Management And Operations 593: Unit 4 Managerial Leadership and Productivity: Lecture 4 [Ken Butterfield] Slide #: 1 1. Problem Precise Simplified Dominant coalition 3. Evaluate Utility analysis Evaluate in relation Power mobilization 4. Select an Unit 4: Solving Problems Analytically and Creatively. Once again, I think your book does a nice job on laying out these issues, and so I m simply adding some additional information on this topic. And in particular, I d like to talk about models of organizational decision making. These have to do with the ways human beings actually go about making decisions inside organizations, a topic that I think your book doesn t cover completely. As you see, the various models that we re going to discuss, or at least these first three models: the rational model, the bounded rationality model, and the political model all correspond to a basic four step decision making process that s on the left hand side of this slide. This process is essentially the one that s laid out in your book where you begin by identifying your problem, or problem identification. Step two is to search for s. Step three is to evaluate s, and step four is to finally select an to solve your problem. I d like to note upfront that this four step decision making process doesn t correspond to every model of decision making. Later on, we ll talk about what is known as the garbage can model of decision making, which explicitly rejects this four step process. So to me, that might be a little interesting, we might think that this four step process is somewhat obvious, but in fact, it s not obvious in the sense that it does not describe how many decisions end up being made. But let s begin with the rational model. Slide #: 2 1. Problem Precise Simplified Dominant coalition 3. Evaluate Utility analysis Evaluate in relation Power mobilization 1
4. Select an The rational model of decision making begins with what s known as a precise problem identification, and I m going to use an example to help bring this to life a little bit, it s an example at least some of us have in common and it s shopping for a diamond engagement ring. In this example, we begin with a precise problem identification, and here, we try to lay out in as much precise detail as possible, exactly what we re trying to accomplish. One reason why I like the diamond ring example is that there is a common approach that people will use in shopping for diamond engagement rings, which has to do with what is known as the four C s. Those are cut, carrot, clarity, and color. And so, as you try to very precisely lay out your problem, you may well lay out exactly what you re looking for in terms of those four C s, you might also add a fifth C which the marketers never want you think about, which is the notion as cost. And you might also have other dimensions built in, for example, a dimension having to do with the satisfaction level that you are hoping to achieve on the part of your soon to be spouse. So, at any rate, the point is to be as precise as you can about exactly what it is that you re trying to accomplish. From there, we do what s known as an exhaustive searching for s. In some cases, it may not be possible to literally be exhaustive, but to be as exhaustive as you can, you would comb the universe of opportunities, in this case, trying to examine as many possible diamond rings as you can. Step three involves a utility analysis; this brings us back to our problem identification step where we go back to the various dimensions that allow us to evaluate the s. So we might go back to the four C s and evaluate all of the diamond rings that we come across in regard to cut, carrot, clarity, and color, as well as cost, satisfaction, and whatever else we might of built into our original problem statement. From there, provided we did a good job with our utility analysis, the best should simply fall out, and that s what optimization means. When we optimize, we pick the single best solution to solve our original problem. Slide #: 3 1. Problem Precise Simplified Dominant coalition 3. Evaluate Utility analysis Evaluate in relation Power mobilization 4. Select an The bounded rationality model is quite different from the rational model, and has actually been set up to exist in contrast to the rational model. The point here is that it s not always possible for us to be rational because of things like cognitive limitations and time constraints, we simply can t possibly be rational in every decision that we make. I find this interesting because 2
managers often go to a great length to try claim that essentially everything that they do is highly rational in nature, when in fact it s not realistic or even practical for us to make very many rational decisions. So this brings us to what s known as the bounded rational model, the model that explicitly notes that because of cognitive limitations and time constraints there s a very different way we tend to go about in making our actual decisions. Rather than doing the very precise problem identification that we see in the rational model, in the bounded rationality model we do a much more simplified problem identification. In the case of a diamond ring example, we might, for example just say: I want to find a diamond ring that s going to be satisfactory to my soon to be fiancé. Much more simplified way of looking at the problem. Instead of doing an exhaustive search for s, we tend to do a much more limited and sequential search where we might look much more locally, begin with a very local search for a diamond. If that doesn t work, we might look to a city nearby, perhaps get on the internet, but in a much more limited sequential way than the exhaustive as implied in a rational model. We then evaluate each one of those s in relation to our aspiration level. This is just simply a way of saying that we again go back to our problem identification phase, where in our example, we had simply say we wanted to find a ring that would be satisfactory to our soon to be spouse, and so as you do that limited sequential search, you would evaluate each of the and say okay: here s a diamond ring that I found in my local mall. Is this one going to satisfy my fiancé? If the answer is no, then you move onto the next option. If the answer is yes, then you are simply finished. And that brings us to step four, which is selecting the using what s called satisficing. The difference between optimizing and satisficing is fairly simple. With optimizing, you pick the solution that best solves your problem. When you satisfice, you pick the first solution that solves your problem. So again, you pick up a ring at the local mall, as you evaluate it to your original aspiration level, if it solves your problem, you re finished. One of the things I find interesting about the bounded rationality model is in relation to the question of what model do we use more often? Do we tend to make more decisions in a relatively rational manner? Or do we tend to make more decisions in a more bounded rational model? And