Data and Decision-Making PDF

Management Fifth Canadian Edition John R. Schermerhorn, Bachrach, Jr. Barry Wright Chapter 7 Data and Decision-Making This slide deck contains animations. Please disable animations if t...

Management Fifth Canadian Edition John R. Schermerhorn, Bachrach, Jr. Barry Wright Chapter 7 Data and Decision-Making This slide deck contains animations. Please disable animations if they cause issues with your device. Copyright ©2021 John Wiley & Sons Canada, Ltd. Learning Objectives 7.1 Discuss the role of information, data, and analytics in management. 7.2 Identify different ways managers approach and deal with problems. 7.3 Explain the six steps in the decision-making process. 7.4 Describe the potential pitfalls and sources of creativity in managerial decision making. Copyright ©2021 John Wiley & Sons 2 Canada, Ltd. Managerial competencies Managers must have Technological competency o Ability to understand new technologies and to use them to their best advantage Information competency o Ability to locate, gather, organize, and display information for decision-making and problem solving Analytical competency o Ability to evaluate and analyze information to make actual decisions and solve real problems Copyright ©2021 John Wiley & Sons 3 Canada, Ltd. Information, Technology, & Management (1 of 6) What is useful information? Data o Raw facts and observations Information o Data made useful and meaningful for decision- making Information drives management decision- making Copyright ©2021 John Wiley & Sons 4 Canada, Ltd. Information, Technology, & Management (2 of 6) Characteristics of useful information: Timely High quality Complete Relevant Understandable Management Information System: Using the latest technologies to collect, organize, and distribute data Copyright ©2021 John Wiley & Sons 5 Canada, Ltd. Information, Technology, & Management (3 of 6) Data Mining and Analytics Data mining is the process of analyzing data to produce useful information for decision- makers. Big data exist in huge quantities and are difficult to process without sophisticated mathematical and analytical techniques. Management analytics involves the systematic evaluation and analysis of data to make informed decisions. Copyright ©2021 John Wiley & Sons 6 Canada, Ltd. Information, Technology, & Management (4 of 6) Business Intelligence and Data Visualization Business Intelligence o Taps information systems to extract and report data in organized ways that are useful to decision-makers Data Visualization o Visually update and display key performance metrics and information on a real-time basis through executive dashboards Copyright ©2021 John Wiley & Sons 7 Canada, Ltd. Information, Technology, & Management (5 of 6) Information needs in organizations Information exchanges with the external environment: o Gather intelligence information o Provide public information Information exchanges within the organization: o Facilitate decision- making o Facilitate problem- solving Copyright ©2021 John Wiley & Sons 8 Canada, Ltd. Information, Technology, & Management (6 of 6) Internal and external information needs in organizations Copyright ©2021 John Wiley & Sons 9 Canada, Ltd. Problem Solving and Managerial Decisions (1 of 16) Problem Solving and Managerial Decisions Managers as Information Processors o Continually gather, share, and receive information o Today, as much electronic as it is face to face o Always on, always connected Copyright ©2021 John Wiley & Sons 10 Canada, Ltd. Problem Solving and Managerial Decisions (2 of 16) The manager as an information processor and nerve centre for planning, organizing, leading, and controlling Copyright ©2021 John Wiley & Sons 11 Canada, Ltd. Problem Solving and Managerial Decisions (3 of 16) Problem solving The process of identifying a discrepancy between actual and desired performance and taking action to resolve it. Copyright ©2021 John Wiley & Sons 12 Canada, Ltd. Problem Solving and Managerial Decisions (4 of 16) Problem solving Decision o A choice among possible alternative courses of action Performance threat o Something is wrong or has the potential to go wrong Performance opportunity o Situation offers the chance for a better future if the right steps are