Management Chapter 7: Data & Decision-Making

Management - Chapter 7: Data and Decision-Making

• This chapter focuses on the role of information, data, and analytics in management, managerial approaches to problem-solving, the decision-making process, and creativity in managerial decision-making.

Learning Objectives

• Discuss the role of information, data, and analytics in management
• Identify and analyze different ways managers approach and deal with problems
• Explain the six steps in the decision-making process
• Describe the potential pitfalls and sources of creativity in managerial decision-making

Managerial Competencies

• Technological competency: Understanding and utilizing new technologies effectively.
• Information competency: Locating, gathering, organizing, and presenting information for decision-making and problem-solving.
• Analytical competency: Evaluating and analyzing information to make informed decisions and solve problems.

Information, Technology, & Management (1 of 6)

• Data: Raw facts and observations
• Information: Useful data made meaningful for decision-making
• Information is crucial for effective management decision making

Information, Technology, & Management (2 of 6)

• Useful information’s characteristics: Timely, high quality, complete, relevant, and understandable
• Management Information System (MIS): Uses technology for collecting, organizing, and distributing data

Information, Technology, & Management (3 of 6)

• Data Mining: Analyzing data to extract useful information for decision-makers
• Big Data: Huge quantities of data, needing sophisticated analysis techniques
• Management analytics: Conducting systematic evaluations and analysis of data for better decision-making

Information, Technology, & Management (4 of 6)

• Business Intelligence: Using information systems to extract and report useful data for decision-makers
• Data Visualization: Using visuals to update and display key performance metrics in real-time via executive dashboards

Information, Technology, & Management (5 of 6)

• Information needs in organizations: Include gathering intelligence information, providing public information, and information exchanges within the organization to facilitate decision-making and problem-solving

Information, Technology, & Management (6 of 6)

• Internal and external flows of information are vital for organizational decision-making and problem-solving.

Problem Solving and Managerial Decisions (1 of 16)

• Managers are continuous processors of information, gathering, sharing, and receiving information electronically and in person for informed decisions.

Problem Solving and Managerial Decisions (2 of 16)

• Managers use information in various roles
• Analytical, technological and information competencies are crucial

Problem Solving and Managerial Decisions (3 of 16)

• Problem solving: The process of identifying gaps between desired and actual performance and acting to achieve the desired performance.

Problem Solving and Managerial Decisions (4 of 16)

• Decision: A choice among possible courses of action
• Performance threat: A situation where problems exist or are likely to occur
• Performance opportunity: A chance for improvement.

Problem Solving and Managerial Decisions (5 of 16)

• Problem solvers: React to problems while gathering information to fix them.
• Problem avoiders: Don't gather information or work to resolve problems.

Problem Solving and Managerial Decisions (6 of 16)

• Problem seekers: Anticipate problems and opportunities as well as act appropriately to develop and maintain advantages.

Problem Solving and Managerial Decisions (7 of 16)

• Systematic thinking: Rational and step-by-step approach to problem-solving.
• Intuitive thinking: Flexible and spontaneous approach to problem-solving.

Problem Solving and Managerial Decisions (8 of 16)

• Multi-dimensional thinking: A combination of intuitive and systematic thinking; crucial for effective decision making.
• Strategic opportunism: Remaining focused on long-term objectives and adaptable in response to short-term circumstances.

Problem Solving and Managerial Decisions (9 of 16)

• Different cognitive styles exist amongst managers (sensation thinkers, intuitive thinkers, sensation feelers, intuitive feelers)
• Understanding these helps appreciate decision-making methods.

Problem Solving and Managerial Decisions (10 of 16)

• Structured problems: Familiar, straightforward, and clear information needs.
• Programmed decisions: Pre-existing solutions applied to structured problems.

Problem Solving and Managerial Decisions (11 of 16)

• Unstructured problems: Complex, ambiguous problems requiring unique solutions.
• Non-programmed decisions: Solutions created to meet the demands of a unique and complex problem, commonly needed by higher-level management.

Problem Solving and Managerial Decisions (12 of 16)

• Crisis decision-making: Handling sudden and unexpected problems demanding fast and appropriate resolution.

