Make
Better
Decisions
IN RECENT YEARS DECISION MAKERS in both the public and private sectors have made an astounding number of poor calls. For example, the decisions to invade Iraq, not to comply with global warming treaties, to ignore
Darfur, are all likely to be recorded as injudicious in history books. And how about the decisions to invest in and securitize subprime mortgage loans, or to hedge risk with credit default swaps? Those were spread across a number of companies, but single organizations, too, made bad decisions. Tenneco, once a large conglomerate, chose poorly when buying businesses and now consists of only one auto parts business.
General Motors made terrible decisions about which cars to bring to market. Time Warner erred in buying AOL, and Yahoo in deciding not to sell itself to Microsoft.
Why this decision-making disorder? First, because decisions have generally been viewed as the prerogative of individuals – usually senior executives. The process employed, the information used, the logic relied on, have been left up to them, in something of a black box. Information goes in, decisions come out – and who knows what happens in between? Second, unlike other business processes, decision making has rarely been the focus of systematic analysis inside the firm. Very few organizations have “reengineered” their decisions. Yet there are just as many opportunities to improve decision making as to improve any other process.
Useful insights have been available for a long time. For example, academics defined
“groupthink,” the forced manufacture of consent, more than half a century ago – yet it
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Best Practice Make Better Decisions
still bedevils decision makers from the
White House to company boardrooms.
In the sixteenth century the Catholic
Church established the devil’s advocate to criticize canonization decisions – yet few organizations today formalize the advocacy of decision alternatives. Recent popular business books address a host of decision-making alternatives
(see “Selected Reading”).
However, although businesspeople are clearly buying and reading these books, few companies have actually adopted their recommendations. The consequences of this inattention are becoming ever more severe. It is time to take decision making out of the realm of the purely individual and idiosyncratic; organizations must help their managers employ better decision-making processes. Better processes won’t guarantee better decisions, of course, but they can make them more likely.
A Framework for
Improving Decisions
Focusing on decisions doesn’t necessarily require a strict focus on the mental processes of managers. (Though, admittedly, the black box deserves some unpacking.) It can mean examining the accessible components of decision making – which decisions need to be made, what information is supplied, key roles in the process, and so forth. Smart organizations make multifaceted interventions – addressing technology, information, organizational structure, methods, and personnel. They can improve decision making in four steps:
1. Identification. Managers should begin by listing the decisions that must be made and deciding which are most important – for example, “the top 10 decisions required to execute our strategy” or “the top 10 decisions that have to go well if we are to meet our financial goals.”
Some decisions will be rare and highly strategic (“What acquisitions will allow us to gain the necessary market share?”) while others will be frequent and on the front lines (“How should we decide how much to pay on claims?”). Without
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IDEA IN BRIEF
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In many organizations, decisions are left up to individuals and the process for making them receives little if any scrutiny. The recent plague of poor financial decisions is
evoked can be related or compared to three decision-making models. Those three decision-makings models are the behavioral decision, garbage can model and the political model theories. According to the behavioral decision theory, decision makers deal with chaos and uncertainty but ultimately make their decisions on what they know. This means that based on their knowledge, beliefs, and values, decision makers incorporate these values to make appropriate decisions. The other theory described in the article…
Conclusion & Recommendations 7 References 9 Introduction The report will critically analyze a personal decision I made last year, and discuss how I could have made a better decision. It will also provide an alternate decision that I could have made, and analyze the outcomes. The Gibbs Reflective Cycle (Wood, 2010) will be used as a method to critically reflect upon my personal decision. Sometimes as a student, it becomes difficult to move on public transport; especially with the high expenses…
In simpler terms, we all apply economics in our daily lives, whether it is for making a decision on which toothpaste to buy or deciding on which country to travel to. The theory of economics is applied to every decision we make. It helps us get a deeper understanding of our own situation as acting humans and helps us make better decisions (Callahan 2004). It helps us put our choices into perspective, as it makes us understand that our costs are measured in terms of our foregone alternatives (Callahan…
company uses its profits to hire more stuff or open new premises and so make more profit, the money here is functioning as capital. As capital increases that is called capital accumulation and its driving force of the economy. Capitalism can be seen as the better economic choice because capitalism countries as usually much more technologically advanced, and because individuals can make their own business decisions and choose their profession with out trouble or disapproval from the government…
These are the idea of ethics broken down into smaller sections to make ethics more easily defined. My opinion of ethics is just as easy as doing the right thing. I know there are times when making the morally right decision is truly difficult and the easy way out is making the wrong decision. These are both ethical behavior but I like to stay on the morally correct side as much as I can. I believe that making the right decision can make you grow and mature as a person. A person that has bad ethics…
developed. In 1976, respected organizational theorist Russell Ackoff penned an article in Management Science in which he attacked the five basic assumptions on which he felt then modern day management information systems were based. While Ackoff did make some valid points, his conclusions were mostly erroneous, especially in today’s society. The first assumption that Ackoff attacked was the idea that “the critical deficiency under which most managers operate is the lack of relevant information (Ackoff…
employees are being forced to make decisions that they’ve never had to make before. This change was one that needed to be supported in order to work, but the supervisors never provided any positive feedback to those who had made a good decision in satisfying the guests’ needs. One can’t simply throw a huge responisibility at an employee who has no experience and expect them to thrive and do better for the company. Becker should have spend time to support the decisions of those taking initiative for…
Decision-Making Process Monique Williams Thomas MGT 230 August 12, 2014 Neruka Okpara Decision-Making Process Making decisions especially life changing ones are never easy. No matter how many times you go over your options in your head, you're bound to lose a little sleep over the decisions. Life changing decisions can cause some serious stress for you especially when you don’t have a lot of time to make that decision. Recently, I made the decision to return to college and obtain my degree…
English 102 Professor Pilla October 2, 2014 Anything you can do, I can do better. Let’s face it, trying to please everyone is absolutely impossible and a sure way to set yourself up for unhappiness. In the poem “The Road Not Taken” By Robert Frost he is trying to explain that to his audience about his experience with that decision. From the beginning, Frost explains that people have their own paths to take. He goes on to explain that as much as he wishes he could take the same path as another…
1. Decision making is often described as the essence of a manager's job due to the fact that managers must supervise and form agendas. Supervising and forming agendas for workers requires more than following orders and preset work protocols, the manager must make their own decisions in order to ensure that their part of the business is running efficiently. 3. Planning and Decision Making set the organization's goals and decides how best to achieve them. Organizing then determines how best to…