I think if we think about the various decisions that we ve even made today, we realize that not very many decisions are very rational. Right, for example, as you decided to get dressed this morning. Did you go about a very precise method of laying out the problem of getting dressed? Did you do an exhaustive search for s, etcetera? I would imagine that for most of us that does not describe our experience. The process of getting dressed, and the decision of getting dressed tends to be much more of a bounded rationality kind of approach, where you simply just needs to wear something that day, do a very limited, sequential search and you pick the first that adequately solves your problem. And so I think that we see that although the rational model might be more desirable and might be what we call the more normative approach to making decisions, the bounded rationality model is somewhat more common and more realistic in terms of our day-to-day decision making. And this is even true for important decisions. We might like to think that we as human beings make our most important decisions in a more rational manner. But once again, I would suggest that this is not necessarily the case. Managers may at times make important decisions rationally, for example, when they try to figure out what industry to operate in or what product to make, they might make a very rational choice. But for other decisions that we make, we do it in a much more bounded rational way. An example I like to give is our choice of significant other, whether you re married or perhaps have a boyfriend or girlfriend. We again, might like to think that we make those kinds of decisions in a very rational manner, but as most of us at least, would consider the person who we might now consider our mate; does it look more like a rational 3
process that got you there? Or was it something more of a bounded rational process? Again, as you walk through the various steps, in most cases I think people find, that despite the importance of making a decision like that, it probably corresponded more to a bounded rationality sort of method. Slide #: 4 1. Problem Precise Simplified Dominant coalition 3. Evaluate Utility analysis Evaluate in relation Power mobilization 4. Select an The third model is what s known as the political model of decision making. Here we see that although the political model roughly corresponds to the four step decision making process on the left hand side of the screen, it actually only loosely fits, and I think you ll see that as I walk through this model. But it fits closely enough that I go ahead and keep this on the same slide with the rational and bounded rationality model. What the political model suggests is that we begin at the problem identification phase with the dominant coalition defining the problem. Now first of all, what is a dominant coalition? It s simply a power-based group; it s the group in an organization that has the most power. In most organizations, the dominant coalition is arguably the top management team. It can also be in certain cases a board of directors. But having said that, there s no reason why those can be the only dominant coalitions within an organization. For example, in some organizations we find that the union ends up being the dominant group within that organization. The point here though, is that whoever is in charge, whichever is the dominant coalition, is the group that gets to set the agenda, they are the ones that get to decide what problems get decided on. And this is no trivial point; the people who get to set the agenda get to decide what goes on in the organization. So for example, if there s some kind of performance problem inside an organization, performance problems are often somewhat ambiguous in nature in the sense that it can depend on who you ask as to what the problem is. And so if a dominant coalition decides that a performance problem is based on a lack of cost control that will set the organization in a course of action that would be in accordance with a focus on cost. But if a dominant coalition were to decide that the problem is more, for example, a lack of innovation. That would set the organization off in a very different direction. And so, who the dominant coalition is can be very important in terms of how an organization goes about solving its problems. So once the dominant coalition has defined the problem, the political model suggests that the next step is what s known as demand generation. This is simply a process where the dominant coalition will go to other groups inside the organization and find out what the various demands are of these other groups. So it s just simply generating a list of demands, needs, and interests of other groups within the organization. From there, the process of decision making is one of power mobilization in a way that legitimizes the status quo. All this essentially means that 4
the dominant coalition, despite having generated a list of demands from other groups, will simply do whatever it wants to do. That s the concept of power mobilization. Again, the dominant coalition does whatever it wants to do in a way that legitimizes the status quo, which is another way of saying it basically keeps things the way that they are. In other words, the dominant coalition is generally going to be very loath to give up its power. And so whatever decision it makes is going to be one that does not threaten its own power base. The decision that s made is likely to be one that keeps the dominant coalition in power. So you can see that the political model is very different from the rational and bounded rationality model. But because of the notion of power and politics in the workplace, it s important to have a description of a political model that stands on its own because as I think many of us know so many decisions in the workplace tend to fairly political in nature. And I think as you think of the variety of decisions that get made inside of organizations, you can see how common the political model is. I certainly see the political model going on in my own workplace environment. And so with this, we have a third model that again goes some distance to helping us understand how people go about making decision. Yes, some decisions are made rationally. Some decisions are made in a more of a bounded rationality fashion, and yet other decisions are made in a manner consistent with the political model. Slide #: Garbage can model Non-rational People, s, and problems get hooked together by chance Groups and people possess tools and try to find problems to solve Retrospective sensemaking The final model is what s known as the garbage can model. This model is placed on a separate slide primarily because it does not conform to the four step decision making process that the other three models conform to. In fact, the garbage can model is decidedly non-rational in the sense that the first three models, which are more on the rational side, at least compared to the garbage can model, do correspond to that four