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Successful Decision Business
The literature is abundant with guidelines and prescriptions about how to be a successful decision maker. The issue is given a consideration from mainly two perspectives: how to solve complex problems, and how to resolve business and management issues. How to solve problems is mainly discussed within the framework of deductive reasoning, i.e. how to choose the appropriate theoretical model and how to apply it to a given problem. In essence the guidelines for business managers focus mainly on how to manage the rational process of decision making.
Decisions are made everyday at all levels in an organization and described as smartly privileged information that will result in rational decision making. A manager within an organization undertakes the responsibility of making rational decision by being logical and consistent in a decisive manner. There is a number of theoretical models have been developed for a rational decision making and among them the assessments in the basis of certainties of business and management issues and in the aspect of the assignment question the descriptive, normative, and behavioural decision theories were taken as the models of foundation of this paper.
These three different theories were discussed later according to my own view in relation to the rational process of decision making, teamwork, multiplicity, and the ethics of organization in terms of solving complex problem and resolve business and management issues. In order to run a successful organization, management has to understand the different theories behind decision-making process and then managers could be the successful decision makers. Thus, different levels of managements use different types of decision making process for the survival of the company.
It is necessary to clearly distinguish the theories' boundaries and limitations to successfully decide which variables are important at each level of an organization to manage the rational process of decision making that focused on the guidelines for business managers. In this essay I attempted to establish the concept of development and use of problem-solving as well as decision-making process that both scientific and considerate of individual differences and managerial viewpoints and absolutely remarkable as the guidelines of business managers to be focused.
While the scientific process has provided appropriate model to be used successfully in a wide range of situations, many researchers have described individual differences that can manipulate perspectives and detiny related to problem solving. These differences can be used to identify appropriate problem-solving techniques in the organizational level of rational decision making.
Solving complex problem and resolve business management issues through rational decision-making process
The nature of the decision-making within an organisation is influenced by its culture and structure. This could be developed by theoretical models. However decision making is not specifically reserved for the management; is done daily by everyone. Decision making is a part of everybody's daily task from choosing essential home accessories to family dinner preparations. To better realize the managements' role of decision making in an organization, three theories of decision making should be emphasized: descriptive, normative, and behavioural theory.
However, for the purpose of easy comparison and contrasts the question of the assignment, the following three theories are analyzed in relations to business and management issues: technically, organizationally and institutional or behaviourally. Decision making is more than randomly choosing an option, but a cognitive process or a thought-out process to achieve rational decisions. Individuals, from all levels of an organization make decisions. Not all decisions are versatile, but the decisions affect the job securities as well as the organization's interest. A successful decision making process involves rationally analyzing the problems to achieve the most efficient choice that will compliment the situation.
According to a researcher of decision making Berret (2005), the assertion behind rationality in organizations is based on the concept that reasonable people will respond to their environment by assessing known facts, estimating possible outcomes, and weighing those outcomes against their respective costs. Decision making process which consists of four components such as data gathering, information processing, meaning-making, and deciding on a course of action differ from one level of management to another, however, they all share common responsibility; rational choices that are consistent, and value-maximizing choice within specified constraints (Berrett, 2005).
Now in present day decision making process is becoming the basis of competitive advantage and value creation for an organization as it is a continuous and ongoing process. Apparently if markets give all organisations access to similar resources globally and competition causes many routine business processes to unite on world-class values, the quality of decision making could become the key differentiator.
Problem solving for the business and management issues is a part of decision making process in which management can perceive and resolve a gap between a present situation and a desired goal within the organization, with the corridor to the goal blocked by known or unknown obstacles. In a broad sense, the situation is one not previously encountered, or where at least a specific way out from past experiences that is not known.
In contrast, within the selection process of decision making one of two or more possible solutions of problems are chosen to reach a desired goal. Generally the steps in both problem solving and decision making are quite similar. Indeed, the terms are sometimes used interchangeably.
In common most theoretical models of problem solving and decision making process include at least four phases (Bransford et al, 1984):
- An input phase in which a problem is perceived and an attempt is made to understand the situation or problem.
- A processing phase in which alternatives are generated and evaluated and a solution is selected
- An output phase which includes planning for and implementing the solution.
