Managerial Decision Making

Individuals make decisions that represent the probability of events occurring over which they have no control but that may affect the outcomes of those decisions. Such conditions may be viewed as a continuum from certainty to risk to uncertainty. Decision making becomes more challenging with increasing levels of risk and uncertainty. Important decisions by managers and leaders are often made under the conditions of risk (subjective probabilities) and uncertainty.

Bounded rationality describes a pattern that tends to be more descriptive of how leaders and others make what they consider to be thoughtful decisions. It represents tendencies to satisfice, engage in a limited search for alternative solutions, work with inadequate information, and use various biases to obtain and process information. It recognizes the practical limitations of individuals when they attempt to make decisions. Over time, the level of satisficing can be raised through various actions, such as the various elements and technologies associated with knowledge management.

Evidence-based management, like knowledge management, strives to reduce the natural tendency toward bounded rationality. It proceeds from the premise that using a deeper diagnosis enables leaders to do their jobs better. We presented five critical diagnostic questions and the key insights for leaders that are central to evidence-based management.

Political decision making emphasizes the impact of multiple stakeholders who have the power to influence decisions. It may be triggered when interdependent stakeholders hold divergent views about problem definitions, desired goals, and/or preferred solutions. Various political strategies, such as scapegoating and impression management tactics, may come into play under such circumstances. The most effective influence methods over the long run tend to be rational persuasion, inspirational appeal, and consultation.

Common blocks to creativity are found in three major categories: perceptual, cultural, and emotional. One way of viewing the creative process is through five interconnected stages: preparation, concentration, incubation, illumination, and verification. Two of the many approaches for stimulating creativity were highlighted: de Bono’s lateral thinking method and related techniques, and Osborn’s creativity process. Osborn’s creativity process includes three phases: fact finding, idea finding, and solution finding. Brainstorming is one of the key methods of Osborn’s creativity process that is used to help stimulate idea finding by teams. Electronic brainstorming may be an effective alternative to traditional face-to-face brainstorming in various situations.