Module 9: Improving Decision Making

Module 9: Improving Decision Making

• Module 9 focuses on improving decision-making processes.

Decision Making

• Different types of decisions exist.
• The decision-making process is a key topic.
• Considerations for quality decisions are crucial.

Business Value of Improved Decision Making

• The value of improved decision making is measurable.
• Decisions at all levels of a firm are important.
• Many small decisions add up to significant annual value.

Example: Business Value of Enhanced Decision Making

• Various examples demonstrate the quantified business benefit of better decision-making processes.
  • Allocate support to valuable customers, predict daily call center demand, decide daily parts inventory level, identify competitive bids from major suppliers, schedule production.
  • Each example lists the decision maker, number of decisions, estimated value to the firm, and resulting annual value.

Types of Decisions

• Structured: Repetitive, routine decisions with defined procedures. They can be handled efficiently and swiftly.
• Semi-structured: A portion of the problem has clear solutions, while the rest needs judgment and procedure.
• Unstructured: Novel, important, and non-routine decisions; there is no clear procedure to follow. Decisions require judgment and intuition from the decision-maker.

Information Requirements of Key Decision-Making Groups in a Firm

• Decisions vary based on decision-making level (senior, middle, operational management).
• Senior management handles unstructured decisions.
• Middle management addresses semi-structured decisions.
• Operational management is responsible for structured decisions.

The Decision-Making Process Stages

• Intelligence: Discovering, identifying, and understanding problems in an organization.
• Design: Identifying and exploring various solutions.
• Choice: Choosing among solution alternatives.
• Implementation: Executing the chosen solution and monitoring performance.

Stages in Decision Making (Diagrammatic Summary)

• Problem discovery, solution discovery, and choosing solutions are parts of the decision-making process.
• Testing solutions is also an essential part.
• If a solution fails, revisiting an earlier stage enables adjustments.

High-Velocity Automated Decision Making

• Humans are eliminated from routine decisions that can be automated.
• Decision-making is handled by computer algorithms.
• Acceptable solutions are predefined and implemented swiftly.
• Examples such as Google searches are cited.

Quality of Decisions and Decision Making

• Accuracy: Decisions accurately reflect reality.
• Comprehensiveness: Decisions consider all relevant factors and factual information.
• Fairness: Decisions take into account all interested parties.
• Speed (efficiency): Decisions are made quickly and efficiently.
• Coherence: Decisions are consistent with established rational processes.
• Due process: Decisions are made via established procedures and can be challenged.

Learning Objectives Covered

• Describe different types of decisions.
• Explain the decision-making process.
• Describe considerations for quality decisions.

Quick Review - True or False

• Repetitive decisions are semi-structured.
• Entering a new rubber goods market is a structured decision.
• Implementing a decision is the last stage.
• Revisiting earlier stages is possible if a decision fails.
• A high-velocity decision process often randomly generates choices.
• Google search utilizes high-velocity automated decision-making.
• Quality decisions need accuracy and rationality.
• In quality decisions, fairness considers interests of related parties.

Explore the intricacies of decision-making processes in this comprehensive quiz based on Module 9. Delve into various types of decisions, their implications for business value, and the importance of quality decisions at all levels of an organization. Real-world examples illuminate the measurable benefits of enhanced decision-making.