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Decision Making remains one enigma for managers. Although no prescription can be offered for mastering this technique yet these fillers will certainly improve your skill
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The Kaizen ForumTHE KAIZEN FORUM
DECISIONMAKING
The Kaizen Forum DECISION
MAKING
““A manager by A manager by profession is a decision profession is a decision
maker; Uncertainty is his maker; Uncertainty is his opponent, overcoming it opponent, overcoming it
is his mission.”is his mission.”
““A decision is a judgement. It is A decision is a judgement. It is a choice between alternatives. It a choice between alternatives. It is rarely a choice between right is rarely a choice between right and wrong. It is at best a choice and wrong. It is at best a choice
between “almost right” and between “almost right” and “probably wrong”.“probably wrong”.
““DRUCKERDRUCKER””
The Kaizen Forum
CONCEPTS TO BE COVERED
““When making decisions don’t When making decisions don’t get paralysis through get paralysis through
analysis”.analysis”.
Limitations of rational decision making model Models of decision making. Individual vs Group decision making.. Your individual decision making style? Why decision fails? Guidelines for decision making.
The Kaizen Forum
DECISION PROCESS
RRecognizeecognizeProblemProblem
GATHER GATHER FACTSFACTS 11
22
33
GENERATEGENERATE
DECISIONDECISION
MONITORMONITOR
DEFERDEFER
DELEGATEDELEGATE
IMPLEMENTIMPLEMENT
MAKEMAKE
ASSESS RESULTASSESS RESULT
MATCHMATCH
The Kaizen ForumCONSTRAINTS OF
RATIONAL DECISION MAKING
1. PROBLEM• Seldom consensus as to the definition of the problem.
• Differentiate fact from opinion.
• Identify what standard is violated.
2. GENERATE ALTERNATIVE SOLUTION• The first acceptable solution is usually accepted.
• Alternatives are based on what was successful in the past.
• Specify alternatives that are consistent with goals
““I never sit on a fence.Iam I never sit on a fence.Iam either on one side or another”either on one side or another”
Harry TrumanHarry Truman
The Kaizen Forum
3. EVALUATE ALTERNATIVES
• Limited information available about each alternative.
• Satisfactory solutions, not optimal ones, are usually accepted.
• Do not evaluate main effects and side effects.
CONSTRAINTS OF RATIONAL DECISION MAKING
4. IMPLEMENT AND FOLLOW UP
• Resistance to change is a universal phenomenon.
• Not always clear what part of the solution should be monitored or measured in follow-up.
The Kaizen Forum
PROGRAM M ED NON PROGRAM M ED
DECISION
CLASSICAL ADM INISTRATIVE
M O DEL
1.1. ApproachApproach
2.2. TypeType
3.3. KnowledgeKnowledge
4.4. Probability of riskProbability of risk
5.5. Alternatives availableAlternatives available
6.6. GoalsGoals
Rational/ObjectiveRational/Objective
Prescriptive (Idealized situation)Prescriptive (Idealized situation)
CompleteComplete
LowLow
ManyMany
DefinedDefined
Satisficing ApproachSatisficing Approach
Descriptive (Reality Based)Descriptive (Reality Based)
FragmentaryFragmentary
HighHigh
Only a fewOnly a few
Broad SpectrumBroad Spectrum
ON GOING / RULES ON GOING / RULES STRUCTURED EMPRICALSTRUCTURED EMPRICAL
REQUIRES THINKING UN-REQUIRES THINKING UN-STRUCTURED NOT UNIQUESTRUCTURED NOT UNIQUE
MODEL OF DECISION MAKING
The Kaizen ForumMODELS
CRISES SPEEDY ACTIONCRISES SPEEDY ACTION INTUITIVE INTUITIVE
RIGID RIGID TIGHT CONTROLTIGHT CONTROL
SHORT RANGESHORT RANGE
SINGLESINGLE COMPLETECOMPLETENOT SH SHAREDNOT SH SHARED
AIMED ATAIMED ATPERFECTIONPERFECTION
DEFINED GOALSDEFINED GOALS
ANALYTICALANALYTICALSNAPSNAPMINMIN MAXMAX
PARTICIPATIVEPARTICIPATIVEADAPTIVEADAPTIVE
CHANGEABLECHANGEABLEEXPLOITIVEEXPLOITIVESHIFT FOCUSSHIFT FOCUS
FLEXFLEX MULTIPILEMULTIPILE CONTINGENCYCONTINGENCY
CREATIVECREATIVECOOPERATIVECOOPERATIVEBROAD GOALSBROAD GOALSTEAM WORKTEAM WORK
““The ideal number for a hard The ideal number for a hard decision-making meeting is decision-making meeting is two--- with one on holiday !”two--- with one on holiday !”
INFORMATIONINFORMATION
CONCLUSION
The Kaizen ForumDIFFERENCES
WESTERN
1. Finding an answer.2. Adhere to group
think.
3. Struggle for the right answer.
4. Have to sell decision.
5. Always in a hurry to decide quickly.
6. Plans run into problem.
JAPANESE
1. Defining the question.
2. Consensus – encourage dissenting opinions.
3. Focus on alternatives
4. Process delegates authority.
5. Take longer time to decide.
6. Execute with speed
The Kaizen ForumGROUP THINK
A good CEO will try and anticipate a difficult problem requiring logical analytical decision making and set in motion the machinery for
providing necessary information.”
