Problem solving & decision making

Problem solving and decision making

MANAGEMENT SKILLS

Dr Thai Van Vinh

Part 4: Problem Solving & Decision Part 4: Problem Solving & Decision

Making

• Decision making and problem solving

• The nature of decision making as part of

management

• Decision making approaches Decision making approaches

• Factors in decision making

• Problem solving: making the most of

opportunities

• Thinking ‘outside the box’ and creativity

– Important factors in decision making

– Various approaches to decision making and problem

l isolving

Decision Making and Problem Solving

• Managers make many decisions some small

• Managers make many decisions – some small,

some large

• It can be generally argued that decision making

is the very essence of a manager’s job y f g j

• The ability to make good decisions is central to

the management of the organisation

• Solving problems is purposeful and satisfying for g p p p y g those of us who love business

Welcome them!

Decision Making and Problem Solving (C)

• Many authors and managers use the terms

• Many authors and managers use the terms

decision making and problem solving

interchangeably and others treat decision making

as a sub-category of problem solving

• Decision making is commonly defined as the act

of choosing from among alternatives while a

of choosing from among alternatives while a

problem (or opportunity) is a situation offering

strong potential for significant gain if

appropriate actions are taken

Decision Making and Problem Solving (C)

• In ancient times, a king had a boulder placed on a roadway , g p y

Then he hid himself and watched to see if anyone would

remove the huge rock Some of the kingdom’s wealthiest

merchants and courtiers came by and simply walked around it

merchants and courtiers came by and simply walked around it Many loudly blamed the King for not keeping the roads clear, but none did anything about getting the big stone out of the

way Then a peasant came along carrying a load of vegetables

way Then a peasant came along, carrying a load of vegetables

On approaching the boulder, he laid done his burden and tried

to move the stone to the side of the road After much pushing and straining he finall s cceeded He noticed a p rse here

and straining, he finally succeeded He noticed a purse…where the boulder had been The purse contained many gold coins

and a note from the King indicating that the gold was for the

person who removed the boulder from the roadway.

• The peasant learned what many never understand: every

• The peasant learned what many never understand: every

obstacle presents an opportunity to improve one’s condition.

Decision Making as Part of Management

• Decision making is important in every area of a

• Decision making is important in every area of a manager’s job

• Planning Planning

– What are the organisation’s long-term objectives?

– What strategies will best achieve these objectives?

– What should the organisation’s short-term objectives

be?

Decision Making as Part of Management (C)

Decision Making as Part of Management (C)

• Controlling

– What activities in the organisation need to be

controlled?

– How should these activities be controlled?

– When is a performance deviation significant? When is a performance deviation significant?

– When should I discipline a problem employee?

Decision Making as Part of Management:

Programmed and Non Programmed Decisions

and procedures and stem from prior experience or

technical knowledge about what works or does not

– are programmed to the extent that they are repetitive

worked out for handling them

complaints or employee discipline

Decision Making as Part of Management: Programmed and Non Programmed Decisions

• Non-programmed decisions:

Programmed and Non-Programmed Decisions

Non programmed decisions:

– are unique decisions that require a ‘custom made’ solution

– This is when a manager is confronted with an

ill-structured or novel problem and there is no ‘cut and dried solution’

service

Decision Making as Part of Management:

Certainty Risk and Uncertainty

• You make decisions now for action that will be

Certainty, Risk and Uncertainty

You make decisions now for action that will be taken to achieve your goals in the future

• Important decision making situations often

• Important decision making situations often

contain some aspects that are unknowable and

very difficult to predict

– Decisions made at moments of uncertainty involve risk and the possibilit that the co rse of action taken

risk and the possibility that the course of action taken can lead to losses rather than the desired results

The ncertaint can come from a ariet of so rces

– The uncertainty can come from a variety of sources– Thus, SWOT, TOWS, and PESTLE analyses are

important

Decision Making as Part of Management:

Certainty Risk and Uncertainty (C)

• ‘The best managers in the world a guy with a

Certainty, Risk and Uncertainty (C)

The best managers in the world, a guy with a

Harvard MBA, might make bad decisions around 40% of the time And a rotten manager might

40% of the time And a rotten manager might

make bad decisions 60% of the time’

– there’s only about a 20% difference

• But as a manager you have to make decisions But as a manager, you have to make decisions

