ProThink “Helping you make the right decisions!”®

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Decision Making Aaron Brown Brian Chang Steve Byrne Sarah Coble Tiffany Chen Chris Conway

STATISTICS STATISTICS

Research, conducted by YouGov polled 3471 adults online, Research, conducted by YouGov polled 3471 adults online, highlights the negative impact of poor decision-making or highlights the negative impact of poor decision-making or

poor communication about decision-making, has on poor communication about decision-making, has on employees. employees.

Of those that thought their employer was a poor Of those that thought their employer was a poor decision-maker, 61 percent reported feeling frustrated decision-maker, 61 percent reported feeling frustrated and losing respect for the manager. and losing respect for the manager.

Some 83 percent felt it damaged moraleSome 83 percent felt it damaged morale 51 percent said it reduced productivity in the workplace 51 percent said it reduced productivity in the workplace Nearly one in five, or 19 per cent, thought it led to Nearly one in five, or 19 per cent, thought it led to

competitors gaining an advantage competitors gaining an advantage

What is decision making and how it What is decision making and how it worksworks

Causes and effects of poor decision-Causes and effects of poor decision-making making Concept of Groupthink Concept of Groupthink Show how decision-making can affect a Show how decision-making can affect a

company in positive or negative company in positive or negative direction direction

Solutions to those causes Solutions to those causes

Overview Overview

Decision Making Decision Making

In organizations, or in general, decision making In organizations, or in general, decision making is considered as an outcome of cognitive is considered as an outcome of cognitive processes that lead to the selection of a course processes that lead to the selection of a course of action among several alternatives. of action among several alternatives.

Decisions can be made off of outside influences, Decisions can be made off of outside influences, advice, and opinions advice, and opinions

Decision-making should be looked at as a process and not Decision-making should be looked at as a process and not something that can be done quickly and effectively on a regular something that can be done quickly and effectively on a regular basis.basis.

Steps to Formulating a Decision Steps to Formulating a Decision

Step One: Step One: FormulationFormulation

Step TwoStep Two Concept DevelopmentConcept Development

Step ThreeStep Three DetailingDetailing

Step Four Step Four EvaluationEvaluation

Step FiveStep Five ImplementationImplementation

Poor Decision MakingPoor Decision Making

Problems can arise with poor decision-Problems can arise with poor decision-making and the misuses and making and the misuses and misunderstandings of the decision-making misunderstandings of the decision-making processes processes

Forms of Bad Decision MakingForms of Bad Decision Making

1. Groupthink1. Groupthink A mode of thinking that people engage in when they A mode of thinking that people engage in when they

are deeply involved in a cohesive in-group, when the are deeply involved in a cohesive in-group, when the members’ striving for unanimity override their members’ striving for unanimity override their motivation to realistically appraise alternative courses motivation to realistically appraise alternative courses of action of action

Also meaning…Also meaning… In a group there is more concern with appearing In a group there is more concern with appearing

cohesive and maintaining group relations, or a cohesive and maintaining group relations, or a tendency to seek concurrence, than there is with tendency to seek concurrence, than there is with

making a high quality decision. making a high quality decision.

Symptoms of Groupthink Symptoms of Groupthink

Collective Collective rationalizationsrationalizations

Direct pressure on Direct pressure on dissidents to conformdissidents to conform

The emergence of The emergence of self-appointed mind self-appointed mind guardsguards

Biased perceptions or Biased perceptions or stereotyping of out-stereotyping of out-group members group members

Self-censorshipSelf-censorship An illusion of An illusion of

invulnerabilityinvulnerability An illusion of An illusion of

unanimityunanimity An illusion of morality An illusion of morality

Bad Decision Making Cont.Bad Decision Making Cont.

2. According to Whyte, Hirokawa and 2. According to Whyte, Hirokawa and Scheerhorn …Scheerhorn … Bad decision-making could be attributed to Bad decision-making could be attributed to

the “tendency of groups make more extreme the “tendency of groups make more extreme decisions than individuals and the tendency of decisions than individuals and the tendency of groups to frame some decisions in negative groups to frame some decisions in negative ways” ways”

Bad Decision Making Cont.Bad Decision Making Cont.

3. Emotions and a groups’ manner of 3. Emotions and a groups’ manner of handling conflict can also play a role in the handling conflict can also play a role in the quality of decisions. quality of decisions.