1. CONDITIONS• Highly cohesive group
• Under pressure to make decision
2. SYMPTOMS• Not being critical of each other’s ideas.
• Selective in gathering information.
• Believe in group morale.
• Lack of accountability.
FAULTY DECISION MAKING STYLE WHICH DESIRESFAULTY DECISION MAKING STYLE WHICH DESIRESUNANIMITY AT THE EXPENSE OF QUALITY DECISIONUNANIMITY AT THE EXPENSE OF QUALITY DECISION
The Kaizen ForumEFFECTIVE GROUP DECISION MAKING
LeadershipLeadership 1.Avoid domination.1.Avoid domination. 2.Encourage input2.Encourage input 3.Avoid groupthink 3.Avoid groupthink And satisficng.And satisficng. 4. Remember goals.4. Remember goals.
Constructive conflictConstructive conflict 1. Air legitimate difference1. Air legitimate difference 2.Stay task-related.2.Stay task-related. 3.Be impersonal.3.Be impersonal. 4.Play devil’s advocate.4.Play devil’s advocate.
Effective groupEffective groupDecision makingDecision making
CreativityCreativity 1.Brainstorm1.Brainstorm 2. Avoid criticizing2. Avoid criticizing 3. Exhaust ideas.3. Exhaust ideas. 4. Combine ideas4. Combine ideas
The Kaizen ForumNEMAWASHI! THE TOYOTA WAY
Make decision slowly be Make decision slowly be consensus. Thoroughly consensus. Thoroughly considering all options. considering all options.
Implement rapidlyImplement rapidly1. Thorough Consideration
• Quality of decision
• Asking why? 5 times
• Building Consensus
• Deming Cycle (PDCA)
Contd
The Kaizen Forum
Decide and Announce
Seek Individual Input, then Decide and Announce
Seek Group Input, then Decide and Announce
Group Consensus,
Management Approval
Group Consensus,
with full authority
Time
Lev
el o
f in
volv
emen
t
Preferred
Fallback
Fallback (if consensus not
achieved)
ALTERNATIVE TOYOTA DECISION MAKING METHODS
The Kaizen Forum
2. Considering Alternative Solution
• Follow set based Approach
• Different people-different set of alternatives
• Turn conflict into win / win situation
3. Presenting Decision on one page
• Proposal discussed with all
• Agreement befor presentation
• One page – formal decision only formality
NEMAWASHI! THE TOYOTA WAY
The Kaizen ForumEXAMPLE OF AN A3 REPORT
CURRENT CURRENT SITUATAIONSITUATAION
PROPOSALPROPOSAL
LABOR COST & TIME LABOR COST & TIME ANALYSISANALYSIS
TIME SAVINGSTIME SAVINGS
PLANPLAN
IMPLEMENTATIONIMPLEMENTATION
CONTROLSCONTROLS
TIME LINETIME LINE
The Kaizen ForumDECISION STYLES
HighHigh
LowLow
Tolerance Tolerance for for AmbiguityAmbiguity
RationalRational IntuitiveIntuitiveWay of ThinkingWay of Thinking
Careful decision makersAdapt to new situation
Efficient,logical use less information, few alternative
make decision fast focus on short-term
Broad outlook examine more alternative long range find creative solution
Work well with others Receptive to suggestions Avoid conflicts
Source: Rowe McGrath Modules in Decision Making, 1984
BehavioralBehavioral
ConceptualConceptual
DirectiveDirective
AnalyticalAnalytical
The Kaizen ForumHOW TO IMPROVE YOUR DECISION MAKING
1. ANALYSE THE SITUATION
2. SHOW FLEXIILITY TO INCREASE ACCEPTABILITY
3. BEWARE OF PERSONAL BIASES
4. DON’T BE AFRAID TO IMPOSE YOUR INTUITION ON TOP OF RATIONAL ANALYSIS
5. ADAPT TO JOB REQUIREMENT
6. APPLY ETHICAL DECISION GUIDES
7. LATERAL THINKING
SECOND thoughts are invariably wiser.SECOND thoughts are invariably wiser.
---Euripides (480-405 B.C)---Euripides (480-405 B.C)
The Kaizen ForumWHY DECISIONS FAIL
1. VULNERABILITY OF GROUP-THINK
2. ESCALATION OF COMMITMENT
3. LEVEL OF MORAL DEVELOPMENT
4. CONCEPTUAL BLOCK
PEOPLE who stay in the middle of the road get run over.PEOPLE who stay in the middle of the road get run over.
--- Aneurin Bevan (1897-1960)--- Aneurin Bevan (1897-1960)
The Kaizen ForumGUIDE LINES FOR DECISION MAKING
1. MARSHAL THE FACTS
2. CONSULT YOUR FEELING
3. USE WISE TIMINGS
4. DON’T INFER TOO MUCH
5. KEEP THE DECISION FLEXIBLE
6. FOLLOW THROUGH
7. HAVE COURAGE
8. DECISIONS TO SAVE SKIN, BEWARE OF!
““The responsibility is always The responsibility is always mine but the decision lies with mine but the decision lies with
who ever is on the spot”.who ever is on the spot”.