Chapter 7 Decision Making and Creativity
Chapter 7 Decision Making and Creativity Decision Making - Reports blame bad decision making by BP and its contractors for the disaster on the Deepwater Horizon drilling platform in the Gulf of Mexico - A conscious process of making choices among one or more alternatives with the intention of moving toward some desired state of affairs Rational Choice Paradigm - Effective decision makers identify, select, and apply the best possible alternatives - Use logic and all available information to choose the alternative with the highest value - Two key elements of rational choice o Subjective expected utility – probability (expectation) of satisfaction (utility) for each specific alternative in a decision. Determines choice with highest value (maximization), such as, highest returns for stockholders and highest satisfaction or customers, employees, government, and other stakeholders. o Decision making process – systematic application of stages of decision making - All decisions rely to some degree on: o The expected value of the outcomes (utility) o The probability of those good or bad outcomes occurring (expectancy) - Rational choice decision process 1. Identify problem/opportunity o Problem: a deviation between the current and the desired situation o Opportunity: a deviation between current expectations and a potentially better situation that was not previously expected. 2. Choose decision process o Programmed: follow standard Identify the operating procedures; they problem or opportunity have been resolved in the past Choose the Evaluate o Nonprogrammed: the best decision decision problems are new, complex, outcomes process or ill-defined. 3. Discover/develop alternatives o Search, then develop Implement Develop the 4. Choose best alternative alternative selected solutions o Subjective expected utility alternative Choose the 5. Implement choice best 6. Evaluate choice alternative
Problems with the Rational Choice Paradigm - It seems logical, but it is impossible to apply in reality. - In reality, people have difficulty recognizing problems - Focuses on logical thinking and ignores the fact that emotions also influence the process Problem Identification Challenges - Problems and opportunities are constructed from ambiguous information, not “given to us” - Influenced by cognitive and emotional biases - Five problem identification challenges o Stakeholder framing filter information to amplify or suppresses the seriousness of the situation to earn profit Stakeholders throw a spotlight on specific causes of the symptoms and away from other possible causes Frame problems in ways that raise the value of resources they can provide to help the organization solve those problems o Mental models Visual and relational images in our mind of the external world Prototypes – represent models of how things should be Blind us from seeing unique problems or opportunities Produce a negative evaluation of things that are dissimilar to the mental model o Decisive leadership Quickly forming an opinion of whether an event signals a problem or opportunity (which is bad) o Solution-focused problems Provides comforting closure to the otherwise ambiguous and uncertain nature of problems (esp. for people with a strong need for cognitive closure) The familiarity of past solutions makes the current problem less ambiguous or uncertain o Perceptual defence People’s brains refuse to see information that threatens their selfconcept Recent studies report that people are more likely to disregard danger signals when they have limited control over the situation Identifying Problems Effectively - Be aware of perceptual and diagnostic limitations - Fight against pressure to look decisive - Maintain “divine discontent” (aversion to complacency) - Discuss the situation with colleagues – see different perspectives
Making Choices - Bounded rationality: people process limited and imperfect information and rarely select the best choices Rational Choice Paradigm Assumptions Observations from Organizational Behavior Goals are clear, compatible, and agreed upon Goals are ambiguous, conflicting, and lack agreement People are able to calculate all alternatives People have limited information processing and their outcomes abilities Evaluate all alternatives simultaneously Evaluate alternatives sequentially - As a new alternative comes along, it is compared to the implicit favourite (a preferred alternative that the decision maker uses repeatedly as a comparison with other choices) Use absolute standards to evaluate Evaluate alternatives against an implicit alternatives favourite Make choices using factual information Make choices using perceptually distorted information Choose the alternative with the highest payoff Choose the alternative that is good enough (SEU) (satisfice) Biased Decision Heuristics - People have built-in decision heuristics that bias evaluation alternatives o Anchoring and adjustment heuristic Initial anchor point (first information) influences evaluation of subsequent information o Availability heuristic We estimate probabilities by how easy we can recall the event, even though other factors influences ease of recall o Representativeness heuristic Estimate probabilities by how much they are similar to something else (stereotypes) even when better info about probabilities is available Clustering Illusion: the tendency to see patterns from a small sample of events when those events are random Most players and coaches believe than players are more likely to have a successful shot on the net (random event) when their previous two or three shots have been successful.
