DECISION MAKING
AND PROBLEM
SOLVING
“Sir, What is the secret of your success?” a reporter
asked a bank president.
“Two words.”
“And, sir, what are they?”
“Good decisions.”
“And how do you make good decisions?”
“One word.”
“And sir, what is that?”
“Experience.”
“And how do you get Experience?”
“Two words.”
“And, sir, what are they?”
“Bad decisions.”
Theodore Roosevelt
In any moment of decision the best thing you
can do is the right thing, the next best thing is
the wrong thing, and the worst thing you can
do is nothing
Napoleon Bonaparte
Nothing is more difficult, and therefore more
precious, than to be able to decide.
Margaret Thatcher
Standing in the middle of the road is very
dangerous; you get knocked down by the
traffic from both sides.
Managers are constantly expected to make
good decisions ad solve problems
One of the simplest ways of distinguishing a
good Manager from a bad one is in the
quality of decisions they make
What is the difference between problem
solving and decision making?
A problem
Something has gone wrong, taken an
unexpected turn or failed to perform as
predicted
Action is required to put the situation right
A problem is a mystery, a puzzle, and
unsettled matter, a situation requiring a
solution, a plan or an issue involving
uncertainty
A problem is a gap between ideal and actual
conditions
Find and correct the changes that
account for the fall-off in results.
Situation:
Increased – or Changing – Expectations
Find new ways of operating
Find ways to reengineer the system –
correct and invent.
Situation:
It Never Did Work Right
Find ways to overhaul –
or completely rebuild.
Decision
A decision is a choice between alternative
solutions to a problem
“ the process of responding to a problem by
searching for and selecting a solution or
course of action that will create value for
organisational stakeholders”.
consequences of bad decisions
Many decisions we make are trivial or seem to
be so and are made quickly. Yet the
consequences can accumulate into serious
problems
Sometimes none of the small decisions alone
can be considered the cause of the catastrophe
Cont.
The consequences of bad decisions affect
many parties including the decision makers
themselves e.g.
Criminal liabilities
Participants to give more
Steps in Decision Making
Decision-making, in brief, is selecting a
course of action from alternatives. In actual
practice, decision-making should be thought
of a process which includes five steps:
1. Define the problem
Few problems are really clear cut, and usually
the symptoms are more apparent than the
causes. Symptoms offer valuable clues to
underlying problems, but until you have
identified the real problem, or problems,
you’re not ready for step 2.
THE REAL PROBLEM
PROBLEMS
SYMPTOMS
Problem iceberg
Root cause analysis
A supervisor reports: The production line stopped moving.
Foreman: Why did it stop?
The motor that drives the line quit working.
Why did it quit working?
A bearing in the motor froze causing a circuit breaker to pop
open.
Why did the bearing freeze?
Because it didn't have any lubricant and as a result, heated up
until it froze.
Why didn't it have any lubricant?
Because maintenance hasen't been lubricating it.
Why not?
Because to lubricate the bearings the line has to be shut down
for safety reasons and with production running three shifts,
the line never shuts down.
Albert Einstein once said;
`if I had one hour in which to save the
world. I would spend 55 minutes analysing
the problem and five minutes finding the
solution’
A problem well defined is half solved
Not all problems are “caused”
Not all causes can be corrected
2. Gather the facts and data
Decision-making requires that you gather all the data,
that might have a bearing on the problem. For the
most part, data will consist of facts, opinions and
assumptions obtained from observations, records or
other people. If key information is not available, delay
your decision until you get it. In some cases, however,
decision have to be made on the basis of incomplete
knowledge, either because the information is not
obtainable or because it would be too costly to get.
DATA COLLECTION METHODS
Brainstorming. This requires an
environment in which the participants
are free to ‘think loud’ (retreats,
conferences, seminars).
CONT
Surveys. This economically tap ideas of
large group of respondents.
Discussion Groups. This consists of those
who are directly involved in decision
making. During discussions the group
should be:
Comprehensive
Avoid initial judgment
CONT
Experience. ‘Experience is the best
teacher.’ Reliance on experience is guide
for future action.
FACTORS TO CONSIDER IN
DECISION MAKING
RESOURCES. While making the
decision the first consideration is
evaluating the resources at the disposal.
PROCEDURAL DOCUMENTS.
These are documents which provide
guidelines for decision making.
