decision, is commonly used in organizations.Weaknesses: no group interaction, team may not understand decision or is unable to implement the decision.


Process: the designated leader makes all decisions without consulting the group members.Strengths: takes minimal time to make a decision, is commonly used in organizations.Weaknesses: no group interaction, team may not understand decision or is unable to implement the decision.


Method 2: Decision by expert

Method 2: Decision by expert

Process: select the expert from the group, the expert considers the

issues and makes the decisions.

Strengths: useful when one person on the team has an

overwhelming amount of expertise in a certain area.

Weaknesses: unclear how to determine who the expert is (team

members may have different opinions), no group interaction, and

may become a popularity issue or power struggle.


Process: select the expert from the group, the expert considers the

issues and makes the decisions.

Strengths: useful when one person on the team has an

overwhelming amount of expertise in a certain area.

Weaknesses: unclear how to determine who the expert is (team

members may have different opinions), no group interaction, and

may become a popularity issue or power struggle.


Method 3: Decision by averaging individual’s opinions

Method 3: Decision by averaging individual’s opinions

Process: separately ask each team member his/her opinion and average the results. Strengths: extreme opinions cancelled out, group members consulted, urgent decisions can be made, useful when it is difficult to get the team to talk. Weaknesses: no group interaction, team members are not truly involved in the decision, commitment to the decision may not be strong, unresolved conflict may exist or escalate, and may damagefuture team effectiveness.


Process: separately ask each team member his/her opinion and average the results. Strengths: extreme opinions cancelled out, group members consulted, urgent decisions can be made, useful when it is difficult to get the team to talk. Weaknesses: no group interaction, team members are not truly involved in the decision, commitment to the decision may not be strong, unresolved conflict may exist or escalate, and may damagefuture team effectiveness.


Method 4: Decision made by authority after group discussion

Method 4: Decision made by authority after group discussion

Process: the team creates ideas and discussion, but the

designated leader makes the final decision. The leader will call a

meeting, present the issues, listens to a discussion from the the

team, and announces the final decision.

Strengths: team used more than methods 1-3, listening to the team

increases accuracy of the decision.

Weaknesses: the team is not part of the decision, the team may

compete for the leader’s attention, may not have commitment from

the team to the decision, team may not be honest with their feelings

and only tell the leader what they think he/she wants to hear.


Process: the team creates ideas and discussion, but the

designated leader makes the final decision. The leader will call a

meeting, present the issues, listens to a discussion from the the

team, and announces the final decision.

Strengths: team used more than methods 1-3, listening to the team

increases accuracy of the decision.

Weaknesses: the team is not part of the decision, the team may

compete for the leader’s attention, may not have commitment from

the team to the decision, team may not be honest with their feelings

and only tell the leader what they think he/she wants to hear.


Method 5: Decision by minority

Method 5: Decision by minority

Process: a minority of the team, two or more members who constitute less than 50% of the team, make the decision. Strengths: method often used by executive committees, can be used by temporary committees, some team perspective and discussion apparent. Weaknesses: can be construed as railroading, may not have full commitment by the team, and competition amongst the team members.


Process: a minority of the team, two or more members who constitute less than 50% of the team, make the decision. Strengths: method often used by executive committees, can be used by temporary committees, some team perspective and discussion apparent. Weaknesses: can be construed as railroading, may not have full commitment by the team, and competition amongst the team members.


Method 6: Decision by majority vote

Method 6: Decision by majority vote

Process: this is the most commonly used method in the United

States. The decision is discussed until at least 51% or more of the

team members agree on the decision.

Strengths: useful when there is insufficient time to make decision

by consensus,useful when the complete team commitment is

unnecessary for implementing the decision.

Weaknesses: taken for granted and is seen as the only way for

teams to make a decision, team is viewed as the “winners and the

losers”; reduces the quality of the decision, minority opinion not

discussed and may not be valued, full group interaction is not

obtained.


Process: this is the most commonly used method in the United

States. The decision is discussed until at least 51% or more of the

team members agree on the decision.

