and Planning Decision Making
MNO 3370 (Honors)
Management Workplace: Community Insurance Center
Chapter Concepts
Benefits of Planning Setting Goals Goal Commitment Distal Goals Flexibility in Planning
Benefits of Planning
Benefits of Planning
Persistence
Direction
Intensified Effort
Creation of Task Strategies
Pitfalls of Planning
Pitfalls of Planning
False Sense of Certainty
Impedes Change and Adaptation
Detachment of Planners
Setting Goals
Specific
S.M.A.R.T.
Measurable Attainable Realistic
Timely
Examples of S.M.A.R.T. Goals?
Starbucks: "In fiscal 2006, we plan to open approximately 1,800 net new stores globally." Walgreen: "Second is to hire a significant number of people with disabilities in our South Carolina distribution center, scheduled to open in 2007, and achieve 20% productivity gains there." Wrigley: "In 2005, the company will decrease the long-term rate of return assumption for the assets of its U.S. (pension) plans from 8.75 % to 8.5%."
Halliburton: "We estimate that 74% of the backlog existing on 12/31 will be eliminated the following fiscal year."
UPS: "65% of drivers will have Martha Stewart Living access to the new technology Omnimedia: "In 2004 we will (implemented in 2004) by the end discontinue the Catalog for Living of 2005." and "In 2005, we will and its online product options, increase operating profit in each and sell remaining inventory in of our 3 key businesses: early fiscal 2005." domestic, int'l, supply chain."
Developing Commitment to Goals
The determination to achieve a goal is increased by: Setting goals participatively Making goals reasonable Making goals public Obtaining top management support
Developing Effective Action Plans
An Action Plan Lists...
Specific Steps
People
Resources
Time Period
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Tracking Progress
Set...
Proximal Goals
Gather and provide...
Performance Feedback
Distal Goals
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Maintaining Flexibility
Option-based planning
keep options open by making simultaneous investments invest more in promising options maintains slack resources
Learning-based planning
plans need to be continuously adjusted
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Turning plans into reality...
Top Level Vision & Mission Statements The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. To Our Employees: We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.
Rational Decision Making
Define the problem Identify decision criteria Weight the criteria Generate alternative solutions Evaluate alternatives Select solution and implement
It sounds so easy, but...
Define the Problem
Issue is complex and can be defined in many ways Lack of consensus Problems defined in terms of solutions already possessed Symptoms confused with real problem Incomplete or inaccurate information
Generate Alternative Solutions
Solutions are usually evaluated as they are proposed Few alternatives are usually known The first acceptable solution is usually adopted Over-reliance on what has worked in the past
Evaluate and Select Alternative
Little is known about each alternative Gathering good information is costly Satisficing rather than maximizing Solutions selected by default Solutions implemented prematurely
Limits to Rational Decision Making
Maximize Satisfice
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Limits to Rational Decision Making
Bounded Rationality
A decision-making process restricted in the real world by:
limited resources incomplete and imperfect information managers' limited decision-making capabilities
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Implement and Follow-Up
Solution not always accepted by others Difficulty in measuring success Implementation often takes a long time
Group Decision Making - Advantages
View problems from multiple perspectives and Find access more information Generate more alternative solutions More committed to making chosen solutions work
Group Decision Making-Disadvantages
Susceptible to groupthink Limited number of solutions considered Take considerable time One or two people can dominate group discussion Members don't feel personally accountable for decisions and actions
Conditions for Groupthink
The group is insulated from others with different perspectives The group leader expresses a strong preference for a particular decision There is no established procedure for defining problems and exploring alternatives Group members have similar backgrounds
Using Groups to Improve Decision Making
Structured Conflict
Nominal Group Technique
Delphi Technique
Stepladder Technique
Electronic Brainstorming
Structured Conflict
C-Type Conflict
Cognitive conflict. Disagreement that focuses on problem- and issue-related differences of opinion
A-Type Conflict
Affective conflict. Disagreement that focuses on individuals or personal issues
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Devil's Advocacy
Steps to Establish a Devil's Advocacy Program
1. Generate a potential solution
2. Assign a devil's advocate to criticize and question
3. Present the critique of the solution to key decision makers
4. Gather additional information
5. Decide whether to use, change, or not use the originally proposed solution
Dialectical Inquiry
Steps to Establish a Dialectical Inquiry Process
1. Generate a potential solution 2. Identify the assumptions underlying the potential solution 3. Generate a conflicting counterproposal based on opposite assumptions
4. Have advocates of each position present their arguments and engage in a debate in front of decision makers
5. Decide whether to use, change, or not use the originally proposed solution
Community Insurance Center
Use of music and headphones Management Workplace Activity (p. 165)
When are Groups Better?
Definitions...
Nominal Group Technique
Steps to Establish Nominal Group Technique
1. During a "quiet time," group members write down as many problems and solutions as possible 2. Each member shares one idea at a time 3. Ideas are posted on flipcharts until all ideas are shared 4. Group discusses advantages/disadvantages
5. Ideas are ranked during a second "quiet time"
6. Members read rankings aloud, and the idea with the highest average rank is selected
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Delphi Technique
Steps to Establish Delphi Technique
1. Assemble a panel of experts. 2. Create a questionnaire of open-ended questions.
3. Summarize the responses and feed back to the panel until the members reach agreement.
4. Create a brief report and send to the panel members for agreement/disagreement. 5. Continue the feedback process until panel reaches agreement.
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Stepladder Technique
Step 3
Member 4 Joins Group Shares thoughts, ideas, recommendations Members 1, 2, & 3 Share previous thoughts, ideas, recommendations Discussion is Held and Tentative Group Decision is Made
Step 2
Member 3 Joins Group Shares thoughts, ideas, recommendations
Members 1 & 2 Share previous thoughts, ideas, recommendations
Discussion is Held and Tentative Group Decision is Made
Step 1
Member 1 Shares thoughts, ideas, recommendations
Member 2 Shares thoughts, ideas, recommendations
Discussion is Held and Tentative Group Decision is Made
Adapted From Exhibit 5.13
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Electronic Brainstorming
Four Rules of Brainstorming
1. The more ideas, the better. 2. All ideas are acceptable, no matter how wild or crazy.
3. Other group members' ideas should be used to come up with even more ideas. 4. Criticism or evaluation of ideas is not allowed.
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Electronic Brainstorming
Advantages of Electronic Brainstorming
Overcomes production blocking
technology allows everyone to record their ideas as they are created no ideas lost "waiting your turn" to speak
Overcomes evaluation apprehension
anonymity creates free expression
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Electronic Brainstorming
Disadvantages of Electronic Brainstorming
Greater expense No automatic acceptance of ideas because of one's position Some find it difficult to express themselves in writing Lack of typing skills can frustrate participants
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