- A review phase in which the solution is evaluated and then modifications, decisions are made, if necessary.
According to Chartered Institute of Management Accountants 2007, problem-solving/decision-making process (refer to appendix-1) is broadly described as beginning with the perception of a gap and ending with the implementation and evaluation of a solution to fill that gap.
Each segment of the process includes specific steps to be completed before moving to the next segment and these segments are strongly related and supported by the theoretical model of decision making that mainly discussed within the framework of deductive reasoning of the rational process of decision making that settled in detail below in the next part of this essay.
Mainly rational decision making process facilitates the business managers by the following ways:
- Assist managers make better more informed systematic decisions for resolving the business issues.
- Creates a vocabulary that allows managers to share their thought process.
- Creates opportunities for learning about how decisions are made.
- Entail a discipline on decision-making that helps avoid the ambush of lunging to the first elucidation that comes to mind.
Breaking the whole decision making process and complex problem solving into a six-step process that is widely described in a journal of Shapiro (2000) increases the possibility of success and of learning from each decision and applying those learning in future decisions. Hence the process helps business managers assess the situation and draw well-reasoned conclusions and it could be done in a sequential way (refer to appendix-2).
It also creates an explanation to the framework of deductive reasoning behind decisions that helps to build commitment to the decision. The following four-steps could be treated as the guidelines of rational decision making process that more or less emulate the theory of PDCA (plan, do, check, act) of a great statistician William Edwards Deming (1900-1993) discusses the complex problem solving and resolve the business and management issues could be used as a general consideration for a rational decision making by business managers:
Decision could be set in frame
If the decision put into a frame then it can be noticed in an effective way by managers as it acts like a window. It also makes the decision into context by setting the scope that aspects of the problem are most vital and should be emphasized. Without a frame of every decision it could be like using tanks and missiles for killing mosquitoes. Managers' responsibility is to set the context for every decision and thereby establish the scope and priorities.
For instance, an executive with a background in engineering tends to frame decisions as technical problems, while an executive from marketing tends to frame the same decisions as market issues. And this way would be the best way to resolve the management issue. Frames for most business, public and management sector decisions need to include the resourcing in terms of people, market, financial, managerial and technology factors to be effective.
But it is also necessary for the managers that they must be aware of their frames to test them against the demands of the situation and to coherent why it is the right frame for this decision. Their frames must be broad enough to cover the important business issues, and precise enough to give clear direction otherwise there is a chance to be vague.
Assemble of Information
Once the manager has set the frame, assemble information can be delegated. It is very necessary to uncover the hidden assumptions as hidden assumptions can dangerously hide important information which can be useful to take the sensible decision. Besides future trends are also vital for congregation information that can be derived by PEST (political, economical, social and technological factors) projections (found in every marketing planning) for possible areas of change in the future. But overestimates of assumption may cause of failure to collect key information.
Analyze the assembled Information
It can also be delegated like gathering the information analyzing or reducing the usable chunks. Analyze the information considering its internal and external impacts such as resourcing/people, market/financial & technology. For instance, basing a product decision on technology considerations can be devastating if the market is not ready for it.
Or overextending to meet alleged market demands without sufficient people to successfully complete a product or project is ignoring a significant aspect of the decision that could have serious consequences. Again by the marketing theory of SWOT analysis can be used to accomplish the internal factors (strengths and weaknesses) and environmental factors (opportunities and threats).
Finally action could be taken
It cannot be delegated like setting the frame as manager's role is to see the advanced depiction and to utilize the analyzed data to depict the effective action for the organization. The analyst, who gathers the information and analyzes it, is often an expert in one field. It is the manager's role to understand the conglomerate business or public context. For instance, only the manager is in a position to decide if a product that is technically viable with excellent market potentials, should be attempted when the key knowledge workers are involved in other important work that cannot be set aside.
Typically the action is delegated to professionals in technology or manufacturing or finance or other areas. In general fair action in decision making process, as defined by Kim & Mauborgne (1997), builds the reliance and pledge necessary to succeed in the knowledge economy in terms of business and management issues. They define three steps to the Process as engagement (involve decision), explanation (think behind the decision), and expectation (state clearly) (kim et al 1997).
