ch7: decision making and creativity

Question 1

decision making

Answer 1

the conscious process of making choices among alternatives with the intention of moving toward some desired state of affairs

Question 2

effective decision making

Answer 2

identifying, selecting and applying the best possible alternative – pure logic

Question 3

the rational choice view history

Answer 3

established 2500 years ago – Plato
o 400 years ago – Descartes + other European philosophers – the ability to make logical decisions
o 1700s – the notion that the best choice is the one that offers the greatest explained satisfaction

Question 4

ratonal choice decision

Answer 4

selecting the best alternative by calculating the probability that various outcomes will occur from the choices and the expected satisfaction from each of those outcomes

Question 5

identify the problem

Answer 5

o Problem – the deviation between the current and the desired situation
 “ought to be” – goals or performance expectations – later help evaluate the selected choice
o Opportunity – a deviation between current expectations and a potentially better situation that wasn’t previously expected
 Discovery that some choices may produce better results than current goals or expectations

Question 6

choosing the best decision process

Answer 6

– choosing among the different approaches and processes to make the decision
o Programmed – follow standard operating procedures – they have been resolved in the past, optimal solution has already been identified and documented
o Nonprogrammed – requires all steps in the decision models, problems are new or complex

Question 7

discover or develop a list of possible choices

Answer 7

o Searching for ready-made solutions (practices that have worked well on similar problems)
o If they’re not acceptable, need to design a custom-made solution or modify an existing one

Question 8

choose the best alternative

Answer 8

– an alternative that offers the greatest expected satisfaction or value
o Requires information about all possible alternatives and their outcomes – usually impossible

Question 9

evaluate what

Answer 9

whether the gap has narrowed between what is and what ought to be

Question 10

five problem identification challenges

Answer 10

o Solution-focused problems – describe the problem as a veiled solution – have been reinforced by past successes with that solution + comforted by closure to problems (nonconsciously embed a solution in their problem definition)
o Decisive leadership – executives are valued for their decisiveness (how quickly they determine that it’s a problem) + many leaders announce problem before having a chance to logically assess the situation
o Stakeholder framing – hide or provide information in ways that makes the decision maker see the situation as a problem, opportunity, steady sailing
 Point to external factors rather than their own faults as the cause of production delays
o Perceptual defense – fail to become aware of problems because they block out bad news as a coping mechanism
o Mental models – knowledge structures that we develop to describe, explain, and predict the world around us
 Fill in information that we don’t immediately see – fulfills our need to understand and navigate the surrounding environment
 Also are prototypes of ideal conditions – models of how things should be – can blind us

Question 11

identifying problems effectively

Answer 11

o Be aware of problem identification biases
o Resist temptation to look decisive
o Develop a norm of “divine discontent” – never satisfied with current conditions no matter how successful the situation may be
o Discuss the situation with colleagues and clients – easier to discover blind spots in problem identification when listening to how others perceive the situation

Question 12

bounded rationality

Answer 12

the view that people re bounded in their decision-making capabilities, including access to limited information, limited information processing, and tendency toward satisficing rather than maximizing when making choices
o Known as the theory questioning the rational choice view, but it’s not the only one – imperfect rationality theories

Question 13

goals

Answer 13

often ambiguous or in conflict with each other – decision makers rarely have a guide to determine which ones should take priority

Question 14

information processing

Answer 14

in reality, people evaluate only a few alternatives and only some of the main outcomes of those alternatives

Question 15

implicit favorite

Answer 15

– a preferred alternative that the decision maker uses repeatedly as a comparison with other choices

Question 16

reasons for bounded rationality

Answer 16

all of the alternatives are not usually available at the same time, humans have a natural preference for comparing two choices rather than systematically evaluating many alternatives at the same time + people are cognitive misers (minimize mental effort by quickly forming a preferred alternative and then looking for evidence that supports it – confirmation bias), minimizing the risk of cognitive dissonance (an emotional experience caused by a perception that our beliefs, feelings, behavior are incongruent with one another)

Question 17

heuristics

Answer 17

– cognitive shortcuts or mental rules of thumb
o Often adaptive and functional – used to simplify things, help make quick decisions
o But are sometimes not good enough – complex decisions in uncertain environments