Effects of poor Decision-MakingEffects of poor Decision-Making

Negatively impacts:Negatively impacts: ProductivityProductivity EfficiencyEfficiency TurnoverTurnover ProfitProfit Employee MoralEmployee Moral CommunicationCommunication Brand ImageBrand Image

Effects of the Bay of Pigs Effects of the Bay of Pigs InvasionInvasion

A number of poor decisions were made in the Bay of Pigs A number of poor decisions were made in the Bay of Pigs Invasion, which included changing locations, cancelling a Invasion, which included changing locations, cancelling a follow- up air strike against Cuban forces, and other internal follow- up air strike against Cuban forces, and other internal problems within the CIA and administration problems within the CIA and administration

The effects of the failed invasionThe effects of the failed invasion Brought embarrassment to the Kennedy AdministrationBrought embarrassment to the Kennedy Administration Did not overthrow Castro and just made him more popular for Did not overthrow Castro and just made him more popular for

standing up against the U.S.standing up against the U.S. Casualties: 4 U.S. pilots and 68 Cuban exilesCasualties: 4 U.S. pilots and 68 Cuban exiles The rest of the 1,209 Cuban exiles were imprisoned and some The rest of the 1,209 Cuban exiles were imprisoned and some

were executed.were executed. U.S. negotiated for the return of the prisoners for $53 million in U.S. negotiated for the return of the prisoners for $53 million in

food and medicine.food and medicine. Increased tensions with Cuba culminating into the Cuban missile Increased tensions with Cuba culminating into the Cuban missile

crisis.crisis.

Apple iPhoneApple iPhone Apple lowered the price of the iPhone by $200 after only 66 days.Apple lowered the price of the iPhone by $200 after only 66 days.

This upset many early iPhone buyers, believing that Apple cut the price This upset many early iPhone buyers, believing that Apple cut the price too quickly by too much.too quickly by too much.

This created bad feelings among a loyal iPhone customer base.This created bad feelings among a loyal iPhone customer base.

Other critics say that the iPhone price cut also had the effect of Other critics say that the iPhone price cut also had the effect of cannibalizing its own business. Lowering the demand for its other cannibalizing its own business. Lowering the demand for its other products, in place of the iPhone or iTouch.products, in place of the iPhone or iTouch.

Apple recognized that they might of made a mistake and did give Apple recognized that they might of made a mistake and did give out $100 refunds and credit to early buyers, which helped a little. out $100 refunds and credit to early buyers, which helped a little.

Effects of Poor Decision-MakingEffects of Poor Decision-MakingCont.Cont.

Brand Loyalty, don’t loose your returning Brand Loyalty, don’t loose your returning customers. customers. Coca-Cola BrandCoca-Cola Brand

• Tried introducing “New Coke” after conducting Tried introducing “New Coke” after conducting research and a blind taste test study. research and a blind taste test study.

• They failed to see the brand loyalty in their They failed to see the brand loyalty in their customers which cost them millions. customers which cost them millions.

Research costsResearch costs Cost of producing the productCost of producing the product Lost customersLost customers

Effects of Effects of Poor Decision-Making Cont.Poor Decision-Making Cont.

Time Warner Cable/AOL mergerTime Warner Cable/AOL merger Time Warner Time Warner

• Lawsuits amounting to over $3 billion Lawsuits amounting to over $3 billion Ex-employeesEx-employees Stock holdersStock holders

• Stock Value plummeted 26% from 2000 to 2008. Stock Value plummeted 26% from 2000 to 2008. AOLAOL

• In 2002 AOL lost more than 1 million customersIn 2002 AOL lost more than 1 million customers• The Title “AOL” was removed from AOL Time Warner, which now The Title “AOL” was removed from AOL Time Warner, which now

reads Time Warner Cable. reads Time Warner Cable. Upper managementUpper management

• Both AOL and Time Warner went through changes in their upper Both AOL and Time Warner went through changes in their upper management due to the poor decision-making that occurred with the management due to the poor decision-making that occurred with the merger. Prior Chief executives from both companies removed merger. Prior Chief executives from both companies removed themselves for the “better of the company”. themselves for the “better of the company”.

Decision-Making Across Decision-Making Across CulturesCultures

The need to identify The need to identify the type of culture.the type of culture.

Who is being Who is being affected?affected?

What is the goal?What is the goal? PersuasionPersuasion DecisionDecision

Anxiety/Uncertainty Management Anxiety/Uncertainty Management TheoryTheory

Causes:Causes: Fear of the unfamiliarFear of the unfamiliar Fear of the unknownFear of the unknown Vulnerability Vulnerability Perceived threats Perceived threats

between ingroup and between ingroup and outgroup circles.outgroup circles.

