Principles of business management

Essentials of Management 10e
by Andrew J. DuBrin
CHAPTER 5
Decision Making, Creativity, and Innovation
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Steps in Problem Solving
and Decision Making
Identify and diagnose the problem (be aware that problem exists). Recognize that real problem may be different from what first look suggests.
Develop creative alternative solutions (explore even unrealistic suggestions).
Evaluate alternative solutions (examine pros and cons of each alternative).
Choose one alternative solution (best one comes closest to achieving goal decision was intended to achieve).
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Steps in Problem Solving
and Decision Making, continued
Implement the decision.
Not really a decision until it is implemented.
Effective decision is relatively easy to implement.
Evaluate and control.
Examine how well the decision achieved its intended results.
Important lessons to be learned form comparing what happened to what you expected.
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Limits to Rationality in Decision Making
Bounded rationality means that finite mental ability plus external forces block entirely rational decisions.
Behavioral economics emphasizes that people are not entirely rational decision makers.
People make satisficing decisions because they lack time or resources to make wait for best solution.
Heuristics are rules of thumbs used in decision making that stem from bounded rationality. An example would be investing your age in fixed-income assets. (No stocks for a 100-year-old person!)
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Influences on Decision Making
Intuition (based on experience, and can help point executive in right direction)
Personality and cognitive intelligence
Propensity for risk taking
Decisiveness based on degree of caution
Perfectionism and rigidity
High cognitive intelligence can help but should include practical intelligence.
Cognitive intelligence can lead to “analysis paralysis”.
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Influences on Decision Making, continued
Emotional intelligence (managing your feelings, reading feelings of others, connecting with people and understanding their feelings)
Self-management is component of EI particularly linked to decision making. (Right degree of self-management helps person prevent throwing temper tantrums when activities doe not go as planned.)
Effective workers do not let occasional bad mood ruin their day.

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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Influences on Decision Making, continued
Quality and accessibility of information
Solid data are needed.
Big Data can add valid insights to decision making.
Decision maker might favor accessibility over quality.
Anchoring is giving too much weight to first information received.
Political considerations
Favoritism, alliances, and desire to stay in favor with powerful people
Favor status quo to avoid making waves
Revenge a possible factor
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© 2017 Wessex Press, Inc. www.wessexlearning.com. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Influences on Decision Making, continued
Degree of certainty (calm and confident when certain, but effective manager can deal with risk in decision making)
Crisis and conflict
Some decision makers panic during crisis, others at their best.
Visualization can help prepare for crisis,
Moderate conflict directed at real issues can be asset to decision making.
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Influences on Decision Making, continued
Values of decision maker (all decisions are ultimately based on values)
Procrastination (leads to indecisiveness)
Decision-making styles
Person who relies on intuition decides quickly.
Impulsive versus reflective is basic style.
Single focus decision makers take one course of action.
Multi-focused explore many options, pursue multiple courses.

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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Advantages and Disadvantages of
Group Decision Making
Often results in high-quality solutions to problems because of many contributors.
Often leads to commitment to decision.
Serious problem is groupthink, or striving for consensus despite flawed decision. Can also occur when choosing between inevitable losses.
Encouraging expression of doubt and criticism can reduce groupthink.
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

A Specific Method of Group Problem Solving: The Nominal Group Technique
Generating ideas (moderator presents problem to group)
Recording ideas (round-robin feedback to record ideas without discussion or debate)
Discussing ideas (each recorded idea is discussed to determine clarity and importance)
Voting on ideas (vote privately to prioritize ideas)
Selecting highest-ranking alternative (moderator takes a tally to select best idea)
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Creativity and Innovation in
Managerial Work
Creativity is developing novel ideas that can be put into action.
Innovation is the commercialization or implementation of creative ideas.
Disruptive innovation is about a new product or service transforming an existing market by being simpler, more convenient, and costing less.
Generating powerful ideas has become an urgent managerial priority.
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© 2017 Wessex Press, Inc. www.wessexlearning.com. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The Creative Personality
Creative people are generally open and mentally flexible.
Creative people have strong need to grow professionally.
Creative thinkers break the rules, disrupt status quo.
Are able to think laterally, or find many different solutions to problems. (Vertical thinking is more logical and leads to one or a few solutions.)
Think divergently by reaching out to different points of views and ideas from people outside own field.

