 The
model consists of 6 steps:
Step 1: Define the problem or opportunity.
Step 2: Set objectives & criteria.
Step 3: Generate alternatives.
Step 4: Select the most feasible
alternatives.
Step 5: Implement the decision.
Step 6: Control the results.
 Define
the problem you want to solve or
opportunity you want to capitalize on.
 This
step requires you classify the problem,
select an appropriate level of employee
participation, & distinguish the cause of the
problem from its symptoms.
 Classify

the problem:
Problems can be classified in terms of how the
decision is structured, the conditions in which
decisions are made, and the decision model
used.
 Decisions
can be categorized as programmed
or nonprogrammed:
 Programmed Decisions – recurring or routine
situations in which the decision maker should
use decision rules or organizational policies
& procedures to make decisions.
 Nonprogrammed Decisions – significant &
nonrecurring & nonroutine situations in
which the decision makers should use the
decision-making model.
 Nonprogrammed
decisions take longer to
make than programmed decisions.
 Must be able to differentiate between the 2
types of decisions, because they alert you to
the time & effort you should be spending.
 Upper-level managers typically make more
nonprogrammed decisions than do lowerlevel managers, who tend to make
programmed decisions.
 When
a problem arises, managers must
choose the best people to solve it.
 The key to successful group decisions is to
avoid the pitfalls and capitalize on the
strengths of the group process.
 The

upside of Group Decision Making:
When group members participate in the decision
process, 6 advantages often occur.
 The
1.
2.
3.
4.
5.
6.
6 advantages:
Better-quality decisions.
More information, more alternatives, &
heightened creativity and innovation.
Better understanding of the problem &
decisions.
Greater commitment to the decision.
Improved morale & motivation.
Good training.
 Downside

1.
2.
3.
4.
of Group Decision Making:
Careful leadership is required to avoid the
following pitfalls of group decision making:
Wasted time & slower decision making.
Satisficing.
Domination by subgroup or individual &
goal displacement.
Conformity & groupthink/grouping.
 Once
you’ve defined the problem, set an
objective that states end result in solving
problem or capitilizing opportunity.
 Objective answers question ‘Why am I doing
this?’ so the objective states what the
individual, group, or organization intends to
accomplish.
 When writing objective, specify criteria for
achieving it.
 Criteria are standards that must be met to
accomplish the objective.
 After
defining the problem & setting
objectives & criteria, generate alternatives.
 Often there’s more than one way to solve a
problem.
 Base alternatives on evidence, not just
opinion.
 In this section, we examine innovation &
creativity, the use of information &
technology to generate alternatives, & group
methods for generating creative alternatives.
 Use




Innovation & Creativity:
Innovation alters what is established by
introducing something new.
Product innovations are changes in outputs to
increase consumer value & development of new
outputs.
Process innovations are changes in the
transformation of inputs into outputs.
Creativity is a way to thinking that generates
new solutions to problems & new ways to
approach opportunities.
 Creative
Process:
Intelligence & creativity are not highly
correlated.
 3 stages in the creative process are:
1. Preparation.
2. Incubation & illumination.
3. Evaluation.

 Use
Information & Technology:
Useful information has 4 characteristics:
1. Timeliness,
2. Quality,
3. Completeness,
4. Relevance.

 Get
Groups to use Creativity & improvement.
 Five widely used methods:
1.
2.
3.
4.
5.
Brainstorming
Synectics
Nominal Grouping
Consensus Mapping
The Delphi Technique
Brainstorming:
 Group members generate as many
alternatives as they can in a short time.
 Group presented with a problem & asked to
develop as many solutions as possible.
 Short time period (10-20 min) is specified.
 Members encouraged to make wild, off-thewall suggestions.
 Build on suggestions made by others.
 Not to react in anyway to any contribution.
1.
Brainstorming (continued):
 When selecting members, include varied of
people.
 5 – 12 people.
 Everyone has equal voice – status differences
should be ignored.
1.
Synectics:
 Novel alternatives are generated through
fantasizing.
 Focuses on generating novel ideas rather
than large number of ideas.
2.
Nominal Grouping:
 Structured voting method is used to generate
& evaluate alternatives. Involves 6 steps:
3.






List ideas.
Record ideas.
Clarify the ideas.
Rank the ideas.
Discuss the ranking.
Vote.
Consensus Mapping:
 Develops group agreement on a problem
solution.
 If agreement can’t be reached, the group
doesn’t make a decision.
 Consensus mapping can be used after
brainstorming.
 Benefit – the group ‘owns’ the solution, so
members are more committed to
implementing it.
4.
5.
•
•
•
•
Delphi Technique:
A series of confidential questionnaires are
used to refine a solution.
Response from the 1st questionnaire are
analyzed & resubmitted to participants in a
2nd questionnaire.
This process may continue for 5 or more
rounds before a consensus emerges.
These group members are experts in their
field, and are outsiders.
 Make
evidence-based decisions.
 Two types of techniques will assist you in this
process.
 Quantitative & Cost-benefit analyses.
 Quantitative:



Mathematical analysis to assess alternative
solutions.
Break-even analysis – calculates the volume of
sales or income that will result in a profit –
involves estimating the volume of sales & cost of
production, break-even point occurs when no
profit or loss results.
Capital budgeting – used to analyze alternative
investments in major long-term resources – goal
is to find the quickest payback.
 Quantitative:

Queuing Theory – Addresses waiting time,
companies have staff providing customer service,
using too many staff to wait on customers is an
inefficient use of resources & costly, too few
staff providing customer service can also be
costly if poor service drives customers away.
 Cost-benefit



Analysis:
Combines subjective methods & mathematical
techniques to compare alternative courses of
action.
Also called pros & cons analysis.
Looks at advantages & disadvantages of each
alternative.
 Develop
a plan of action.
 How you implement your plan is crucial to its
success or failure.
 Establish
checkpoints to determine whether
the chosen alternative is solving the
problem.
 If not, consider corrective action.
 If implementation continues to go poorly,
don’t remain with your decision.