Paralyzed by Choice - People engage in satisficing – selecting an alternative that is “good enough” - Decision makers are less likely to make any decision at all as the number of options increases - Occurs even when there are clear benefits of selecting any alternative (such as joining a company retirement plan) - Evidence of human information processing limitations Emotions and Making Choices - Emotions affect the evaluation of alternatives in three ways: o Emotions form early preferences Initial emotion makers influence our preferred choices People with damaged emotional brain centers have difficulty making choices o Emotions change the decision evaluation process Moods and emotions influence the process of evaluating alternatives Good mood – less attentions on decision making; bad mood – more attentive on details o Emotions serve as information when we evaluate alternatives We “listen in” on our emotions and use that information to make choices Intuitive Decision Making - Ability to know when a problem or opportunity exists and select the best course of action without conscious reasoning - Intuition as emotional experience o Gut feelings are emotional signals o Not all emotional signals are intuition Intuition involves comparing our observations with deeply held patterns learned through experience They are mental models that help people to understand whether the situation is good or bad - Intuition as rapid non-conscious analysis o Uses action scripts programmed decision routines that speed up our response to pattern matches or mismatches Shorten the decision-making process by jumping from problem identification to selection of a solution
Making Choices more effectively - Systematically evaluate alternatives against relevant factors - Be aware of effects of emotions on decision preferences and evaluation process - Decisions are influenced by both rational and emotional process - Scenario planning – a systematic process of thinking about alternative futures and what the organization should do to anticipate and react to those environments Problems with Decision Evaluation - Confirmation bias (post-decisional justification) o Inflate quality of the selected option; forget or downplay rejected alternatives o Caused by need to maintain a positive self-concept - Escalation of commitment o Repeating or further investing in an apparently bad decision o Caused by self-justification, prospect theory effect, perceptual blinders, closing costs Evaluating Decisions more effectively - Separate decision choosers from evaluators - Establish a preset level to abandon the project - Find sources of systematic and clear feedback - Involve several people in the evaluation process Tangible Creativity - Alex Beim, founder and chief creative technologist of Tangible Interaction Design in Vancouver, relies on creative thinking to invent enticing interactive displays, such as the zygotes at the Vancouver Olympics - Developing an original idea that makes a socially recognized contribution - Applies to all aspects of the decision process – problems, alternatives, solutions
Creative Process Model
Preparation
Incubation
Illumination
Characteristics of Creative People - Independent Imagination o Higher openness to experience personality o Lower need for affiliation motivation o Higher self-direction/stimulation values - Cognitive and practical intelligence
Verification
-
Persistence Subject knowledge/ experience
Creative Work Environments - Learning orientation o Encourage experimentation o Tolerate mistakes - Intrinsically motivating work o Task significance, autonomy, feedback - Open communication and sufficient resources - Unclear/ complex effects of team competition and time pressure on creativity Creative Activities - Refining the problem o Review abandoned projects o Explore issue with other people - Associate play o Storytelling o Artistic activities o Morphological analysis - Cross-pollination o Diverse teams o Information sessions o Internal tradeshows Employee Involvement - The degree to which employees influence how their work is organized and carried out - Different levels and forms of involvement Better problem identification
Employee Involvement
Contingencies of Involvement
Potential Involvement Outcomes
Synergy produces more/better solutions Better at picking the best choice Higher decision commitment
Contingencies of Involvement - Higher employee involvement is better when… o Decision structure Problem is new and complex (non-programmed decision) Knowledge source Employees have relevant knowledge beyond leader Decision commitment Employees would lack commitment unless involved Risk of conflict Norms support firm’s goals Employee agreement likely
Problems with the Rational Choice Paradigm - It seems logical, but it is impossible to apply in reality. - In reality, people have difficulty recognizing problems - Focuses on logical thinking and ignores the fact that emotions also influence the process Problem Identification Challenges - Problems and opportunities are constructed from ambiguous information, not “given to us” - Influenced by cognitive and emotional biases - Five problem identification challenges o Stakeholder framing filter information to amplify or suppresses the seriousness of the situation to earn profit Stakeholders throw a spotlight on specific causes of the symptoms and away from other possible causes Frame problems in ways that raise the value of resources they can provide to help the organization solve those problems o Mental models Visual and relational images in our mind of the external world Prototypes – represent models of how things should be Blind us from seeing unique problems or opportunities Produce a negative evaluation of things that are dissimilar to the mental model o Decisive leadership Quickly forming an opinion of whether an event signals a problem or opportunity (which is bad) o Solution-focused problems Provides comforting closure to the otherwise ambiguous and uncertain nature of problems (esp. for people with a strong need for cognitive closure) The familiarity of past solutions makes the current problem less ambiguous or uncertain o Perceptual defence People’s brains refuse to see information that threatens their selfconcept Recent studies report that people are more likely to disregard danger signals when they have limited control over the situation Identifying Problems Effectively - Be aware of perceptual and diagnostic limitations - Fight against pressure to look decisive - Maintain “divine discontent” (aversion to complacency) - Discuss the situation with colleagues – see different perspectives
Making Choices - Bounded rationality: people process limited and imperfect information and rarely select the best choices Rational Choice Paradigm Assumptions Observations from Organizational Behavior Goals are clear, compatible, and agreed upon Goals are ambiguous, conflicting, and lack agreement People are able to calculate all alternatives People have limited information processing and their outcomes abilities Evaluate all alternatives simultaneously Evaluate alternatives sequentially - As a new alternative comes along, it is compared to the implicit favourite (a preferred alternative that the decision maker uses repeatedly as a comparison with other choices) Use absolute standards to evaluate Evaluate alternatives against an implicit alternatives favourite Make choices using factual information Make choices using perceptually distorted information Choose the alternative with the highest payoff Choose the alternative that is good enough (SEU) (satisfice) Biased Decision Heuristics - People have built-in decision heuristics that bias evaluation alternatives o Anchoring and adjustment heuristic Initial anchor point (first information) influences evaluation of subsequent information o Availability heuristic We estimate probabilities by how easy we can recall the event, even though other factors influences ease of recall o Representativeness heuristic Estimate probabilities by how much they are similar to something else (stereotypes) even when better info about probabilities is available Clustering Illusion: the tendency to see patterns from a small sample of events when those events are random Most players and coaches believe than players are more likely to have a successful shot on the net (random event) when their previous two or three shots have been successful.