– If you don’t make decisions, you are going nowhere and doing nothing

– If you make decisions, you will make bad decisions

But you learn from it

Decision Making as Part of Management: Urgent

Versus Important Decisions

• A particularly useful time management technique

Versus Important Decisions

A particularly useful time management technique

is to distinguish between urgent and important

decisions

• This distinction is significant as these two types

of decisions have to be dealt with differently

– urgent items have a deadline attachedurgent items have a deadline attached

– Important items also have a deadline The deadline

for them is usually far enough in advance for there tofor them is usually far enough in advance for there to

be sufficient time to focus primarily on quality

Decision Making Approaches: The Logical Systems

• Defining the problem Defining the problem

– Accurately defining the problem is essential

• Analysing the problem

of process– If the process is clearly documented the cause of theIf the process is clearly documented, the cause of the problem is more likely to emerge

• Generating alternative solutions

– It is important to generate as many solutions to the

problem as possible within the parameters defined

Decision Making Approaches: The Logical Systems

(C)

• Choosing a solution or course of action

(C)

g

– evaluate against established criteria, the same criteria

applying to all possible solutions

– The solution that most effectively meets the criteria

should be selected

• Implementing the solution

– There is often a disparity between the solution agreed to

in a group and the solution implemented g p p – To determine a plan for implementing the decision is

critical

• Evaluating the effectiveness of the solution

– Did the implementation plan meet the goals and

objectives?

– Did the solution via the plan eliminate the problem? 16

Decision Making Approaches: Contingency

Approach

• This approach differentiate between

Approach

This approach differentiate between

programmed and non-programmed decisions

• Rules and policies in programmed decisions

provide managers with a high degree of certainty about the appropriateness of the solution

• In contrast non programmed decisions bring

• In contrast, non-programmed decisions bring

managers a high degree of uncertainty and risk

• The risk may be reduced by a factor associated with the increased number of people who p p

Decision Making Approaches: Decision Tree

• The Tree grows from left to right as a logical The Tree grows from left to right as a logical

sequence of events unfolds:

Drawing up the decision tree from left to right

– Drawing up the decision tree from left to right

– Estimating probability of occurrence

– Calculating the expected payoff, based on estimated

Decision Making Approaches: Decision Tree

Decision Making Approaches: Critical Path

Analysis

• Critical Path Analysis (CPA) or Critical Path

Analysis

Critical Path Analysis (CPA) or Critical Path

Method (CPM) is part of a planning system

called Net ork Anal sis

• CPA uses the arrow diagram in which:

– A circle represents an event (or phase)

– The arrow points to the next event (or phase)

• Used to find out the shortest route

Decision Making Approaches: Program Evaluation

and Review Technique (PERT)

• It is similar to CPA and with the computerisation

and Review Technique (PERT)

It is similar to CPA and with the computerisation PERT and CPA are often used interchangeably

• PERT also uses the arrow diagram but differs

when it estimates the duration of activities

• PERT requires three estimates for every activity:

– (iii)(iii) t (p) =t (p) The most pessimistic duration The most pessimistic duration

Decision Making Approaches: Program Evaluation

and Review Technique (PERT)

t (o) + 3t (m) + 2t(p)

t (e) =

6

Decision Making Approaches: Group Quantitative

gro ps and se a ariet of techniq es to:

– Generate broad parameters to the problems

– Quickly collect a quantity of ideas on the issueQuickly collect a quantity of ideas on the issue

– Collectively assess the alternatives; and

– Agree on an strategy to create a solution

Decision Making Approaches: Group Quantitative

• This works from a group basis whose members

Approach – The Delphi Technique

never meet face to face

– First, the problem is identified and members are asked to

their solutions and invariably the results of the first questionnaire trigger new solutions and change priorities – The procedure is then repeated as often as necessary until The procedure is then repeated as often as necessary until consensus is reached

quantitative analysis of the problem

Decision Making Approaches: The Qualitative

Approach – The PDCA Cycle

Factors in Decision Making

• The way in which a manager makes a decision The way in which a manager makes a decision depends on six factors:

– The situation;

– The competence of the person involved in

implementing the decision;

– The time available to implement the decision;

The stakeholders involved;

– The stakeholders involved;

