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8/10/2019 Ch12 of Org Behavior by Jones
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12-Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 1
Organizational Theory,Design, and Change
Sixth Edition
Gareth R. Jones
Chapter 12
Decision Making,
Learning, Knowledge
Management, and
Information Technology
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Learning Objectives
1.
Differentiate between several modelsof decision making that describe howmanagers make decisions
2.
Describe the nature of organizationallearning and the different levels atwhich learning occurs
3.
Explain how organizations can use
knowledge management andinformation technology to promoteorganizational learning to improvethe quality of their decision making
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Learning Objectives (cont.)
4.
Identify the factors, such as theoperation of cognitive biases, thatreduce the level of organizational
learning and result in poor decisionmaking
5.
Discuss some techniques that
managers can use to overcome thesecognitive biases and thus open the
organization up to new learning
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Organizational Decision Making
!
Organizational decision making:the process of responding to aproblem by searching for andselecting a solution or course ofaction that will create value fororganizational stakeholders
!
Programmed decisions:decisions
that are repetitive and routine!
Nonprogrammed decisions:decisions that are novel and
unstructured
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Models of OrganizationalDecision Making
!
The rational model:decision makingis a straightforward, three-stageprocess!
Stage 1: Identify problems that need tobe solved
! Stage 2: Design and develop a list ofalternative solutions and courses of action
to solve the problems!
Stage 3: Compare likely consequences ofeach alternative and decide which courseof action offers the best solution
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Figure 12.1: The RationalModel of Decision Making
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Models of OrganizationalDecision Making (cont.)
!
The rational model(cont.)
! Underlying assumptions
! Decision makers have all the information
they need
! Decision makers can make the bestdecision
! Decision makers agree about what needsto be done
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Models of OrganizationalDecision Making (cont.)!
The rational model(cont.)! Criticisms of the assumptions
! Information and uncertainty: the
assumption that managers are aware of all
alternative courses of action and theirconsequences is unrealistic
! Managerial abilities:managers have only a
limited ability to process the information
required to make decisions!
Preferences and values: assumes managersagree about what are the most important goalsfor the organization
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The Carnegie Model
!
Introduces a new set of more realisticassumptions about the decision-makingprocess!
Satisficing:limited information searchesto identify problems and alternativesolutions
! Bounded rationality:a limited capacity
to process information! Organizational coalitions:solution
chosen is a result of compromise,bargaining, and accommodation between
coalitions
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Table 12.1: Differences Betweenthe Rational and Carnegie Models
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Models of OrganizationalDecision Making (cont.)
!
The incrementalist model:managers select alternative courses ofaction that are only slightly, or
incrementally, different from thoseused in the past! Perceived to lessen the chances of
making a mistake
! Called the science of muddling through! They correct or avoid mistakes through a
succession of incremental changes
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Models of OrganizationalDecision Making (cont.)
!
The unstructured model:describeshow decision making takes place inenvironments of high uncertainty
!
Unstructured model recognizesuncertainty in the environment
! Managers rethink their alternatives whenthey hit a roadblock
! Decision making is not a linear,
sequential process
! Tries to explain how organizations makenonprogrammed decisions
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Models of OrganizationalDecision Making (cont.)!
The garbage can model:a view of decision makingthat takes the unstructured process to the extreme!
Decision makers are as likely to start decision makingfrom the solutionside as the problemside
!
Create decision-making opportunities that they cansolve with ready-made solutions based on theircompetencies and skills
! Different coalitions may champion different alternatives
!
Decision making becomes a garbage canin whichproblems, solutions, and people all mix and contend fororganizational action
!
Selection of an alternative depends on which personsor groups definition of the current situation holds sway
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The Nature of OrganizationalLearning
!
Organizational learning:theprocess through which managers seekto improve organization members
desire and ability to understand andmanage the organization and its
environment
!
Creates an organizational capacity torespond effectively to the changingbusiness environment
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The Nature of OrganizationalLearning (cont.)
!
Types of organizational learning! Exploration:organizational
members search for and experiment
with new kinds or forms oforganizational activities andprocedures
! Exploitation:organizationalmembers learn ways to refine andimprove existing organizationalactivities and procedures
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The Nature of OrganizationalLearning (cont.)
!
Learning organization:anorganization that purposefully designsand constructs its structure, culture,
and strategy so as to enhance andmaximize the potential for
organizational learning to take place!
Employees at all levels must be able to analyzethe way an organization performs andexperiments with change to increaseeffectiveness
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Levels of OrganizationalLearning
! Individual-level learning:managersneed to facilitate the learning of new skills,norms, and values so that individuals canincrease their own personal skills and
abilities!
Employees develop a sense of personalmastery to create and explore what they want
! Employees must develop a commitment andattachment to their job so they will enjoy
experimenting and risk taking! Organizations should encourage employees to
assume more responsibility for their decisions
l f O l
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Levels of OrganizationalLearning (cont.)
! Group-level learning:managers needto encourage learning by promoting theuse of various kinds of groups so thatindividuals can share or pool their skills
and abilities!
Allows for the creation of synergy! Group routines can enhance group
effectiveness!
Group learning is even more important than
individual learning in promoting organizationallearning
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L l f O i i l
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Levels of OrganizationalLearning (cont.)
! Organizational-level learning:
managers can promote organizationallearning through the way they create anorganizations structure and culture
! Cultural values and norms are an
important influence on learning! Adaptive cultures:value innovation and
encourage and reward experimentation and
risk taking by middle and lower-levelmanagers
! Inert cultures:are cautious and
conservative, and do not encourage risktaking by middle and lower-level managers
L l f O i i l
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Levels of OrganizationalLearning (cont.)