taken Copyright ©2021 John Wiley & Sons 13 Canada, Ltd. Problem Solving and Managerial Decisions (5 of 16) Problem solving approaches or styles: Problem avoiders Inactive in information gathering and solving problems Problem solvers Reactive in gathering information and solving problems Copyright ©2021 John Wiley & Sons 14 Canada, Ltd. Problem Solving and Managerial Decisions (6 of 16) Problem solving approaches or styles: Problem seekers Proactive in anticipating problems and opportunities and taking appropriate action to gain an advantage Copyright ©2021 John Wiley & Sons 15 Canada, Ltd. Problem Solving and Managerial Decisions (7 of 16) Systematic versus intuitive thinking: Systematic thinking o approaches problems in a rational, step-by-step, and analytical fashion Intuitive thinking o approaches problems in a flexible and spontaneous fashion Copyright ©2021 John Wiley & Sons 16 Canada, Ltd. Problem Solving and Managerial Decisions (8 of 16) Multi-dimensional thinking applies both intuitive and systematic thinking Effective multi-dimensional thinking requires skill at strategic opportunism o Remaining focused on long-term objectives o Being flexible to resolve short-term problems Copyright ©2021 John Wiley & Sons 17 Canada, Ltd. Problem Solving and Managerial Decisions (9 of 16) Managers use different cognitive styles The four different types of cognitive thinkers Copyright ©2021 John Wiley & Sons, 18 Inc. Problem Solving and Managerial Decisions (10 of 16) Types of problems Structured problems are ones that are familiar, straightforward, and clear with respect to information needs Programmed decisions apply solutions that are readily available from past experiences to solve structured problems Copyright ©2021 John Wiley & Sons 19 Canada, Ltd. Problem Solving and Managerial Decisions (11 of 16) Types of problems Unstructured problems are ones that are full of ambiguities and information deficiencies Non-programmed decisions apply a specific solution to meet the demands of a unique problem Commonly faced by higher-level management Copyright ©2021 John Wiley & Sons 20 Canada, Ltd. Problem Solving and Managerial Decisions (12 of 16) Crisis decision-making A crisis involves an unexpected problem that can lead to disaster if not resolved quickly and appropriately. Copyright ©2021 John Wiley & Sons 21 Canada, Ltd. Problem Solving and Managerial Decisions (13 of 16) Rules for crisis management: Figure out what is going on Remember that speed matters Remember that slow counts too Respect the danger of the unfamiliar Value the skeptic Be ready to “fight fire with fire ” Copyright ©2021 John Wiley & Sons 22 Canada, Ltd. Problem Solving and Managerial Decisions (14 of 16) Managers make decisions with various amounts of information Certain environment o offers complete factual information on possible action alternatives and their consequences Risk environment o lacks complete information but offers probabilities of the likely outcomes for possible action alternatives Copyright ©2021 John Wiley & Sons 23 Canada, Ltd. Problem Solving and Managerial Decisions (15 of 16) Managers make decisions with various amounts of information Uncertain environment o lacks so much information that it is difficult to assign probabilities to the likely outcomes of alternatives Copyright ©2021 John Wiley & Sons 24 Canada, Ltd. Problem Solving and Managerial Decisions (16 of 16) Three environments for problem solving and decision-making Copyright ©2021 John Wiley & Sons 25 Canada, Ltd. The Decision-Making Process (1 of 11) Steps in the decision-making process Copyright ©2021 John Wiley & Sons 26 Canada, Ltd. The Decision-Making Process (2 of 11) Step 1 — Identify and define the problem Focuses on information gathering, information processing, and deliberation Decision objectives should be established Common mistakes in defining problems: o Defining the problem too broadly or too narrowly o Focusing on symptoms instead of causes o Choosing the wrong problem to deal with Copyright ©2021 John Wiley & Sons 27 Canada, Ltd. The Decision-Making Process (3 of 11) Step 2 — Generate and Evaluate Alternative Courses of Action Potential solutions are formulated and more information is gathered, data are analyzed, the advantages