Question 18

biased decision heuristics

Answer 18

o Anchoring and adjustment heuristic – we’re influenced by an initial anchor point and don’t sufficiently move away from that point
 Even when they’re meaningless
 Explanation – people tend to compare alternatives rather than evaluate them purely against objective criteria
 Ex: in negotiation – round numbers lead to round counteroffers (exact numbers are better anchors) + first offer leads to a difference in negotiated agreement
o Availability heuristic – the tendency to assign higher probabilities to objects or events that are easier to recall from memory
o Representativeness heuristic – the tendency to evaluate probabilities of events by the degree of which they resemble other events or objects rather than on objective probability information

Question 19

satisficing

Answer 19

selecting an alternative that is satisfactory or good enough, rather than the alternative with the highest value (maximization) – satisfy + suffice
o Usually necessary, choosing the best choice (maximization) requires complete and perfect information
o Ex: people like to have choices but too many alternatives – cognitively and emotionally draining
 Reducing cognitive effort – discarding a large selection of alternatives using easily identifiable factors and by evaluating them using only a handful of possible outcomes
o Ex: when the booth had 6 jams, 30% of people bought one but only 3% when 24 types of jam

Question 20

issues with opportunity based decision making

Answer 20

o Whether decision makers can discover and objectively evaluate opportunities
o Tendency for decision makers to personalize an opportunity rather than remain impartial

Question 21

emotions and intuition in decision making

Answer 21

1. Emotions form early preferences – people very quickly attach specific emotions to information about each alternative, our preferred alternative is strongly influenced by those initial emotional markers – even information produced from logical analysis gets tagged with emotional markers
2. Emotions change the decision evaluation process – when in a positive mood, pay less attention to details and rely on a more programmed decision routine (anger – more optimistic about the success of risky alternative)
3. Emotions serve as information when we evaluate alternatives – people listen in on their emotions to gain guidance when making choices – similar as having a temporary improvement in emotional intelligence

Question 22

intuition

Answer 22

the ability to know when a problem or opportunity exists and to select the best course of action without conscious reasoning

Question 23

when are emotional signals intuition

Answer 23

when they rely on mental models that reasonably and accurately depict the situation where we sense the problem or opportunity
- Intuition also relies on action scripts (programmed decision routines that speed up our response to pattern matches or mismatches)
o Shorten the decision-making process by jumping from problem identification to selection of a solution – form of programmed decision making

Question 24

making choices more effectively

Answer 24

o Systematically evaluate alternatives against relevant factors – use intuition in combination with careful analysis of relevant information
o Be aware of effects of emotions on decision preferences and evaluation process
o Scenario planning – a systematic process of thinking about alternative futures and what the organization should do to anticipate and react to those environments

Question 25

escalation of commitment

Answer 25

the tendency to repeat an apparently bad decision or allocate more resources to a failing course of action

Question 26

causes of escalation

Answer 26

o Self-justification effect – trying to convey a positive public image of themselves, motivated to demonstrate that their choices will be successful (especially when they’re personally identified with the project) o Self-enhancement effect – a person’s inherent motivation to have a positive self-concept (and to have others perceive them favorably) such as being competent, attractive, lucky, ethical and important  Self-justification and self-enhancement often occur together in escalation of commitment (self-justification is a deliberate attempt to maintain a favorable public image, self-enhancement is nonconscious and distorts information) o Prospect theory effect – an innate tendency to feel stronger negative emotion from losing a particular amount than positive emotion from gaining an equal amount  Stronger motivation to avoid losses than to risk receiving equally valid gains – can lead to the decision to choose to invest more in the losing project o Sunk cost effect – people are more motivated to invest more resources in project that have high sunk costs – the value of resources already invested  Rational choice – investing resources should be determined by expected future gains and risk not the earlier investment  Form of closing costs – the financial penalties of shutting down a project – the higher the closing costs, the more motivated decision makers are to engage in escalation of commitment

Question 27

evaluating decisions more effectively

Answer 27

o Separate decision choosers from evaluators – works best when the decision evaluators have limited alliance with those who made the decision (minimizes the self-justification effect) o Publicly establish a present level to abandon the project (stop-loss) – problem is that conditions are often too complex that it’s difficult to identify an appropriate point to abandon a project o Find sources of systematic and clear feedback – at some point even the strongest confirmation bias effects deflate when decision makers are faced with systematic and clear feedback about the project’s failings – earlier awareness of problems, would offer less psychological attachment o Involve several people in the evaluative process o Focus on the present