!
Organizations can improve theireffectiveness by copying andimitating each othersdistinctive
competences! Encourages explorative and exploitative
learning by cooperating with suppliers anddistributors to discover new ways to handleinputs and outputs
! Systems thinking:argues that in order to
create a learning organization, managersmust recognize the effects of one level oflearning on another
Fi 12 2 L l f
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Figure 12.2: Levels ofOrganizational Learning
K l d M t d
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Knowledge Management andInformation Technology
!
Knowledge management:a type ofIT-enabled organizational relationshipthat has important implications for
both organizational learning anddecision making
! Involves sharing and integrating of
expertise within and between functionsand divisions through real-time,interconnected IT
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Knowledge Management (cont.)
!
Codification approach:knowledge iscarefully collected, analyzed, and storedin databases where it can be retrievedeasily by users who input organization-specific commands and keywords
! Suitable for standardized product or service
! Personalization approach:IT
designed to identify who in theorganization might possess theinformation required for a custom job
! More reliance on know-how, insight, and
judgment to make decisions
F t Aff ti
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Factors AffectingOrganizational Learning
!
Several factors may reduceorganizational learning over time
! Managers may develop rules and
standard operating procedures tofacilitate programmed decision making
! Past success with SOPs inhibits learning
!
Programmed decision making drives outnonprogrammed decision making
ff i
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Factors AffectingOrganizational Learning (cont.)
!
Cognitive structure:system ofinterrelated beliefs, preferences,expectations, and values that
predetermine responses to andinterpretations of situations
! These shape the way managers make
decisions and perceive environmentalopportunities and threats
25
F t Aff ti
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Factors AffectingOrganizational Learning (cont.)
!
Types of cognitive biases! Cognitive biases:systematically bias
cognitive structures to causemisperception and misinterpretation of
information, thereby affectingorganizational learning and decisionmaking
! Cognitive dissonance:state ofdiscomfort or anxiety experienced whenthere is an inconsistency between onesbeliefs and actions!
Managers seek or interpret information thatconfirms and reinforces their beliefs andignore information that does not
Factors Affecting
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Factors AffectingOrganizational Learning (cont.)
!
Types of cognitive biases (cont.)! Illusion of control:causes managers to
overestimate the extent to which theoutcomes of an action are under their
personal control! Frequency:deceives people into
assuming that extreme instances of aphenomenon are more prevalent than they
really are! Representativeness:leads managers to
form judgments based on small andunrepresentative samples
F t Aff ti
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Factors AffectingOrganizational Learning (cont.)
!
Types of cognitive biases (cont.)!
Projection:allows managers to justify andreinforce their own preferences and valuesby attributing them to others
! Ego-defensiveness:leads managers tointerpret events in such a way that theiractions appear in the most favorable light
!
Escalation of commitment:leadsmanagers to remain committed to a losingcourse of action and refuse to admit thatthey have made a mistake
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Figure 12.3: Distortion of OrganizationalDecision Making by Cognitive Biases
Imp o ing Decision Making
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Improving Decision Makingand Learning
!
Strategies for organizational learning
! Cause managers to continuously unlearnold ideas and confront errors in their
beliefs and perceptions!
Listening to dissenters
! Converting events into learning
opportunities
! Experimenting
Improving Decision Making
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Improving Decision Makingand Learning (cont.)
!
Game theory:tool to help managersimprove decision making and enhancelearning
! Interactions between organizations are viewedas a competitive game
!
Two basic types of game! Sequential move game:players move in turn,
and one player can select a strategy to pursueafter considering its rivals choice of strategies
! Simultaneous move game:the players act at
the same time, in ignorance of their rivalscurrent actions
! Useful for organizations competing againsta limited number of rivals that are highly
interdependent
Fi 12 4 A D i i T
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Figure 12.4: A Decision Treefor UPSs Pricing Strategy
I i D i i M ki
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Improving Decision Makingand Learning (cont.)!
Nature of the top-management team! The way the top management is
constructed and the type of people whoare on it affect organizational learning
! Wheel configuration decreases org
learning because managers reportseparately to the CEO
! Wheel works best when problems are simple
and require minimal coordination
! Circle configuration works best for team
and organizational learning
Improving Decision Making
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Improving Decision Makingand Learning (cont.)
!
Learning occurs best when there isheterogeneity of the top-management team
! Groupthink:the conformity that
emerges when like-minded peoplereinforce one anothers tendencies to
interpret events and information insimilar ways
34
Figure 12 5: Types of Top
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Figure 12.5: Types of Top-Management Teams
Improving Decision Making
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Improving Decision Makingand Learning (cont.)
!
Devil
s advocate:a person who isresponsible for critiquing ongoingorganizational learning
!A method for overcoming cognitive biasesand promoting organizational learning byinstitutionalizing dissent
!
Dialectical inquiry:teams of decisionmakers generate and evaluate
alternative scenarios and providerecommendations
Improving Decision Making
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Improving Decision Makingand Learning (cont.)
!
Collateral organizationalstructure:an informal organization ofmanagers that is set up parallel to the
formal organization structure toshadowthe decision making and
actions of managers in the formal
organization!Allows an organization to maintain its
capacity for change at the same time thatit maintains its stability
Figure 12 6: How Devils Advocacy and
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Figure 12.6: How Devil s Advocacy andDialectical Inquiry Alter the Rational Approachto Decision Making