Chapter 4
Creative Problem
Solving and
Decision Making
PowerPoint Presentation by Charlie Cook
The University of West Alabama
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All rights reserved.
The Relationship among Objectives, Problem Solving, and Decision Making
• Problem
– Exists whenever objectives are not being met.
– What is happening vs. what is wanted to happen
• Problem Solving
– The process of taking corrective action to meet
objectives.
• Decision Making
– The process of selecting an alternative course
of action that will solve a problem.
– First decision is whether to take corrective
action.
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The Decision-Making
Model
• A six-step process that
when properly utilized
increases chances of
success in decision
making and problem
solving.
Exhibit 4–1
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Decision-Making Styles
• Reflexive Style
– Makes quick decisions without taking the time
to get all the information that may be needed
and without considering all the alternatives.
• Reflective Style
– Takes plenty of time to make decisions,
gathering considerable information and
analyzing several alternatives.
• Consistent Style
– Tends to make decisions without either rushing
or wasting time.
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Decision Making in the Global Village
• U.S.-based decision-making styles are different
from the decision-making styles in other
cultures due to differences in:
– Time orientation
– The use participative decision making
– Orientation toward problem solving rather than
acceptance of the status quo
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Decision Structure
• Programmed Decisions
– Recurring or routine situations in which the
decision maker should use decision rules or
organizational policies and procedures to make
the decision.
• Nonprogrammed Decisions
– Significant and nonrecurring and nonroutine
situations in which the decision maker should
use the decision-making model.
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Decision Structure Continuum
Nonprogrammed Decision:
Significant, nonrecurring, and nonroutine
(Longer period of time to make decisions)
Programmed Decision:
Nonsignificant, recurring, and routine
(Shorter period of time to make decisions)
Exhibit 4–2
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Decision-Making Conditions
• Certainty
– Each alternative’s outcome is known in
advance.
• Risk
– Probabilities can be assigned to each outcome.
• Uncertainty
– Lack of information or knowledge makes the
outcome of each alternative unpredictable such
that no probabilities can be determined.
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Decision-Making Models
• Rational Model (Classical Model)
– The decision maker attempts to use optimizing,
selecting the best possible alternative.
• The Bounded Rationality Model
– The decision maker uses satisficing, selecting
the first alternative that meets the minimal
criteria for solving the problem.
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Continuum of Decision-Making Conditions
Exhibit 4–3
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Potential Advantages and Disadvantages of Using Group Decision Making
• Potential Advantages
• Potential Disadvantages
1. Better-quality decisions
2. More information,
alternatives, creativity,
and innovation
3. Better understanding of
the decision
4. Greater commitment to
the decision
5. Improved morale and
motivation
6. Good training
1. Wasted time and slower
2. Satisficing
3. Domination and goal
displacement
4. Conformity and
groupthink
Exhibit 4–4
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Continua for Classifying a Problem
Exhibit 4–5
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Continua for Classifying a Problem (cont’d)
Exhibit 4–5 cont’d
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Define the Problem
• Distinguish Symptoms from the Cause of the
Problem
– List the observable and describable
occurrences (symptoms) that indicate a
problem exists.
– Determine the cause of the problem.
– Removing the cause should cause the
symptoms to disappear or cease.
• Symptom: Customer dissatisfaction
• Cause: Poorly trained employees
• Solution: Implement customer relations training
program for employees
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Set Objectives and Criteria
• Setting Objectives
– Involves establishing clear objectives that will
make for better decisions.
– Objectives state what the decisions should
accomplish in solving a problem or taking
advantage of an opportunity.
• Setting Criteria
– Involves setting standards that an alternative
must meet to be selected as the decision that
will accomplish the objective.
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Generate Creative Alternatives
• Innovation
– The implementation of a new idea
• Product innovation (new things)
• Process innovation (new way of doing things)
• Creativity
– A way of thinking that generates new ideas
• The Creative Process
– Preparation
– Incubation and illumination
– Evaluation
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Stages in the
Creative Process
Become familiar with the problem; generate
as many solutions as possible.
Take some time before working on the
problem again to gain additional insight.
Before implementing the solution, evaluate
the alternative to be sure it is practical.
Exhibit 4–6
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Group Decision-Making Techniques That Foster Creativity
Exhibit 4–7
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Generating Creative Alternatives
• Brainstorming
– The process of suggesting many possible
alternatives without evaluation.
• Synectics
– The process of generating novel alternatives
through role playing and fantasizing.
• Nominal Grouping
– The process of generating and evaluating
alternatives using a structured voting method
that includes listing, recording, clarification,
ranking, discussion, and voting to select an
alternative.
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Generating Creative Alternatives (cont’d)
• Consensus Mapping (Ringi)
– The process of developing group agreement on
a solution to a problem.
• Delphi Technique
– The process of using a series of confidential
questionnaires to refine a solution.
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Responses That Kill Creativity
•
•
•
•
“It can’t be done.”
“We’ve never done it.”
“Has anyone else tried it?”
“It won’t work in our department
(company/industry).”
• “It costs too much.”