step process. In contrast, the garbage can model explicitly points out cases in which step four: deciding on a solution actually precedes step one, which is identifying a problem. And that kind of idea will come through as I discuss the garbage can model. But you can see how this is decidedly non-rational and counter to the rational model in the sense that for step four to come before step one would absolutely fly in the face of rational sort of thinking. The second bullet: people, s, and problems getting hooked together by chance is a way to bring out the reason why the model is called the garbage can model. The garbage can is basically a metaphor. Picture it this way: imagine taking a garbage can or any container and for a given problem in an organization, you take the people involved in the problem, the s that are being considered, and the problems themselves. Put them in a garbage can, put the lid on, shake it up. Essentially by chance or some process that s like chance, the people, s, and problems as they bounce around in the garbage can are gonna get hooked together. Again, this is a metaphor to how the garbage can works. And I ll use an example to try to bring out this metaphor. Perhaps some of you are familiar with the example of the 3 M post-it note. Making a longer story short, what the story tends to suggest that the inventor of the post-it note was originally trying to create a super adhesive, and the experiments failed. Instead of getting a super adhesive what came out was a relatively weak, wishy-washy 5
sort of adhesive that we know now, and are familiar with as being on the post-it note. Well it wasn t until many years later that this solution, the post-it pout was actually hooked to a problem. What happened was that the inventor was in church, or so the story goes, and had problems with bookmarks falling out of the hembook or the Bible or whatever the person was dealing with at church. And it just kind of occurred to this inventor that some of this weak adhesive could be smeared on the back of bookmarks and used to stay inside the book without damaging the book. And so, again, it wasn t until years later that a problem was considered that could be hooked up with the solution of the 3 M post-it note. And from there, the process became one of just getting people involved in order to champion the innovation through the remainder of the process at 3 M and ultimately become a multi-million dollar idea. But I think you can see how the garbage can model metaphor is amped here. It wasn t like this was a rational choice where people thought through the problem and then ultimately come to a solution. In fact, the solution came first. Step four came before step one, and the solution ended up being hooked together with people and problems in a fairly chant sort of manner in a way consistent with what the garbage can model suggests. The next bullet further emphasizes this point by saying that groups and people in organizations often possess tools and then try to find problems to solve. The metaphor here is kind of like you ll hear people say that somebody has a hammer and they walk around the organization trying to find nails to pound. So once again, the solution comes first. A manager in an organization, might, for example, have some kind of new computer technology. Maybe it s an exciting new technology that other competitors of the organization are already using, and a manager might bring that technology into the workplace without having a clear idea of what it s even useful for. This sort of thing happens frequently in the world of technology and innovation. And again, the idea here is that someone has the answer first and then they walk around trying to figure out what problems they can solve. So you can see how this is non-rational and sort of backwards in nature. You begin with a solution and then you go hunting for people and problems to attach it to. The final idea on this slide is a related concept known as retrospective sensemaking. The idea here is again decidedly non-rational. From a rational standpoint, we think about the idea that in decision making, we typically think first and then we act. Right, in retrospective sensemaking and in the garbage can model, it s the opposite. It s that we act first and then we think. The action becomes before the thinking. I m gonna give you an example to help this one make more sense. The example I often give students here is to just simply think about what you re doing here right now. Now here you are, part of an MBA program, taking an online and find yourself in some certain stage of your own life. But how did you get here, you know? When you were sitting there as a child talking to your young friends, did you say to yourself: yeah, someday I want to grow up to become an online MBA student at Washington State University, etcetera? Or is it more like you just kind of woke up one day and found yourself being an MBA student taking online classes at Washington State University? The point I m trying to bring out again, here, is that we may like to think that many actions that we take are relatively rational or even bounded rational in nature. But when in fact what often seems to happen is that we sort of act first. Things just sort of happen in life. And then we try to make sense of them after the fact. And so we can come up with all sorts of explanations about how we got to where we are today, and try to make them look rational. When in fact, a lot of these are very retrospective in nature. We just find ourselves in a certain situation, and we go about trying to explain it after the fact. And again, you can see how that runs so counter to our other models of decision making, and in particular the rational model. Again, the rational model suggests that we always think before we act. The garbage can model says no, it s actually quite common for us 6
to first act and do things, and then go about trying to make sense of what we re doing after the fact. So with all of this, hopefully we can understand what the garbage can model is trying to bring out. And although the garbage can model often seems kind of alien and perhaps even confusing at first, my sense is that like most students, the more you think about the garbage can model, the more sense it will make, and furthermore, the more you ll realize that many decisions that we make are actually much more like garbage can decisions than any of the other three models. So I m not saying necessarily, that we make more garbage can decisions than any other model, but what I am suggesting is that this method of decision making I think is a lot more common than many of realize. And so with that, we have our four models of decision making, which again help us understand how human beings actually go about making decisions in organizations. Some of our decisions are rational, some are bounded rational, some are political, and some are more like the garbage can model. With that, we have come to the end of unit four: solving problems analytically and creatively. 7