– The value (both dollar and strategic terms) or critical importance of the decision; and

– The effectiveness of those involved in

implementation (team cohesion)

Problem Solving: Making the Most of

Opportunities

• It is suggested that 80% of upper-level managers

Opportunities

It is suggested that 80% of upper level managers

were aware of a major problem before it actually

occ rred

– This allows the conclusion that it is possible to

identify a problem before something goes wrong

• Managers who view problems as opportunities g p pp tend to be both more innovative and successful

This suggests that managerial effort would be far

– This suggests that managerial effort would be far

better spent on the question: ‘How can I make

something out of this?’ than on seeing only the

something out of this? than on seeing only the

Problem Solving: Looking Further

• When you are faced with When you are faced with

– a problem or issue that is difficult to deal with,

– if it is an important problem that will not resolve itself, and

about it,

– Then you are in a problem solving situation Then, you are in a problem solving situation

Problem Solving: The Process

Problem Solving: The Process (C)

• A principal instrument for effective problem A principal instrument for effective problem

solving and decision making is employee

participation

• The basic 5 step approach can be utilised to

ensure

– the correct information is gathered reviewed andthe correct information is gathered, reviewed and

options chosen, and

staff participate in the process and gain commitment– staff participate in the process and gain commitment

to a decision

Problem Solving: Removing Root Causes

• “Root Causes” are those problems that if Root Causes are those problems that, if

removed, solve a number of related problems

• No manager can expect to identify all problems and trace all root causes

• This is possible, however, with assistance of staff

Seeking assistance from staff to find root ca ses has

– Seeking assistance from staff to find root causes has the added benefit to the communication process that

it enables staff to understand the problems and why their removal is important

Problem Solving: Removing Root Causes (C)

WHAT IS WRONG WHAT MIGHT BE DONE

STEP 2 ANALYSIS

STEP 3 APPROACHES

IN

THEORY

Diagnose the problem:

Sort symptoms into

categories Suggest causes Observe what is lacking Note barriers to resolving

What are possible strategies or prescriptions?

What are some theoretical cures?

Generate broad ideas about what might be done Note barriers to resolving

STEP 1 PROBLEMS What's wrong?

What are current symptoms?

STEP 4 ACTION IDEAS What might be done?

What specific steps might

be taken to deal with the

y p What are disliked facts

contrasted with preferred situation?

problems?

Effective Decision Making Process

• Effective decision making process involves Effective decision making process involves

several steps:

– identify the problem;

– generate alternative solutions;

e al ate and choose an alternati e; and

– evaluate and choose an alternative; and

– implement and monitor the chosen solution

• Which step is the most important?

• As a manager you must observe the symptoms g y y p and treat the cause

There is no right or efficient way to do the There is no right or efficient way to do the

Improving Problem Solving: Overcoming Barriers

• A father and son are driving to work one morning A A father and son are driving to work one morning A terrible accident occurs The father is killed

instantly and the son is badly injured An ambulance

instantly and the son is badly injured An ambulance arrives at the accident scene and the son is rushed

to hospital When they carry him into the emergency

to hospital When they carry him into the emergency room the nurse says ‘He’s in terrible shape We’ve

got to get him into surgery.’ They rush him down the hall to the operating theatre The surgeon walks in, takes one look at him and says, ‘I’m sorry I can’t

operate on him; he’s my son’

• How can this be?

Improving Problem Solving: Overcoming Barriers

C)

• Your ability to make effective and creative

C)

Your ability to make effective and creative

decisions can be stifled by preconceptions

infl enced b o r perception of o r orld

influenced by your perception of your world

– Perception is affected by cultural background, by our life experiences, our attitudes and beliefs – personal, moral, ethical, religious, social and cultural; and it is natural to make decisions so that they ‘fit in’ with our view of the world

– No decision is ever made that is not affected by

personal perception

Improving Problem Solving: Overcoming Barriers

C)

• Personal perception can be a barrier to creative

C)

Personal perception can be a barrier to creative

and effective decision making

– your perception of a situation may not ‘allow’ or

encourage you to think in ways that would be

innovative and often successful

• The best way to put things right is to learn not to y p g g

do them incorrectly the next time you do them

– once we are aware of what we were doing wrong we

– once we are aware of what we were doing wrong, we can take evasive action before we make the same

mistake again