Debriefing- Effective decision making and Dave Armstrong Case

In a perfect world!!

all decisions would be made by rational people: define the problem, identify decision criteria, weight the criteria, generate alternatives, rate each alternative, compute the optimal decision

A Hiring Decision

good candidate but killed his dog; can he solve the problem?

Bounded Rationality by Herbert Simon

model that shows how we make decisions by simplified models
- decisions based on technique called SATISFICING
-

SATISFICING

seeking the first solution that solves the problem; hard to understand all info necessary to optimize; solutions are satisfactory/sufficient rather than optimal

Key Influences on Decision making

-creativity
-intuition
-past experience
-group dynamics and synergy

Intuition

that "gut feeling" created out of experience resulting in rapid decisions with what appears limited information; intuition is good with high level of uncertainty and very little precedent; facts are limited; time is limited

Errors in Decision making

overconfidence bias, anchoring bias (early first perceived info to make judgements), availability bias, confirmation bias, representative bias (past situation is representative of current), and groupthink

Escalation of Commitment

-one of the greatest decision-making biases
- throwing good money after bad
-tendency to continue to commit resources to a failing course of action

Group think

group members look to minimize conflict within the group to reach a consensus
harmony vs conflict
can be good conflict to make a better decision; prevent group think- everyone is a leader

Organizational Constraints to Decision Making

Performance evaluation, reward systems, formal regulations, system-imposed time constraints, historical precedents

Why is the decision facing Dave Armstrong a difficult one?

jobs are very different, consequences; uncertainty with jobs

A Balanced Perspective

-new decision for Armstrong
-multidimensional (him, his family, and professional)
-involves long-term objectives
-balance his wife's objectives

Two decision making tool that can help bring some clarity to the problem

Decision Tree (diagrammatically way of taking a look at the problem that were trying to solve, usually involves actions, uncertainties, and outcomes, consequences)
- Quantitative Analysis

Job A, succeed or fail,

exciting ownership rich, prestigious,

- exciting ownership, tense

Quantitative Analysis

You can put different weights on salary, bonus, equity, and etc. to value the most importance; provide analysis by weights; incorporate a risk profile for chance of success;

Dave Armstrong

didn't take any options but we walked through an analysis; you can take quantitative approach always