Problem Solving and Managerial Decisions (13 of 16)

• Rules for crisis management: Determine the situation, prioritize speed, acknowledge the unfamiliar, trust skeptics, be prepared to address the problem.

Problem Solving and Managerial Decisions (14 of 16)

• Certain environment: Complete information on possible actions and consequences.
• Risk environment: Partial information with probabilities of outcomes.

Problem Solving and Managerial Decisions (15 of 16)

• Uncertain environment: Limited information and difficult to estimate probabilities of outcomes.

Problem Solving and Managerial Decisions (16 of 16)

• Three environments for problem solving and decision-making: Certain, risk, and uncertain.

The Decision-Making Process (1 of 11)

• The decision making process involves 5 steps. 

The Decision-Making Process (2 of 11)

• Step 1: Identifying and defining the problem – Focusing on gathering information, processing it, and establishing decision objectives.  Common mistakes include: Defining too broadly or narrowly; Focusing on symptoms instead of causes; Choosing the wrong problem.

The Decision-Making Process (3 of 11)

• Step 2: Generating and evaluating alternative courses of action – Formulating solutions, gathering more information, and analyzing the advantages and disadvantages of each solution and consideration of different approaches to evaluating alternatives, including stakeholder analysis and cost-benefit analysis.

The Decision-Making Process (4 of 11)

• Criteria for evaluating alternatives (in Step 2): Benefits, costs, timeliness, acceptability, and ethical soundness.

The Decision-Making Process (5 of 11)

• Common mistakes during Step 2: Abandoning the search for alternatives too quickly; lack of self-confidence and commitment; unanticipated positive and negative side effects.

The Decision-Making Process (6 of 11)

• Step 3: Deciding on a preferred course of action – Classical model (optimization) and behavioral model (satisficing); both are important to consider.

The Decision-Making Process (7 of 11)

• Differences in classical and behavioral models regarding rationality, the perfect world, bounded rationality, and optimizing versus satisficing decisions.

The Decision-Making Process (8 of 11)

• Step 4: Implementing the decision – Involves taking action to ensure the chosen solution is put into practice, requiring willingness and ability from managers to construct proper plans, and preventing the lack-of-participation error.

The Decision-Making Process (9 of 11)

• Step 5: Evaluating results – Comparing the actual results with the desired ones, examining positive and negative consequences; If objectives were not met, returning to the earlier steps in the process.

The Decision-Making Process (10 of 11)

• Spotlight questions for ethical reasoning at each step: Utility (satisfy stakeholders), Rights (respect everyone’s rights and duties), Justice (consistent with justice), and Caring (consistent with care).

Issues in Managerial Decision-Making (1 of 6)

• Issues discussed include why decision errors occur, how problems are framed, and how simplifying strategies (heuristics) aid decision-making.

Issues in Managerial Decision-Making (2 of 6)

• Availability bias: Decisions based on easily available information, especially recent information.
• Representativeness bias: Decisions based on similarities to other situations.
• Anchoring and adjustment bias: Decisions biased by earlier information or decisions (use of anchoring points).

Issues in Managerial Decision-Making (3 of 6)

• Framing error: Interpreting problems based on perception (positive or negative).
• Confirmation error: Focusing only on information supporting prior decisions.
• Escalating commitment: Continuing a poor course of action despite evidence of failure.

Issues in Managerial Decision-Making (4 of 6)

• Creativity (Big-C and Little-C): Big-C: Extraordinary ideas by exceptional people; Little-C: Unique ideas by individuals in daily tasks and situations.

Issues in Managerial Decision-Making (5 of 6)

• Task Expertise, Task Motivation, and Creativity Skills: Drivers of creativity in managerial decision-making. These skills are important to achieve creativity.

Issues in Managerial Decision-Making (6 of 6)

• Team Creativity Skills, Management Support, and Organizational Culture: Drivers of situational creativity within organizations. These factors encourage a productive environment for creativity.

Explore the essential role of information, data, and analytics in management with this quiz based on Chapter 7. Learn about different managerial approaches to problem-solving, the decision-making process, and the importance of creativity in these processes. Test your understanding of the competencies required for effective management decisions.