Every decision made and every action taken is an opportunity to learn for the business managers or in broad sense for an organization. And all learning depends on feedback. The feedback can be clarified by the rational decisions as the decisions can have effects within the company and in the marketplace. There is a proverb in English, Victory has a thousand fathers; defeat is an orphan. So if the organization does not keep track of rational decisions it misses the opportunity.
But it can be stated that these rational decisions should be implied by the business managers. Include in every important decision a plan on gathering information and erudition from occurrence. In a concise form of a rational decision making consists of Intelligence (pinpoint what needs to be decided. identify all possible courses of action); Design (list the pros and cons of each alternative); Choice (examine the remaining options); Implement and Evaluate (make the choice and take action, appraise the outcome) (ibid).
The appropriate theoretical models utilized by the business managers to manage the rational process of decision making
In many discussions of the researchers, three theoretical models (normative, descriptive and behavioural) are more appropriate among a number of theoretical models used as the guidelines for business managers that most deeply focused on the managing the rational process of decision making. The following three theories are outlined briefly to expose the relation with the guidelines for the business managers how they can apply these theories to manage a problem in terms of rational decision making as my own perception:
Descriptive theoretical model as the guideline for the business managers
The descriptive or positive theory is a black-and-white concept where managers can imagine how things are rather than how things should to be. Descriptive theory is appropriate to make the choices in a situation, and considers decision as a single event that is very effective to solve a business decisional problem. According to Teale et al (2003), the descriptive decision theory is based on describing, as precisely as possible, the actual decision-making behaviour of the decision-maker and how people will make decisions as self preservation and avoidance of responsibility (Teale et al 2003).
In a connection to business and management issue, descriptive theory is acted as technical guideline allied with the technical managers, where their primary trepidation is to solve problems straight away and have a short-run time perspective related to the problem solving element of decision making. Business oriented decision making strategies utilized by the technical managers allow them to solve problems quickly and effectively since the solution to problems are accomplished by analysing various types of input and output data (problem), and then manipulating the data (problem) in accordance with the criteria of bounded rationality.
Normative theoretical model as the guideline for the business managers
The normative theory approaches prescriptive that narrates how decisions should be by the business managers, and lean towards rational approach in decision making. This theory is appropriate to utilize a well conversant and rational individual to organize alternatives that will guide to a successful end result that will benefit the organization in the long run. Apparently the theory carries ethical responsibilities as well as guidelines in terms of business and management issues to seek optimum solutions to business.
In today's business, the workforce comprises of people who are diverse in their nationality, religion, caste, race, age, education and even socioeconomic status. Obviously it is necessary to work together as a team towards the success of the organization. Dilemmas are bound to rise in issues such as downsizing the staff, utilization of resources, changes in law, regulations and technology, issues related to discrimination, issues related to racial, employee rights and even on product quality. All these issues are relatively complex and are difficult to resolve.
Therefore entrepreneurial managers have to follow the normative theory as a guideline to make the rational decision making on their individual judgment while resolving all these different dilemmas related to business. Thus, the normative theory attempts to describe the behaviour of a human decision maker by using rational and intellectual tools to make decisions. In relations to business and management issue, normative theory is acted as qualitative acquainted with ethical guideline closely linked with institutional managers as they have a philosophic point of view and rely in wisdom, experience, and philosophic insight in making important decision by resolving the qualitative problems (Adair, 2007).
Behavioural theoretical model as the guideline for the business managers
Behavioural theory deals with uncertainties, and takes into an account both the descriptive and normative theories and works as mediator of these two theories. Behavioural decision theory is restricted by rationality of the world, and the decisions are made based upon decision-maker's observation as well as perception on given situation. According to Teale et al (2003), behavioural theory in the eye of management issue has most in general with the social system that focuses on the organization in terms of organization level of management.
This theory is appropriate as the guideline for the organizational managers synchronize technical and institutional managers' (the theme of both descriptive and normative theory) transactions by acting as the mediator or an intermediary. Therefore, the rational decision-making strategy process by an organizational manager is to concession in the interest of organizational viability (Teale et al 2003).