Strengths: useful when there is insufficient time to make decision

by consensus,useful when the complete team commitment is

unnecessary for implementing the decision.

Weaknesses: taken for granted and is seen as the only way for

teams to make a decision, team is viewed as the “winners and the

losers”; reduces the quality of the decision, minority opinion not

discussed and may not be valued, full group interaction is not

obtained.


Method 7: Decision by consensus

Method 7: Decision by consensus

Process: collective decision arrived through an effective and fair communication process, meaning all the team members spoke and listened, and all were valued participants.Strengths: most effective method of team decision-making, all teammembers expressed their thoughts and feelings, they felt understood, active listening used. Weaknesses: takes more time than methods 1-6, takes psychological energy and a high degree of team-member skill (can be a negative if the individual team members are not committed to the process.)


Process: collective decision arrived through an effective and fair communication process, meaning all the team members spoke and listened, and all were valued participants.Strengths: most effective method of team decision-making, all teammembers expressed their thoughts and feelings, they felt understood, active listening used. Weaknesses: takes more time than methods 1-6, takes psychological energy and a high degree of team-member skill (can be a negative if the individual team members are not committed to the process.)


Background of the Lens/Frame

Background of the Lens/Frame

“Frames are windows on the world of leadership and management.”

(Bolman and Deal, 2003, p.12)

• a.k.a. maps, tools, lenses, orientations, and perspectives• Definition:

• A set of ideas or assumptions students carry in you head• Helps one understand and negotiate a particular ”territory”

• Windows on a territory • Tools for navigation• Has specific strengths and weaknesses

“Frames are windows on the world of leadership and management.”

(Bolman and Deal, 2003, p.12)

• a.k.a. maps, tools, lenses, orientations, and perspectives• Definition:

• A set of ideas or assumptions students carry in you head• Helps one understand and negotiate a particular ”territory”

• Windows on a territory • Tools for navigation• Has specific strengths and weaknesses

Structural FrameStructural Frame

• Emphasizes goals, specialized roles, and formal relationships

• Commonly depicted by organizational charts

• Designed to fit an organization’s environment and technology

• Problems arise when structure is poorly aligned with the current circumstances

• Emphasizes goals, specialized roles, and formal relationships

• Commonly depicted by organizational charts

• Designed to fit an organization’s environment and technology

• Problems arise when structure is poorly aligned with the current circumstances

Human Resources Frame

Human Resources Frame

• Sees an organization much like an extended family

• Made up of individuals with needs, feelings, prejudices, skills, and limitations

• Sees an organization much like an extended family

• Made up of individuals with needs, feelings, prejudices, skills, and limitations

Political FramePolitical Frame

• Sees organizations as arenas, contests, or jungles

• Bargaining, negotiation, coercion, and compromise are a normal part of everyday life.

• Conflict is rampant

• Sees organizations as arenas, contests, or jungles

• Bargaining, negotiation, coercion, and compromise are a normal part of everyday life.

• Conflict is rampant

Symbolic FrameSymbolic Frame

• Sees organizations as cultures propelled by rituals, ceremonies, stories, heroes, and myths

• Considers organizations as theatre • Actors play their roles in organizational drama • Audiences form impressions from what is seen

• Sees organizations as cultures propelled by rituals, ceremonies, stories, heroes, and myths

• Considers organizations as theatre • Actors play their roles in organizational drama • Audiences form impressions from what is seen

Implications of Looking Through Frames

Implications of Looking Through Frames

• Each frame has its own image of reality• All four deepens your appreciations and understanding

of organizations• Requires elastic movement beyond narrow and

mechanical approaches for understanding organizations• Matching Frames to situations

• One perspective may be more helpful than others• Choosing a frame, or understanding others’ perspectives,

involves a combination of analysis, intuition, and artistry

• Each frame has its own image of reality• All four deepens your appreciations and understanding

of organizations• Requires elastic movement beyond narrow and

mechanical approaches for understanding organizations• Matching Frames to situations

• One perspective may be more helpful than others• Choosing a frame, or understanding others’ perspectives,

involves a combination of analysis, intuition, and artistry

Support during the framing phase of the action learning cycle

Support during the framing phase of the action learning cycle

• 1. Problem Setting as the source to framing

• 2. Purpose & Framing• 3. How do we frame?• 4. Rational Criteria for selecting a frame

• 1. Problem Setting as the source to framing

• 2. Purpose & Framing• 3. How do we frame?• 4. Rational Criteria for selecting a frame

Problem SettingProblem Setting

• Schon’s (1983) distinction between problem solving and problem setting is key to framing.