OTHER FACTORS
Environmental
Political
Security
Ethical considerations
3. Organize the information
If you are working with many facts or a mass
of data, you’ll have to sort out the important
from the trivia, and organize the information
so it can be compared and analyzed. As you
study what’s available you should look for
relationships among the various factors–
costs, growth, schedules, advantages and
disadvantages, etc.
4. Develop options
Developing as many good options as possible.
Quality and quantity are equally important. It
is rare for a problem to have only one
solution, so don’t be deceived. The important
thing is to keep an open mind, let you
imagination roam freely over the facts you’ve
collected, and jot down the possible solutions
that occur to you.
5. Analyze the alternatives and
make your decision
With the previous groundwork laid, you are now in a
position to compare the alternatives and determine the
best solution. Test the alternatives against specific,
good criteria-risk involved, permanency of the remedy,
timing, practicability, your objectives, and so on.
Sometimes you can quickly eliminate the unacceptable
options and focus on a few alternatives with less
shortcomings. Ultimately, you will arrive at the “best”
decision
DECISION TEST
Does it solve the problem and the root cause?
Does it satisfy all established criteria?
Does it satisfy all people involved and affected?
Can workable action plans be developed to
implement it?
Is there time to implement it?
Do the personnel and other resources exist to
make it work?
Have all its risks, disadvantages and possible
consequences been considered
Is it the best choice in term of:
a) Benefits
b)Costs
c) Risks
d)Commitment
e) Workability
Types of Decisions
In your work day. You deal with some of the
following types of decisions:-
- The routine
- The strategic
- Emergency decisions
Strategic Decision
These are more complex. They involve either
finding out what the situation is or changing
it. The ramification of strategic decisions are
broader. They can assist productivity,
organization, capital.
Attributes of effective decision
maker
Visionary
Knowledgeable. The most important
requirement for sound decisions in a
deep understanding of all factors.
Initiative. The leader assumes the
responsibility for beginning the decision
making process and seeing through.
CONT
Advice seeking. Good decision makers
know that they need help from others.
Selectivity. They seek for pertinent data.
They avoid unnecessary facts and
figures.
CONT
Comprehensiveness. They evaluate all
available options and consider possible
alternatives so as to make the best
choice.
Currency. They consider current
conditions and take advantage of
opportunities that exist at the time.
CONT
Flexibility. They are open minded about new
concepts and ideas.
Good judgment. In addition to following
procedures, they exercise their best judgment in
considering the prevailing factors.
Calculated risk taking. Consider cost benefit
analysis of every alternative.
Self knowledge. They know their abilities,
biases and limitations.
Decision making in Groups
Most often , some important decisions will be
made in meetingsGroup:
Advantages of group participation in decision-
making: Collective ownership, increases self
expression innovation and development
Disadvantages: time consuming and
expensive
Group decisions may result from social
pressures
Decision making pitfalls(traps
The problem trap
This is where we have a problem but we do
not try to discover he cause
We rush into generating alternatives and
choosing between them
We can spend a lot of time and effort but we
still remain with the same problem
Anchor trap
Human brains often give great weight to the
first information they receive(initial
impressions, estimates data, comments,
stereotypes, past evens and experiences)
They form an anchor-like reference point for
subsequent thoughts and judgments
Overreliance on this initial information can
inhibit decision making
How to avoid anchor trap
Viewing issues from different perspectives
Considering the issue on own before
consulting others
Being open minded
Seeking information from a variety of people
or sources
Avoid anchoring others by telling them as
little as possible at the start of the discussion
Status quo trap
People have a natural bias to alternatives that
maintain the status quo because it is ‘safe’
familiar especially when the decision can lead
to punishment
Avoid by
Keeping goals firmly In focus
Justification trap
People find It difficult to make decisions that
would proof that their previous decisions were
wrong
Our tendency is make decisions that justify
our previous decisions
Avoiding justification trap
Openly admitting mistakes
Treating mistakes as leaning opportunities
Listening views of people who are not
involved
Remembering that you don’t get out of a hole
by making it deeper
Selective evidence trap
We accept or give extra weight to information
that confirm our basic instinct or point of view
Avoid by:
Testing intuitive decisions
Using an objective decision making framework
Deliberately playing he devils advocate
Encouraging staff to disagree with you and
encouraging an environment where staff feel
comfortable voicing alternative views
Things that can limit your
decision making abilities
Searching for THE ONE RIGHT ANSWER
Not involving front line people
Waiting for 100% agreement
Fear of embarrassment or failure