• “It isn’t in the budget.”
• “Let’s form a committee.”
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Decision Tree
Exhibit 4–8
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Analyzing the Feasibility of Alternatives
• Quantitative Techniques
– Break-even analysis
– Capital budgeting
•
•
Payback
Discounted cash flow
– Linear programming
– Queuing theory
– Probability theory
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The Kepner-Tregoe Method
1. Assess each alternative with regard to the
“must” criteria.
2. Rate the importance of each “want” criterion on
a scale of 1 to 10 (10 being the most important).
3. Determine how well each alternative meets the
“want” criterion.
4. Compute the weighted score (WS) for each
alternative on each criterion.
5. Select the alternative with the highest total
weighted score.
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The Kepner-Tregoe Method for Analyzing Alternatives
Exhibit 4–9
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Cost-Benefit (Pros and Cons) Analysis
• Cost-Benefit Analysis
– A technique for comparing the cost and benefit
of each alternative course of action using
subjective intuition and judgment along with
math.
• Continuum of Analysis Techniques:
Exhibit 4–10
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Plan, Implement, and Control
• Plan
– Develop a plan of action and a schedule of
implementation.
• Implement the Plan
– Communicate and delegate for direct action.
• Control
– Use checkpoints to determine whether the
alternative is solving the problem.
– Avoid escalation of commitment to a bad
alternative.
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Participative Decision-Making:
Time-Driven Model
The model is a decision tree that
works like a funnel. Define the
problem statement; then move from
left to right and answer each
question by responding either high
(H) or low (L), skipping decisions
that are not appropriate to the
situation and avoiding crossing any
horizontal lines. The last column
indicates the appropriate leadership
decision-making style for that
situation.
Source: Adapted from Victor H. Vroom, “Leadership and the
Decision-Making Process,” Organizational Dynamics 28 (4),
p. 87. Copyright © 2000 with permission from Elsevier.
Exhibit 4–11a
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Participative Decision-Making:
Development-Driven Model
The model is a decision tree
that works like a funnel. Define
the problem statement; then
move from left to right and
answer each question by
responding either high (H) or
low (L), skipping decisions that
are not appropriate to the
situation and avoiding crossing
any horizontal lines. The last
column indicates the
appropriate leadership
decision-making style for that
situation.
Source: Adapted from Victor H. Vroom, “Leadership and the
Decision-Making Process,” Organizational Dynamics 28 (4),
p. 87. Copyright © 2000 with permission from Elsevier.
Exhibit 4–11b
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Time-Driven versus Development-Driven Model
Time-Driven
Development-Driven
Making effective decisions
with minimum cost
Focus
Making effective decisions
through maximum
development of group
members
Emphasizes timely
decision making
Value
Emphasizes group
development
Orientation
Has a long-term horizon,
as group development
takes time.
Has a short-term
time horizon
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Chapter 4
Back Up
Creative Problem
Solving and
Decision Making
PowerPoint Presentation by Charlie Cook
The University of West Alabama
Copyright © 2006 Thomson Business and Economics.
All rights reserved.
Learning Outcomes
After studying this chapter, you should be able to:
1. Explain the relationship among objectives, problem solving, and
decision making.
2. Explain the relationship among the management functions,
decision making, and problem solving.
3. List the six steps in the decision-making model.
4. Describe the differences between programmed and
nonprogrammed decisions and among the conditions of
certainty, uncertainty, and risk.
5. Describe when to use the rational decision-making model versus
the bounded rationality model and group versus individual
decision making.
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Learning Outcomes (cont’d)
6. State the difference between an objective and “must” and “want”
criteria.
7. State the difference between innovation and creativity.
8. List and explain the three stages in the creative process.
9. Describe the differences among quantitative techniques, the
Kepner-Tregoe method, and cost-benefit analysis for analyzing
and selecting an alternative.
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Learning Outcomes (cont’d)
10. Define the following key terms:
problem
problem solving
decision making
decision making model
programmed decisions
nonprogrammed decisions
decision-making conditions
criteria
innovation
creativity
creative process
devil’s advocate
brainstorming
synectics
nominal grouping
consensus mapping
participative decision-making
model
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Ideas on Management at Nike
1.
Which young NBA athlete did Nike sign to a large endorsement
contract? What was the contract’s price tag? How did Nike classify and
define the problem or opportunity in making the decision to sign this
player?
2.
What objectives does Nike meet through its star endorsements?
3.
What product is Nike currently marketing under this athlete’s name?
How does Nike demonstrate creativity and innovation?
4.
Which techniques could Nike use to analyze the alternatives in the
contract decision? Does the amount of the contract given to the young
athlete pose a serious financial risk to Nike?
5.
What unethical and socially irresponsible labor practices have critics
accused Nike of in recent years?
6.
Which decision style from Vroom’s participative decision-making model
should Nike have used to make the decision to sign the athlete to a
contract?
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Problem Solving and Decision Making
• The Relationship among the Management
Functions, Decision Making, and Problem
Solving
– Managers need to make proficient decisions
while performing the functions of management.
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