• Problem setting is a requirement before problem solving• Problem setting is a process in which, interactively, we name the

things to which we will attend and frame the context in which we will attend to them (1983, 40).

• The framing of a problem defines what is to count as a solution and what strategic factors will be utilized to solve the problem once it is set.

• Schon’s (1983) distinction between problem solving and problem setting is key to framing.

• Problem setting is a requirement before problem solving• Problem setting is a process in which, interactively, we name the

things to which we will attend and frame the context in which we will attend to them (1983, 40).

• The framing of a problem defines what is to count as a solution and what strategic factors will be utilized to solve the problem once it is set.

Purpose & FramingPurpose & Framing

• Interdependence between purpose and framing

• “ an actor’s purposes flow from the framing of the situation”

• the frame may be based on predispositions of the actor- goals, interests etc.

• Interdependence between purpose and framing

• “ an actor’s purposes flow from the framing of the situation”

• the frame may be based on predispositions of the actor- goals, interests etc.

How do we frame- a dynamic model

How do we frame- a dynamic model

• 1. Person confronted with a complex set of circumstances

• 2. Person draws on tacit knowledge to frame the situation

• 3. Interprets the information• 4. Person reflects on information if results are not what

was expected--may lead to reframe. • (Reflecting in action)- leads to single and double loop

learning

• 1. Person confronted with a complex set of circumstances

• 2. Person draws on tacit knowledge to frame the situation

• 3. Interprets the information• 4. Person reflects on information if results are not what

was expected--may lead to reframe. • (Reflecting in action)- leads to single and double loop

learning

Rational Criteria for selecting a frame

Rational Criteria for selecting a frame

• 1. Does the particular frame keep inquiry moving?

• 2. Does accuracy, scope, and simplicity guide theory choice?

• 1. Does the particular frame keep inquiry moving?

• 2. Does accuracy, scope, and simplicity guide theory choice?

BibliographyBibliography• Foundation Coalition (2001). Methods for decision making. Retrieved October 10, 2007,

from

http://www.foundationcoalition.org/home/keycomponents/teams/decision2.html

• Hatch, M.J., (1997). Organizational theory. Oxford, England: Oxford University Press

• Kim, W. C. & Mauborgne, R. (1997), "Fair Process: Managing in the Knowledge Economy",Harvard Business Review, July-August

• Schon, D. A. 1983.How professionals think in action. New York: Basic Books.

• Schwarz, R. (2002). The skilled facilitator. San Francisco,CA: Jossey-Bass Press

• Shapiro, A. & Lorenz, C. E. ( 2000). Successful Decision Making. Retrieved on October 6, 2007:

http://www.4-perspective.com/meet/successful_decision_making.pdf

• Simon, H. (1947). Administrative behavior. New York, NY: Macmillian

• Foundation Coalition (2001). Methods for decision making. Retrieved October 10, 2007, from


• Hatch, M.J., (1997). Organizational theory. Oxford, England: Oxford University Press

• Kim, W. C. & Mauborgne, R. (1997), "Fair Process: Managing in the Knowledge Economy",Harvard Business Review, July-August

• Schon, D. A. 1983.How professionals think in action. New York: Basic Books.

• Schwarz, R. (2002). The skilled facilitator. San Francisco,CA: Jossey-Bass Press

• Shapiro, A. & Lorenz, C. E. ( 2000). Successful Decision Making. Retrieved on October 6, 2007:


• Simon, H. (1947). Administrative behavior. New York, NY: Macmillian





virtual group # 2 decision making: theory & praxis victoria aleman vicki barber michael goold...

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