and disadvantages of alternative solutions are identified Approaches for evaluating alternatives: o Stakeholder analysis o Cost-benefit analysis Copyright ©2021 John Wiley & Sons 28 Canada, Ltd. The Decision-Making Process (4 of 11) Step 2 — Generate and Evaluate Possible Courses of Action Criteria for evaluating alternatives: o Benefits o Costs o Timeliness o Acceptability o Ethical soundness Copyright ©2021 John Wiley & Sons 29 Canada, Ltd. The Decision-Making Process (5 of 11) Step 2 — Generate and Evaluate Possible Courses of Action Common mistakes: o Abandoning the search for alternatives too quickly o Lack of self-confidence and commitment o Unanticipated positive or negative side effects Copyright ©2021 John Wiley & Sons 30 Canada, Ltd. The Decision-Making Process (6 of 11) Step 3 — Decide on a Preferred Course of Action Two different approaches o Classical model leads to optimizing decisions o Behavioural model leads to satisficing decisions Copyright ©2021 John Wiley & Sons 31 Canada, Ltd. The Decision-Making Process (7 of 11) Differences in the classical and behavioural decision- making models Copyright ©2021 John Wiley & Sons 32 Canada, Ltd. The Decision-Making Process (8 of 11) Step 4 — Implement the Decision Involves taking action to make sure the solution decided upon becomes a reality Managers need to have willingness and ability to implement action plans. Lack-of-participation error should be avoided. Copyright ©2021 John Wiley & Sons 33 Canada, Ltd. The Decision-Making Process (9 of 11) Step 5 — Evaluate Results Involves comparing actual and desired results Positive and negative consequences of chosen course of action should be examined. If actual results fall short of desired results, the manager returns to earlier steps in the decision-making process. Copyright ©2021 John Wiley & Sons 34 Canada, Ltd. The Decision-Making Process (10 of 11) At all steps, check ethical reasoning! Ask these spotlight questions: Utility o Does the decision satisfy all constituents or stakeholders? Rights o Does the decision respect the rights and duties of everyone? Copyright ©2021 John Wiley & Sons 35 Canada, Ltd. The Decision-Making Process (11 of 11) At all steps, check ethical reasoning! Ask these spotlight questions: Justice o is the decision consistent with the canons of justice? Caring o is the decision consistent with my responsibilities to care? Copyright ©2021 John Wiley & Sons 36 Canada, Ltd. Issues in Managerial Decision- Making (1 of 6) Issues in decision-making Why do decision errors happen? How do we frame the problem? Heuristics are strategies for simplifying decision-making. Copyright ©2021 John Wiley & Sons 37 Canada, Ltd. Issues in Managerial Decision- Making (2 of 6) Availability Bias bases a decision on recent information or events Representativeness Bias bases a decision on similarity to other situations Anchoring and Adjustment Bias bases a decision on incremental adjustment from a prior decision point Copyright ©2021 John Wiley & Sons 38 Canada, Ltd. Issues in Managerial Decision-Making (3 of 6) Framing Error trying to solve a problem in the context perceived, positive or negative Confirmation Error focusing on information that confirms a decision already made Escalating Commitment continuing a course of action even though it is not working Copyright ©2021 John Wiley & Sons 39 Canada, Ltd. Issues in Managerial Decision-Making (4 of 6) Creative Decision-Making: Creativity is the generation of a novel idea or unique approach that solves a problem or exploits an opportunity o Big-C creativity occurs when extraordinary things are done by exceptional people. o Little-C creativity occurs when average people come up with unique ways to deal with daily events and situations. Copyright ©2021 John Wiley & Sons 40 Canada, Ltd. Issues in Managerial Decision-Making (5 of 6) Copyright ©2021 John Wiley & Sons 41 Canada, Ltd. Issues in Managerial Decision-Making (6 of 6) The three types of situational creativity drivers Copyright ©2021 John Wiley & Sons 42 Canada, Ltd. Copyright Copyright © 2021 John Wiley & Sons Canada, Ltd. All rights reserved. Reproductions or translations of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein. Copyright ©2021 John Wiley & Sons 43 Canada, Ltd.