Organizational Behaviour, emerging knowledge and practice for the real world, by S. McShane, M. Von Glinow (fifth edition) – Summary chapter 7

Decision making is the process of making choices among alternatives with the intention of moving toward some desired state of affairs. Rational choice decision making selects the best alternative by calculation the probability that various outcomes will occur from the choices and the expected satisfaction from each of those outcomes. An opportunity is a deviation between current expectations and a potentially better situation that was not previously expected.

There are five main problems of problem identification:

  1. Solution-focused problems
    This is identifying a problem as a veiled-solution, but this is not really the problem.
  2. Decisive leadership
    Leaders that announce problems or opportunities before logically assessing the situation does not help with identifying the problem.
  3. Stakeholder framing
    Stakeholders hide or provide information in ways that the decision-maker sees the situation as a problem, opportunity or steady sailing. This information is not always accurate and can lead to a wrongly identified problem.
  4. Perceptual defence
    People can fail to become aware of problems because they block out bad news as a coping mechanism.
  5. Mental models
    Mental models can blind us from seeing unique problems or opportunities. Things have to fit in mental models.

Identifying problems can be improved by acquiring new perspectives, having leaders that have the willpower to resist the temptation of decisive decision making and create a norm of divine discontent (never being satisfied with the current conditions).

Bounded rationality is the view that people are bounded in their decision-making capabilities, including access to limited information, limited information processing and a tendency toward satisficing rather than maximizing when making choices. Problems with goals are that problems are often ambiguous and problems can conflict. Sequential evaluation occurs because all alternatives are not usually available to the decision-maker at the same time. The implicit favourite is a preferred alternative that the decision-maker uses repeatedly as a comparison with other choices. The main reason why decision-makers compare alternatives against an implicit favourite is the need to minimize cognitive dissonance. There are three main decision-making heuristics:

  1. Anchoring and adjustment heuristic
    This is the tendency to be influenced by an initial anchor point such that they do not move away sufficiently from that point as new information is provided.
  2. Availability heuristic
    This is the tendency to assign higher probabilities to objects or events that are easier
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    Organizational Behaviour, emerging knowledge and practice for the real world, by S. McShane, M. Von Glinow (fifth edition) – Book summary

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