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Decision Making,
Learning, Creativity,
and Entrepreneurship
McGraw-Hill/Irwin
Contemporary Management, 5/e
Learning Objectives
After studying the chapter, you should be able
to:
Differentiate between programmed and
nonprogrammed decisions, and explain why
nonprogrammed decision making is a
complex, uncertain process.
Describe the six steps that managers
should take to make the best decisions.
Explain how cognitive biases can lead
managers to make poor decisions.
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Learning Objectives
Identify the advantages and disadvantages
of group decision making, and describe
techniques that can improve it.
Explain the role that organizational learning
and creativity play in helping managers to
improve their decisions.
Describe how managers can encourage and
promote entrepreneurship to create a
learning organization and differentiate
between entrepreneurs and intrapreneurs
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Decision Making
Programmed Decision
Routine, virtually automatic decision making
that follows established rules or guidelines.
Managers have made the same decision
many times before
Little ambiguity involved
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Decision Making
Non-Programmed Decisions
Nonroutine decision made in response to
unusual or novel opportunities and threats.
The are no rules to follow since the decision
is new.
Decisions are made based on information,
and a managers intuition, and judgment.
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Decision Making
Intuition
feelings, beliefs, and hunches that come
readily to mind, require little effort and
information gathering and result in on-the-spot
decisions
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Decision Making
Reasoned judgment
decisions that take time and effort to make
and result from careful information
gathering, generation of alternatives, and
evaluation of
alternatives
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Figure 7.1
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Figure 7.2
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Uncertainty
Probabilities cannot be given for outcomes
and the future is unknown.
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Ambiguous
Information
Information whose
meaning is not clear
allowing it to be
interpreted in
multiple or
conflicting ways.
Figure 7.3
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Figure 7.4
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General
Criteria for
Evaluating
Possible
Courses of
Action
Figure 7.5
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Feedback Procedure
1. Compare what actually happened to
what was expected to happen as a
result of the decision
2. Explore why any expectations for the
decision were not met
3. Derive guidelines that will help in future
decision making
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Figure 7.6
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Representativeness
The decision maker incorrectly generalizes
a decision from a small sample or a single
incident.
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Escalating Commitment
Committing considerable resources to
project and then committing more even if
evidence shows the project is failing.
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Promote Diversity
Increasing the diversity in a group may result in
consideration of a wider set of alternatives.
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Figure 7.7
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Figure 7.8
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2. Mental Models
3. Team Learning
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5. Systems Thinking
Knowing and understanding how actions
in one area of the firm will impact other
areas of the firm.
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Entrepreneurship
Entrepreneurs
Individuals who notice opportunities and
take the responsibility for mobilizing the
resources necessary to produce new and
improved goods and services.
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Entrepreneurship
Intrapreneurs
Individuals (managers, scientists, or
researchers) who work inside an existing
organization and notice an opportunity for
product improvements and are responsible
for managing the product development
process.
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Intrapreneurship and
Organizational Learning
Learning organizations encourage their
employees to act as intrapreneurs:
Product champions: taking ownership of a
product from concept to market.
Skunkworks: keeping a group of intrapreneurs
separate from the rest of the firm.
Rewards for innovation: linking innovation by
workers to valued rewards.
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