5-1 Lecture 4 Decision Making, Entrepreneurship, Creativity and Organizational Culture

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Lecture 4

Decision Making, Entrepreneurship,

Creativity and Organizational Culture

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Managerial Decision Making

Decision Making The process by which managers respond to

opportunities and threats by analyzing options, and making determinations about specific organizational goals and courses of action

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Decision Making

Programmed Decision Routine, virtually automatic decision making that

follows established rules or guidelines.• Managers have made the same decision many

times before• There are rules or guidelines to follow based on

experience with past decisions• Little ambiguity involved

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Decision Making

Non-Programmed Decisions Nonroutine decision making that occurs in

response to unusual, unpredictable opportunities and threats.

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Decision Making

Intuition feelings, beliefs, and

hunches that come readily to mind, require little effort and information gathering and result in on-the-spot decisions

Reasoned judgment decisions that take

time and effort to make and result from careful information gathering, generation of alternatives, and evaluation of alternatives

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Why Information Is Incomplete

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Causes of Incomplete Information

Risk The degree of probability that the possible

outcomes of a particular course of action will occur

Uncertainty the probabilities of alternative outcomes cannot

be determined and future outcomes are unknown

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Ambiguous information

Information that can be interpreted in multiple and often conflicting ways

Young Woman or Old Woman

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Time constraints and information costs managers have neither the time nor money to

search for all possible alternatives and evaluate potential consequences

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Six Steps in Decision Making

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Decision Making Steps

Step 1. Recognize Need for a DecisionSparked by an event such as environment

changes.Managers must first realize that a decision

must be made.

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Step 2. Generate AlternativesManagers must develop feasible alternative

courses of action If good alternatives are missed, the resulting

decision is poor It is hard to develop creative alternatives, so

managers need to look for new ideas

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Step 3. Assess AlternativesWhat are the advantages and disadvantages

of each alternative?Managers should specify criteria, then

evaluate.

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Step 4. Choose Among Alternatives• Rank the various alternatives and make a

decision– Tendency is for managers to ignore critical

information, even when available

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Step 5. Implement Chosen AlternativeManagers must now carry out the alternativeOften a decision is made and not

implemented

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Step 6. Learn From FeedbackCompare what happened to what was

expected to happenExplore why any expectations for the

decision were not metDerive guidelines that will help in future

decision making

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Creativity

Creativity A decision maker’s ability to discover original and novel

ideas that lead to feasible alternative courses of actionWays to promote individual creativity

Provide opportunities and freedom to generate new ideas

Provide constructive feedback Promote the importance of looking for alternative

solutions Recognize and reward creativity

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Promoting Group Creativity

Brainstorming Managers meet face-to-face to generate and

debate many alternatives. Group members are not allowed to evaluate

alternatives until all alternatives are listed. When all are listed, then the pros and cons of

each are discussed and a short list created.

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Entrepreneurship and Creativity

Entrepreneurs an individual who notices opportunities and decides

how to mobilize the resources necessary to produce new and improved goods and services

Mobilization of resources to take advantage of an opportunity to provide customers with new and improved goods and services

Intrapreneur a manager, scientist, or researcher who works inside an

organization and notices opportunities to develop new or improved products and better ways to make them

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Organizational Culture

Organizational Culture Shared set of beliefs, expectations, values, norms, and work

routines that influence how members of an organization relate to one another and cooperate to achieve organizational goals

Strong culture: Members share an INTENSE COMMITMENT to cultural values, beliefs and use them to achieve their goals.

Weak culture: Members are not strongly committed to shared values and beliefs.

Generally strong culture is relatively difficult to be changed and is less responsive to flexibility and diversity

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Organizational Culture

Attraction-Selection-Attrition Framework A model that explains how personality may

influence organizational culture. Founders of firms tend to hire employees whose

personalities that are similar to their own Employees who do not fit in tend to leave the

organization over time

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Factors that Maintain and TransmitOrganizational Culture

Organizational culture is maintained and transmitted to members through the values of the founder, the process of

socialization, ceremonies and rites, and stories and languages.

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Organizational socialization process by which newcomer’s learn an

organization’s values and norms and acquire the work behaviors necessary to perform jobs effectively

Ceremonies and rites Process of developing organizational formal

events that recognize incidents of importance to the organization

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Founders’ values Have important and long lasting effects to the

development of organizational culture Have a substantial influence on the values, norms

and standards of behavior that develop over time within the organization.

Founders’ values also affect the selection of appropriate staff who can maintain and develop similar culture.

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Stories and Languages Stories about organizational heroes and villains and their

actions provide important clues about values and norms. Stories can reveal the kinds of behaviors that are valued by

the organization and the kinds of practices that are frowned on.

Languages used in organization, such as slang or jargon, are organization-specific words and phrases, which also provides important clues about norms and values.

Organizational languages also encompasses how people dress, the office they occupy, the cars they drive and the degree of formality they use when they address one another.

Documents

5-1 Lecture 4 Decision Making, Entrepreneurship, Creativity and Organizational Culture