Overview
Managers constantly diagnose issues, evaluate alternatives, and choose courses of action. Effective decision making balances data analytics with intuition while mitigating cognitive biases. Structured problem‑solving models sharpen analysis and boost solution quality.
Key Concepts and Models
- Rational Decision Model: Define problem → Identify criteria → Weigh criteria → Generate alternatives → Rate alternatives → Choose best option.
- Bounded Rationality & Satisficing: Simon’s idea that managers settle for “good enough” due to limits in information and time.
- Common Biases: Confirmation, anchoring, availability heuristic, escalation of commitment.
- Group Techniques: Brainstorming, nominal group technique, Delphi method.
- Problem‑Solving Tools: 5 Whys, fishbone (Ishikawa) diagram, Pareto analysis (80/20 rule).
- Creative Thinking: Divergent vs. convergent, SCAMPER and design‑thinking frameworks.
Step‑by‑Step Example
Scenario: A warehouse suffers from 20 % inventory shrinkage. Use the 5 Whys to find root cause.
- Why is shrinkage high? → Items missing from shelves.
- Why missing? → Stock counts don’t match system.
- Why mismatch? → Receipts sometimes skipped in system.
- Why skipped? → Night shift lacks login credentials.
- Why no credentials? → IT access request process takes 10 days.
Root Cause: Slow IT credential process. Solution: Create temporary guest logins for new staff and automate approvals.
Quick Tip
Document decisions with a decision log—recording criteria and rationale reduces hindsight bias and speeds future audits.