Paralyzed by Choice - People engage in satisficing – selecting an alternative that is “good enough” - Decision makers are less likely to make any decision at all as the number of options increases - Occurs even when there are clear benefits of selecting any alternative (such as joining a company retirement plan) - Evidence of human information processing limitations Emotions and Making Choices - Emotions affect the evaluation of alternatives in three ways: o Emotions form early preferences Initial emotion makers influence our preferred choices People with damaged emotional brain centers have difficulty making choices o Emotions change the decision evaluation process Moods and emotions influence the process of evaluating alternatives Good mood – less attentions on decision making; bad mood – more attentive on details o Emotions serve as information when we evaluate alternatives We “listen in” on our emotions and use that information to make choices Intuitive Decision Making - Ability to know when a problem or opportunity exists and select the best course of action without conscious reasoning - Intuition as emotional experience o Gut feelings are emotional signals o Not all emotional signals are intuition Intuition involves comparing our observations with deeply held patterns learned through experience They are mental models that help people to understand whether the situation is good or bad - Intuition as rapid non-conscious analysis o Uses action scripts programmed decision routines that speed up our response to pattern matches or mismatches Shorten the decision-making process by jumping from problem identification to selection of a solution
Making Choices more effectively - Systematically evaluate alternatives against relevant factors - Be aware of effects of emotions on decision preferences and evaluation process - Decisions are influenced by both rational and emotional process - Scenario planning – a systematic process of thinking about alternative futures and what the organization should do to anticipate and react to those environments Problems with Decision Evaluation - Confirmation bias (post-decisional justification) o Inflate quality of the selected option; forget or downplay rejected alternatives o Caused by need to maintain a positive self-concept - Escalation of commitment o Repeating or further investing in an apparently bad decision o Caused by self-justification, prospect theory effect, perceptual blinders, closing costs Evaluating Decisions more effectively - Separate decision choosers from evaluators - Establish a preset level to abandon the project - Find sources of systematic and clear feedback - Involve several people in the evaluation process Tangible Creativity - Alex Beim, founder and chief creative technologist of Tangible Interaction Design in Vancouver, relies on creative thinking to invent enticing interactive displays, such as the zygotes at the Vancouver Olympics - Developing an original idea that makes a socially recognized contribution - Applies to all aspects of the decision process – problems, alternatives, solutions
Creative Process Model
Preparation
Incubation
Illumination
Characteristics of Creative People - Independent Imagination o Higher openness to experience personality o Lower need for affiliation motivation o Higher self-direction/stimulation values - Cognitive and practical intelligence
Verification
-
Persistence Subject knowledge/ experience
Creative Work Environments - Learning orientation o Encourage experimentation o Tolerate mistakes - Intrinsically motivating work o Task significance, autonomy, feedback - Open communication and sufficient resources - Unclear/ complex effects of team competition and time pressure on creativity Creative Activities - Refining the problem o Review abandoned projects o Explore issue with other people - Associate play o Storytelling o Artistic activities o Morphological analysis - Cross-pollination o Diverse teams o Information sessions o Internal tradeshows Employee Involvement - The degree to which employees influence how their work is organized and carried out - Different levels and forms of involvement Better problem identification
Employee Involvement
Contingencies of Involvement
Potential Involvement Outcomes
Synergy produces more/better solutions Better at picking the best choice Higher decision commitment
Contingencies of Involvement - Higher employee involvement is better when… o Decision structure Problem is new and complex (non-programmed decision) Knowledge source Employees have relevant knowledge beyond leader Decision commitment Employees would lack commitment unless involved Risk of conflict Norms support firm’s goals Employee agreement likely
