RESUME ON DECISION MAKING, LEARNING, CREATIVITY AND

ENTREPRENEURSHIP

Of

CONTEMPORARY MANAGEMENT

Lectured By:

Prof. Dr. Noermijati, S.E, MTM., CPHR.

Composed By:

Santi Duwi Putri Nugroho

DB Matriculation Class
 CHAPTER 6
Decision Making, Learning, Creativity, and Entrepreneurship

DECISION MAKING

I. Definitions
Decision making is the process by which managers respond to opportunities and
threats by analyzing the options and making determinations, or decision, about
specific organizational goals and courses of actions.
So, it can be concluded that decision making is a process in the mental process of
selecting a course of action from a set of alternatives.

Purpose of decision making is to select appropriate goals and courses of action that
increase organizational performance; bad decision lower performance.

From definition above, so, based its aims, decision making can be divided into two,
they are:
1) Decision making in response to opportunities occurs when managers search for
ways to improve organizational performance to benefit customers, employees,
and other stakeholder groups.
2) Decision making in response to threats occurs when managers search for ways
to increase of performance to control or overcome events which raise up from
inside or outside the organization and affect organizational performance.

II. Types of Decision Making

This depends on manager’s authority, responsibility, and position in the
organizational decision-making structure.
a) Programmed Decision Making
 Programmed decisions made using standard operating procedures.
 Deals with frequently occurring situations. (Such as requests for leaves
of absence by employees)
  Much more appropriate for managers to use programmed decision for
similar and frequent situations.
 In programmed decisions managers make a real decision only once
and program itself specifies procedures to follow when similar
circumstances arise.
 Leads to the formulation of rules, procedures, and policies.
b) Non-Programmed Decision Making
 Situations for Non-programmed decisions are unique, ill-structured.
 Non-programmed decisions are one-shot decisions.
 Handled by techniques such as judgment, intuition, and creativity.
 A logical approach to deal with extraordinary, unexpected, and unique
problems.
 Managers take heuristic problem-solving approaches in which logic;
common sense and trial and error are used.

Similarities of Programmed Decision & Non-Programmed Decision

 Both are required to run operations of Business efficiently.

 Complements each other in setting goals and managing resources of the
organization.

Differences of Programmed Decision & Non-Programmed Decision

Programmed Decision Non-Programmed Decision

Used for frequent situations of the organization; Used for unique and ill-structured situations of
both internal and external. the organization; both internal and external.
Mostly Lower level managers are making these Mostly Upper-level managers are making these
decisions. decisions.
Follows structured and non-creative patterns. Takes an outside of the box unstructured, logical
and creative approach.
III. Decision Making Model
1. The Classical Model
The model of decision making which is considered to be normative, which means
that it defines how a decision maker should make decisions. It does not describe
how managers actually make decisions so much as it provides guidelines on how
to reach an ideal outcome for the organization.
 An approach to decision making that tells manager how they should make
decision
 Approach assume that managers are logical and rational
 Approach assumes that managers decision will be in the best interests of
the organization
 Condition suggested in this approach rarely, if ever, exist.

2. The Administrative Model

A decision-making model that includes the concepts of bounded rationality and
satisficing and describes how managers make decisions in situations that are
characterized by uncertainty and ambiguity.
 Concepts are instrumental in shaping the administrative model:
1) Bounded Rationality
People have the time and cognitive ability to process only a limited amount of
information on which to base decisions.
2) Incomplete Information
Information is incomplete because of risk and uncertainty, ambiguity, and
time constraints.
3) Ambiguous Information
It means that information is not clear, it can be interpreted in multiple and
often conflicting ways.
4) Time Constraints and Information Costs
Managers have neither the time nor the money to search for all possible
alternative solutions and evaluate all the potential consequences of those
alternatives.

IV. Steps in Decision Making Process

1. Recognize the Need for a Decision

The need for a decision can be sparked by an event such as environment changes.
The events can be internal or external. Whether it is proactive or reactive, it is
imperative that managers immediately recognize this need and respond in a timely
and appropriate manner.
 2. Generate Alternatives
The managers must develop feasible alternative courses of action. If good
alternatives are missed, the resulting decision is poor. It is hard to develop
creative alternatives, so managers need to look for new ideas.
3. Asses Alternatives
Managers specify criteria, then evaluate. Successful managers use four criteria to
evaluate the pros and cons of alternative courses of action:
 Practicality
 Economic feasibility
 Ethicalness
 Legality
Often a manager must consider these four criteria simultaneously. Some of the
worst managerial decisions can be traced to poor assessment of the alternatives.
4. Choose among Alternatives
Managers rank the various alternatives and make a decision. Managers must be
sure all the information available is brought to bear on the problem or issue at
hand
5. Implement The Chosen Alternatives
Managers must now carry out the alternative. Often a decision is made and not
implemented.
6. Learn from Feedback
Managers should consider what went right and wrong with the decision and learn
for the future. Without feedback, managers do not learn from experience and will
repeat the same mistake over.

