Module 9: Improving Decision Making

Module 9: Improving Decision Making

• Module 9 focuses on improving decision-making processes.
• Key questions include: different types of decisions, how decisions are made, and considerations for quality decisions.
• Improved decision-making has measurable business value.
• Decisions at all levels, even seemingly small ones, add up to significant annual value.

Business Value of Improved Decision Making

• The value of improved decision-making is measurable.
• Decisions are made at all levels of the organization.
• While individual decisions might have a small impact, collectively, they generate substantial annual value.

Example: Business Value of Enhanced Decision Making

• Various examples showcase the financial impact of improved decision-making.
• Different roles, such as accounts manager, call center management, inventory managers, and senior management, make decisions with different frequencies and impacts on the company.
• Specific examples include allocating support, predicting call center demand, deciding inventory levels, identifying competitive bids, and scheduling production.
• Values are given for each decision.

Types of Decisions

• Structured: Repetitive and routine, with defined procedures.
• Semi-structured: Parts of the problem have clear-cut answers using procedures.
• Unstructured: Novel, important, non-routine, and require judgment.

Information Requirements of Key Decision-Making Groups in a Firm

• A hierarchy illustrates the decision-making authority levels within an organization.
• Groups with higher responsibility face increasingly unstructured decision-making challenges.
• Senior management handles unstructured, complex decisions affecting budgets and market entry, while operational management deals mostly with more structured actions and routine decisions.

The Decision-Making Process Stages

• The decision-making process has four key stages:
  • Intelligence: Discovering, identifying, and understanding organizational problems.
  • Design: Identifying and exploring various solutions.
  • Choice: Choosing among solution alternatives.
  • Implementation: Making the chosen alternative work, monitoring effectiveness, and adjusting as needed.

Stages in Decision Making (additional info from the diagram)

• The process is cyclical, allowing for revisiting stages to fix issues
• Includes problem/solution discovery and analysis, choosing a solution, testing the solution, and making further improvements.

High-Velocity Automated Decision Making

• In high-velocity environments, humans are increasingly eliminated from the decision-making process.
• Computer algorithms handle the process, offering quick, predefined solutions.
• Decisions are made faster than humans can monitor and control.

Quality of Decisions and Decision Making

• Accuracy: Decisions reflect reality.
• Comprehensiveness: Decisions consider all relevant facts.
• Fairness: Decisions account for the concerns of all parties.
• Speed/Efficiency: Decisions are made quickly and efficiently.
• Coherence: Decisions are based on rational processes and can be explained.
• Due Process: Decisions are made through a known process and can be challenged.

Learning Objectives Covered

• The objectives for understanding decision-making include describing different decision types, explaining the decision-making process, and detailing considerations for quality decisions.

Quick Review – True or False (Information from the last two slide images)

• Repetitive/routine are semi-structured, not structured.
• Entering a new market can involve a structured decision for the company in the example given.
• Decision process has stages, which are revisited when necessary.
• High-velocity automated decision-making solutions don't need a random selection process; predefined acceptable choices exist, and accuracy/fairness are critical for quality decisions.