Consequences:Consequences: Can increase Can increase

ethnocentrism ethnocentrism Intensify negative Intensify negative

stereotypesstereotypes Lead to vicious conflict Lead to vicious conflict

stylesstyles Ultimately leading to Ultimately leading to

poor decision makingpoor decision making

AUM Theory cont.AUM Theory cont.

We experience anxiety and We experience anxiety and uncertainty when we encounter uncertainty when we encounter someone from another culturesomeone from another culture

Anxiety: emotionAnxiety: emotion Uncertainty: cognitiveUncertainty: cognitive

If trying to persuade to makeIf trying to persuade to makedecision it is important todecision it is important toreduce anxiety and reduce anxiety and

uncertainty.uncertainty.

AUM Theory cont.AUM Theory cont.

There are misunderstandings in There are misunderstandings in intercultural communication for a couple intercultural communication for a couple reasons.reasons. Our frame of referenceOur frame of reference Clashes in verbal and nonverbal behaviorsClashes in verbal and nonverbal behaviors

47 axioms that cover relationships on 47 axioms that cover relationships on seven factorsseven factors # 33: An increase in our respect for strangers # 33: An increase in our respect for strangers

will produce a decrease in our anxiety.will produce a decrease in our anxiety.

Nonverbal BehaviorsNonverbal Behaviors

Extremely beneficial when trying to Extremely beneficial when trying to persuade to make a decision.persuade to make a decision.

Know the cultural taboos when doing Know the cultural taboos when doing business abroad.business abroad. The A-OK signThe A-OK sign Bottom of your foot in China.Bottom of your foot in China.

Remove Ethnocentric LensesRemove Ethnocentric Lenses

Take into account other cultures affected Take into account other cultures affected by a decision.by a decision.

Dominant culture is not the “best”.Dominant culture is not the “best”.

Demonstrate a mutual respect for all Demonstrate a mutual respect for all cultures.cultures.

Avoiding Hidden Mental Avoiding Hidden Mental ModelsModels

Group dynamics awareness exercisesGroup dynamics awareness exercises Six de Bono HatsSix de Bono Hats

Pre-established decision making strategiesPre-established decision making strategies Keeping the big picture in view as projects progressKeeping the big picture in view as projects progress Avoid “good - at the time” decisions which hurt end resultsAvoid “good - at the time” decisions which hurt end results Organize group structure to minimize groupthinkOrganize group structure to minimize groupthink

Avoiding GroupthinkAvoiding Groupthink

Appoint a devil’s advocateAppoint a devil’s advocate Encourage independent critical evaluation of Encourage independent critical evaluation of

group decisionsgroup decisions Group leader should stay neutral initiallyGroup leader should stay neutral initially Divide into independent subgroupsDivide into independent subgroups

Particularly when members split on a decisionParticularly when members split on a decision

Seek outside advice / bring in new membersSeek outside advice / bring in new members Collect anonymous critique / suggestionsCollect anonymous critique / suggestions

Intuitive Decision MakingIntuitive Decision Making

Defined asDefined as Creative thinking, right-brain thinking, insight, intuition, Creative thinking, right-brain thinking, insight, intuition,

or gut reactionor gut reaction

Option GenerationOption Generation Ideally, producing as many alternatives as possible; Ideally, producing as many alternatives as possible;

discarding none at firstdiscarding none at first• Brainstorming / Mind stormingBrainstorming / Mind storming

Subconscious tappingSubconscious tapping Mediation/Relaxation before or after addressing Mediation/Relaxation before or after addressing

problem problem

Rational Decision Making ProcessRational Decision Making Process

Identify the roles of group membersIdentify the roles of group members Scope the range of variables for the problemScope the range of variables for the problem Determine the objectivesDetermine the objectives Propose measurable criteria to evaluate how well the objectives Propose measurable criteria to evaluate how well the objectives

are metare met Develop as wide/varied a range of alternatives as possibleDevelop as wide/varied a range of alternatives as possible Analyze how well each alternative meets each objectiveAnalyze how well each alternative meets each objective Explain the expected result of each alternative for every objective Explain the expected result of each alternative for every objective

to the team leadersto the team leaders The team leaders choose an optionThe team leaders choose an option The chosen alternative is turned over for implementation, The chosen alternative is turned over for implementation,

evaluation, and feedbackevaluation, and feedback