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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Conditions Necessary for Creativity
Expertise, creative-thinking skills and, internal motivation
Three components must be together.
Expertise refers to necessary knowledge.
Creative thinking includes digging for alternatives.
Motivation is for satisfaction, challenge.
Flow experience includes heavy focus.
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Conditions Necessary for Creativity, continued
Environmental need plus conflict and tension (need stimulates goal setting, and conflict and tension put us on edge).
Encouragement from others.
Permissive atmosphere that welcomes creativity facilitates creativity.
Encouragement of risk taking by not punishing for unworkable ideas.
Must feel that work matters to employer.

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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The Creative and Innovative Organization
Managerial and organizational practices can foster creativity. Six factors are particularly important.
Challenge (right type and amount; dream big)
Freedom (choose how to accomplish goal)
Resources (time and money needed)
Rewards and recognition for creative ideas
Allocating time for creative thinking (e.g. giving employees time to pursue pet projects)
Greater diversity in groups (intellectual diversity is major factor)

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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Three Creative Organizations
Fast Company says they are creative, and they follow the principles in slide 16.
Gilead Sciences develops life-saving drugs, and gets them to market rapidly.
Virgin America is an airline that keeps up with disruptive thinking of its clientele.
Warby Parker was first company to sell fashionable and low-priced eyeglasses over the Internet.
Which company would you add to this list, and why?
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Organizational Programs for
Improving Creativity
Creativity training (aimed at developing flexible thinking; extreme example is food and sleep deprivation)
Brainstorming (also used for training; details not worked out in first meeting)
Systematically gathering ideas (collect from inside and outside firm, and use idea quotas)
Appropriate physical surroundings (physical space allows for flow of ideas, but some workers need privacy)
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Guidelines for Brainstorming
Group members spontaneously generate solutions, without being criticized.
Presence of trained facilitator is helpful.
Strive for quantity rather than quality.
Assign fieldwork to brainstorming participants prior to meeting.
Natural light in room may stimulate brainstorming.
Encourage piggybacking (build on ideas of others).
After the session, edit and refine the list of ideas and choose one or two for implementation).
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© 2017 Wessex Press, Inc. www.wessexlearning.com. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Self-Help Techniques for
Improving Creativity
Specific creativity-building suggestions:
Keep track of original ideas (e.g. idea notebook).
Stay current in your field, be curious about environment.
Improve your sense of humor, and laugh at own mistakes.
Take risks when searching for solutions.
Find best time period for being creative.
Pause when faced with creativity block.
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© 2017 Wessex Press, Inc. www.wessexlearning.com. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Self-Help Techniques for
Improving Creativity, continued
Play roles of explorer, artist, judge, and lawyer. (Incorporates many of the suggestions already presented.)
Explorer speaks to people in different fields.
As artist, stretch your imagination.
Be judge by evaluating your wild ideas.
Be lawyer by negotiating to get your ideas implemented.
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Self-Help Techniques for
Improving Creativity, concluded
Engage in appropriate physical exercise
Single aerobic workout can trigger brain into high gear.
Physical fitness can boost cognitive skills.
Exercising pumps more blood and oxygen into the brain, enhances frontal lobe activity.
Exercise alone does not boost creativity!

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© 2017 Wessex Press, Inc. www.wessexlearning.com. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Self-Help Techniques for
Improving Creativity, concluded
Solicit feedback on your performance.
Seek feedback from both manager and coworkers.
Feedback will sharpen your imagination.
Feedback will refine your thinking, helping you to develop ideas other perceive to be imaginative.
Study with 456 supervisor employee pairs found that employees (management consultants) who sought both direct and indirect feedback tended to be rated more highly on creativity.
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© 2017 Wessex Press, Inc. www.wessexlearning.com. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.