Question 28

creativity

Answer 28

the development of original ideas that make a socially recognized contribution

Question 29

stages of creativity

Answer 29

1. Preparation – investigating the problem or opportunity in many ways, developing a clear understanding of what you’re trying to achieve through a novel solution and then actively studying information related to the topic 2. Incubation – reflective thought – our mind is still working on the problem in the background (maintaining a low-level awareness by frequently revisiting the problem) a. Divergent thinking – reframing a problem in a unique way and generating different approaches to the issue (contrasts with convergent thinking – calculating the conventionally accepted right answer) 3. Illumination – suddenly becoming aware of a unique idea – begins with a fringe awareness before the idea fully enters our consciousness – ideas that are vague and roughly drawn 4. Verification – flashing out the ideas and subject them to detailed logical evaluation and experimentation – the beginning of a long process of creative decision making toward development of an innovative product or service - Ex: how it’s studied o People given a group of words (club, gown, mare), have to put a word in front (night) o Control group just solves them – more unsolved, experimental group has an incubation period (5 minutes

Question 30

characteristics of creative people

Answer 30

1. Cognitive and practical intelligence – above-average intelligence to synthesize information, analyze ideas, apply their ideas + practical intelligence (the capacity to evaluate the potential usefulness of their ideas) 2. Persistence – high need for achievement, strong motivation for the task itself, moderate or high degree of self-esteem – people need motivation to continue working on and investing in a project in spite of failures and advice from others to quit 3. Knowledge and experience – required to discover or acquire new knowledge, but with new knowledge their models become more rigid, less adaptable to new information or rules about that knowledge domain + increases “mindless behavior” because expertise reduces the tendency to question why things happen 4. Independent imagination – high openness to experience, moderately low need for affiliation, strong values around self-direction and stimulation

Question 31

learning orientation

Answer 31

– a set of beliefs and norms in which people are encouraged to question past practices, learn new ideas, experiment putting ideas into practice, and view mistakes as part of the learning

Question 32

when does creativity thrive

Answer 32

when leaders have an appealing vision of the future and encourage employees to experiment with new ways to achieve that vision o Coworker support can improve creativity – competition among coworkers

Question 33

2 cornerstones of creativity in organizations

Answer 33

employing people with strong creative potential and providing a work environment that supports creativity

Question 34

activities that encourage creativity

Answer 34

1. Redefine the problem – revisiting projects that have been set aside + asking coworkers unfamiliar with the issue to explore it 2. Associative play – playing games or being challenged in unusual way a. Playful activities – treasure hunts b. Challenging participants to create something new with a specific purpose c. Morphological analysis – systematically investigating all combinations of characteristics of products, services or events, looking at the feasibility of each combination 3. Cross-pollination – when people from different areas of the organization exchange ideas or when new people are brought into existing teams – arranging formal social gatherings, encouraging happenstance interactions with people from other work areas, moving desks 4. Design-thinking – a human-centered, solution-focused creative process that applies both intuition and analytical thinking to clarify problems and generate innovative solutions a. The human rule-design thinking – team activity, collaboration and co-creation among several people with diverse knowledge and experiences – the issue and its possible solutions are viewed from several angles b. Ambiguity rule-creativity – preserve ambiguity rather than seek clarity too quickly, question and refine the stated problem c. The re-design rule – review past solutions to understand how those inventions tried to satisfy human needs d. The tangible rule – build several low-cost prototypes to test ideas, don’t analyze alternatives at a purely conceptual level, tolerate failure

Question 35

employee involvement

Answer 35

o Low level of involvement – where employees are individually asked for specific information but the problem is not described to them o Medium low – employees hear problem individually or collectively, then asked for information relating to their problem o Medium high – employees hear problem, then collectively develop recommendations o High – employees responsible for entire decision-making process

Question 36

contingencies of employee involvement

Answer 36

- Decision structure – programmed decisions are less likely to need employee involvement because the solutions are already worked out from past incidents - Source of decision knowledge – subordinates should be involved in some level of decision making when the leader lacks sufficient knowledge and they have additional information (closer to customers and production activities) - Decision commitment – participation improves employee commitment to the decision - Risk of conflict – two types of conflict undermine the benefits of employee involvement: first if employee goals and norms conflict with the organization’s goals, only a low level of employee involvement is advisable + the degree of involvement depends on whether employees will agree with one another on the preferred solution o If conflict is likely to occur, high involvement would be difficult to achieve