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MANAGERIAL DECISION MAKING - Coggle Diagram
MANAGERIAL DECISION MAKING
5.1 HOW DO YOU MAKE DECISIONS ?
Four Steps in Decision Making
Spotting the Signal:
Identifying problems.
Seeing the Potential:
Identifying opportunities.
Weighing the Paths:
Evaluating available alternatives.
Taking Action:
Resolving the situation
Two Types of Managerial Decisions
Programmed Decisions
Occur often and highly repetitive.
Solved by applying established rules.
Example:
Reordering office supplies when inventory hits zero.
Nonprogrammed Decisions
Unique, poorly defined, and unstructured.
Requires custom, creative problem-solving.
Example
: Responding to a sudden global pandemic.
Programmed and Nonprogrammed Decisions
A decision is a choice made from available alternatives
Decision making is the process of identifying problems and opportunities and then resolving them
Programmed Decisions involves situations that occur often to enable rules
Nonprogrammed Decisions involves situations that are unique or poorly defined and unstructured
5.4 PESONAL DECISION FRAMEWORK
.
The DNA of a Decision
Equation :
Situation + Personal Decision Style = Decision Choice
Situation:
Organizational context (Programmed/Nonprogrammed, Models, 6-step process)
Personal Style:
Individual problem-solving approach
Decision Choice:
Selected action for the best solution
4 Personal Decision Styles
Directive:
Fast, practical, action-oriented, rule-based
Analytical:
Data-driven, careful, complex problem-solver
Conceptual:
Big-picture, creative, long-term options
Behavioral
: People-focused, empathetic, team-oriented
5.5 WHY DO MANAGERS MAKE BAD DECISIONS?
6 Decision Traps (Biases)
Initial Impressions:
Over-relying on anchors or first thoughts
Justifying Past Decisions:
Escalating commitment to failed investments
Confirmation Bias:
Seeing only what supports existing beliefs
Status Quo Bias:
Resisting change ("We've always done it this way")
Framing Effect:
Letting problem presentation dictate choices
Overconfidence:
Trusting gut feeling over empirical data
Master Blueprint (Core Principles)
Follow the Loop:
Diagnose before acting, evaluate after implementing
Know Your DNA:
Combine the specific situation with your style
Stay Vigilant:
Audit your thinking to guard against cognitive traps
5.2 TYPES OF DECISIONS AND PROBLEMS
The Risk Thermometer (Possibility of Decision Failure)
Certainty
Information:
All needed information is available.
Decision Type:
Programmed Decisions.
Risk
Information:
Available.
Characteristics:
Future outcomes are subject to chance.
Uncertainty
Information:
Incomplete information about future events.
Ambiguity & Conflict
Information:
Goals and problems are unclear and difficult to define.
Decision Type:
Nonprogrammed Decisions.