ORGANIZATIONAL LEARNING & CREATIVITY

I. Definition
The Process through which managers seek to improve employees’ desire and
ability to understand and manage the organization and its task environment so
 employees can make decision that continuously raise organizational
effectiveness.
At the heart of organizational learning is creativity, which is the ability of a
decision maker to discover original and novel ideas that lead to feasible
alternatives courses of action.
Encouraging creativity among managers is such a pressing organizational
concern that many organizations hire outside experts to help them develop
programs to train their managers in the art of creative thinking and problem
solving.

II. Creating a Learning Organization

Five principles for creating a learning organization based on Peter Senge:
1. Systems Thinking - the ability to see the big picture, and to distinguish
patterns instead of conceptualizing change as isolated events. Systems
thinking needs the other four disciplines to enable a learning organization
to be realized. There must be a paradigm shift - from being unconnected to
interconnected to the whole, and from blaming our problems on something
external to a realization that how we operate, our actions, can create
problems.
2. Personal Mastery - begins "by becoming committed to lifelong learning,"
and is the spiritual cornerstone of a learning organization. Personal
Mastery involves being more realistic, focusing on becoming the best
person possible, and striving for a sense of commitment and excitement in
our careers to facilitate the realization of potential.
3. Mental Models - must be managed because they do prevent new powerful
insights and organizational practices from becoming implemented. The
process begins with self-reflection; unearthing deeply held belief
structures and generalizations, and understanding how they dramatically
influence the way we operate in our own lives. Until there is realization
and a focus on openness, real change can never take place.
 4. Building Shared Visions - visions cannot be dictated because they always
begin with the personal visions of individual employees, who may not
agree with the leader's vision. What is needed is a genuine vision that
elicits commitment in good times and bad, and has the power to bind an
organization together.
5. Team Learning - is important because modern organizations operate on
the basis of teamwork, which means that organizations cannot learn if
team members do not come together and learn. It is a process of
developing the ability to create desired results; to have a goal in mind and
work together to attain it.
To summarize, a learning organization does away with the mindset that it is
only senior management who can and do all the thinking for an entire
corporation. Learning organizations challenge all employees to tap into their
inner resources and potential, in hopes that they can build their own
community based on principles of liberty, humanity, and a collective will to
learn.

III. Promoting Group Creativity

Based on Decision Making Techniques:
1) Brainstorming: an individual or group method for generating ideas,
increasing creative efficacy, or finding solutions to problems.
2) Nominal Group Technique: designed to reduce the social anxiety
associated with face-to-face group brainstorming.
3) Delphi Technique: involves a coordinator and a group of experts who are
given a problem and a questionnaire that asks for ideas about how to solve
the problem, and general questions related to the problem.

ENTREPRENEURSHIP & CREATIVITY

I. Definition
 Entrepreneurs are individuals who notice opportunities and decide how to mobilize
the resources necessary to produce new and improved goods and services.
Entrepreneurs make all of the planning, organizing, leading, and controlling decisions
necessary to start new business ventures.

II. Characteristics of Entrepreneurial

1. Innovation
An entrepreneur’s mind revolves around new ideas and opportunities for
innovation.
2. Economic Importance
Entrepreneurship works toward optimizing resources and taking full use of them
to create efficient processes.
3. More Profit
The process of entrepreneurship rewards the individual by increasing the profit
potential of the enterprise.
4. Risk Taking
The whole essence of entrepreneurship revolves around the courage and ability to
take new risks.
5. Job Opportunities
Entrepreneurship creates new niches and enterprises, which requires a work force.

III. The Importance of Creativity for Entrepreneurs

1. Creating new ideas for competitive advantage.
2. Thinking of novel ways to develop your product and improve the business.
3. Thinking the unthinkable.
4. Finding similar patterns in different areas.
5. Developing new niches through creativity and entrepreneurship

IV. Indicators That Signify The Creative Thinking Of A Successful Entrepreneur

1. An entrepreneur adheres to rules and principles only when they add value to the
organization and have a potential to attract more customers.
 2. An entrepreneur experiments with his ideas as the first step. The second step is
learning from the experience and the third step is implementation of what they
have learned.
3. An entrepreneur is less afraid to lose and is always keen to experiment in new
ventures.
4. The entrepreneur is not afraid of creativity and believes that creative ideas will
only help their enterprise.
5. A creative thinker will take inspiration from new ideas in every area directly or
indirectly related to the enterprise.
6. An entrepreneur is not afraid to go beyond the industry and enter new markets.
This opens a wide range of opportunities to formulate new niches.
7. Every product and service is not good enough and has room for improvement. An
entrepreneur realizes that very well.
8. A creative thinker is interested in bringing totally opposite things together to
create new products or services.
9. An entrepreneur creates new products for existing services and new services for
existing products.
10. Creative ideas come more quickly when someone is not afraid to appreciate new
ideas irrespective of who comes up with them.
11. An entrepreneur shares an idea and is open to feedback that improves and refines
the idea.
12. Creativity comes from learning different things, whether they are related to the
industry or not.

