Chapter 2: Decision making
L02.1
The decision-making process consists of
eight steps:
1. Identify the problem: Is it a problem
or a symptom of a problem?
2. Identify decision criteria:
Criteria that define what’s important
or relevant to resolving a problem.
3. weigh the criteria: Give the most
important criterion a 10 and then
assign weights to the rest.
4. develop alternatives: The decision
maker must be creative. List viable
alternatives.
5. analyze alternatives: Evaluate
alternatives by using the criteria in
step 2.
6. select alternative
7. implement alternative: you put the
decision into action by conveying it to
those affected and getting their
commitment to it.
8. evaluate decision effectiveness.
Definitions
Decision: A choice among two or more alternatives.
Problem: An obstacle that makes it difficult to achieve a desired goal or purpose.
, L02.2
The assumptions of rationality
The problem is clear and unambiguous.
A single, well-defined goal is to be achieved.
All alternatives and consequences are known.
The final choice will maximize the payoff.
The four essential elements of EBMgt:
1. The decision maker’s expertise and judgment.
2. External evidence that’s been evaluated by the decision maker.
3. opinions, preferences, and values of those who have a stake in the decision.
4. Relevant organizational (internal) factors such as context, circumstances, and
organizational members.
Definitions
Rational decision making: Describes choices that are logical and consistent and maximize
value.
Bounded rationality: Decision making that’s rational, but limited (bounded) by an
individual’s ability to process information.
Satisfice: Accept solutions that are “good enough”.
Escalation of commitment: An increased commitment to a previous decision despite
evidence it may have been wrong.
Intuitive decision making (p.88): Making decisions on the basis of experience, feelings,
and accumulated judgment.
Evidence-based management (EBMgt): The systematic use of the best available evidence
to improve management practice.
L02.1
The decision-making process consists of
eight steps:
1. Identify the problem: Is it a problem
or a symptom of a problem?
2. Identify decision criteria:
Criteria that define what’s important
or relevant to resolving a problem.
3. weigh the criteria: Give the most
important criterion a 10 and then
assign weights to the rest.
4. develop alternatives: The decision
maker must be creative. List viable
alternatives.
5. analyze alternatives: Evaluate
alternatives by using the criteria in
step 2.
6. select alternative
7. implement alternative: you put the
decision into action by conveying it to
those affected and getting their
commitment to it.
8. evaluate decision effectiveness.
Definitions
Decision: A choice among two or more alternatives.
Problem: An obstacle that makes it difficult to achieve a desired goal or purpose.
, L02.2
The assumptions of rationality
The problem is clear and unambiguous.
A single, well-defined goal is to be achieved.
All alternatives and consequences are known.
The final choice will maximize the payoff.
The four essential elements of EBMgt:
1. The decision maker’s expertise and judgment.
2. External evidence that’s been evaluated by the decision maker.
3. opinions, preferences, and values of those who have a stake in the decision.
4. Relevant organizational (internal) factors such as context, circumstances, and
organizational members.
Definitions
Rational decision making: Describes choices that are logical and consistent and maximize
value.
Bounded rationality: Decision making that’s rational, but limited (bounded) by an
individual’s ability to process information.
Satisfice: Accept solutions that are “good enough”.
Escalation of commitment: An increased commitment to a previous decision despite
evidence it may have been wrong.
Intuitive decision making (p.88): Making decisions on the basis of experience, feelings,
and accumulated judgment.
Evidence-based management (EBMgt): The systematic use of the best available evidence
to improve management practice.