V. Expertise That Must Be Owned By Entrepreneurs

Besides creativity, other expertise that entrepreneurs must have are:
1. Personal traits. Personal attributes help entrepreneurs in a variety of ways.
Optimism; vision, self-control; and having initiative, persistence, tolerance and
resilience are all the features that make an entrepreneur stand out and have the
ability to maneuver projects.
 2. Interpersonal skills. An entrepreneur has to interact with people at many levels.
This requires them to have excellent interpersonal skills. Communication,
leadership, motivation, personal relations, negotiation skills, and ethics are
attributes that are a must have in a very dynamic business environment.
3. Critical thinking. An entrepreneur must be his own critic. There should be a keen
observation of various aspects of an idea so it can be perfected before
implementation. A lot of future effort can be saved if an idea is critically
analyzed, and no one else can do it better than the entrepreneur himself.
4. Practical skills. These skills are required at the stage of idea implementation and
management of the enterprise. An entrepreneur must be able to plan and organize
goals and tasks. There should be effective decision-making and critical
monitoring at various stages of the process.

VI. The Entrepreneurial Process

Basic elements of creativity process are:

1. Preparation

The first stage, of course, is the preparation of some basic ideas to hold onto.
There has to be some inspiration that “forces” or “prepares” the entrepreneur to
move forward. The creative process starts with identifying a problem and then
researching for related information. This is done in an effort to start looking for a
 viable solution. An entrepreneur looks in every direction to solve the problem, be
it inside the industry or outside.

2. Thinking outside the box – going beyond the comfort zone

Can we achieve anything if we are not willing to go beyond our comfort zone?
One has to leave the comfortable arena, go beyond and take a risk. Rewards come
with efforts.“Thinking outside the box” is an expression that has been used in
marketing, business and psychology since the 1970s. It owes its origin to a “nine
dot” game that was once used as a test of creativity. The puzzle was designed
such that the person had to go beyond the dots to find the solution. However,
psychologists say that this “external” factor is not really external, it is simply the
existing solution to the problem. “External” is only how our brain tends to
perceive it.

3. Creativity isn’t magic

Despite the immensely amazing things creativity can achieve, it is definitely not
magical. Creativity is simply approaching things with a different perspective. The
simplest approach to creative thinking can be copying different elements,
transforming them, combining them and eureka! There is a new idea. This
essentially makes use of existing elements. As Kirby Ferguson says, “It happens
by applying ordinary tools of thought to existing materials. And the soil from
which we grow our creations is something we scorn and misunderstand even
though it gives us so much — and that’s… copying.”

4. Incubation

During the incubation stage, ideas that have the potential to solve a problem tend
to flourish. This stage is characterized by the unconscious thought process of
refining an idea. Apparently, there are many activities at work during this stage,
but the overall goal is to find a solution. Evaluating existing projects can help to
generate viable ideas. Some researchers even refer to the creativity process as re-
creativity since it takes inspiration from existing ideas and molds them in an
innovative way.
 5. Illumination

Incubation leads to clarity of ideas. This is the “solution finding” stage. Now the
creativity process leads to the knowledge of some practical ideas that can be put
to work. It is like a “light bulb” moment, hence it’s called illumination.

6. Verification
This stage determines whether the “found” solution even has the potential to work
or not. The idea can either be accepted as such, modified with minor or major
changes, or rejected altogether, requiring that the whole process be done again.
7. Critical thinking

Generating innovative ideas is a comparatively easy task. The major success of an

entrepreneurial endeavor lies in critically examining the viability of an idea.
Critical thinking enables an entrepreneur to self-judge in order to evaluate the
idea. It is defined as a self-directed, self-disciplined, self-monitored and self-
corrective process of evaluating an idea.

Critical thinking offers many competitive advantages to the entrepreneur, such as:

 It helps formulate the best possible idea.

 It allows for exploring new horizons and seeing the big picture.
 It enables the entrepreneur to evaluate and ask questions that have not
been considered previously.
 It helps in taking decisive actions; the result of creativity.

VII. Steps In Creating Creative Ideas

1. Brainstorm
2. Encourage and rewards creative ideas of the team
3. Share ideas and solicit feedback
4. Evaluate the ideas
 REFERENCES

Porter, M. (1980). Competitive Strategy. New York: Free Press.

Robbins, S.P., & Judge, T. (2013). Organizational Behavior (15th ed.). Boston: Pearson.
Porth, J. Stephen, John McCall, & Bausch A. Thomas. (1999). Organizational Change
Management. New York: MCB UP Ltd.
Jones, R. Gareth, George M. Jennifer. (2015). Decision Making, Learning Creativity, and
Entrepreneurship. New York: McGraw Hill Education
Selart, Marcus. (2010). A Leadership Perspective on Decision Making. Minnesota: Cappelen
Academic Publishers.
Cingula, Marijan. (2013). Entrepreneurial Competences In Contemporary Management. Zagreb:
University of Zagreb