Chapter  Three    
Decision  Making,  Learning,  Crea5vity,  
and  Entrepreneurship  
 Decision  making    

q The   process   by   which   managers   respond   to   opportuni5es  

and   threats   by   analyzing   the   op5ons   and   making  
determina5ons,   or   decisions,   about   specific   organiza5onal  
goals  and  courses  of  ac5on.  
q Good   decisions   result   in   the   selec5on   of   appropriate   goals  
and   courses   of   ac5on   that   increase   organiza5onal  
performance;  bad  decisions  lower  performance.  
q Decision   making   in   response   to   opportuni5es   occurs   when  
managers   search   for   ways   to   improve   organiza5onal  
performance   to   benefit   customers,   employees,   and   other  
stakeholder  groups.  
TYPES  OF  DECISIONS  
PROGRAMMED  DECISION  MAKING  is  a  rou5ne,  virtually  
automa5c   process.   Programmed   decisions   are   decisions  
that   have   been   made   so   many   5mes   in   the   past   that  
managers   have   developed   rules   or   guidelines   to   be  
applied  when  certain  situa5ons  inevitably  occur.  
 
NON  PROGRAMMED  DECISION    MAKING  is  required  for  
these  non  rou5ne  decisions.  Non  programmed  decisions  
are   made   in   response   to   unusual   or   novel   opportuni5es  
and   threats.   Non   programmed   decision   making   occurs  
when   there   are   no   ready-­‐made   decision   rules   that  
managers  can  apply  to  a  situa5on.  
How  do  managers  make  decisions  in  the  absence  of  
decision  rules?    
 
q They   may   rely   on   their   intui5on   —feelings,   beliefs,   and  
hunches   that   come   readily   to   mind,   require   liHle   effort  
and   informa5on   gathering,   and   result   in   on-­‐the-­‐spot  
decisions.    
q   Or  they  may  make  reasoned  judgments  —decisions  that  
require   5me   and   effort   and   result   from   careful  
informa5on   gathering,   genera5on   of   alterna5ves,   and  
evalua5on  of  alterna5ves.  
Steps  in  the    Decision-­‐Making  Process  

Choose  the  best   Recognize  the  need  

altera5ve     of  a  decision  making    

Implement   Generate  
alterna5ve     alterna5ves  

Learn  from   Access  

feed  back   alterna5ves  
  DECISION  MAKING  MODELS  

Classical  Decision  Making  Model  

  A   prescrip5ve   approach   to   decision   making   based   on   the  
assump5on   that   the   decision   maker   can   iden5fy   and  
evaluate   all   possible   alterna5ves   and   their   consequences  
and   ra5onally   choose   the   most   appropriate   course   of  
ac5on.  
Op5mum  Decision  
The   most   appropriate   decision   in   light   of   what   managers  
believe   to   be   the   most   desirable   consequences   for   the  
organiza5on.    
Administra5ve  model    
An  approach  to  decision  making  that  explains  why  decision  
making  is  inherently  uncertain  and  risky  and  why  managers  
usually  make  sa5sfactory  rather  than  op5mum  decisions.    
ORGANIZAYIONAL    LEARNING  &  CREATIVITY  
Organiza5onal  learning    
is   the   process   through   which   managers   seek   to   improve  
employees’   desire   and   ability   to   understand   and   manage   the  
organiza5on  and  its  task  environment  so  employees  can  make  
decisions  that  con5nuously  raise  organiza5onal  effec5veness.    
 
A  learning  organiza5on  
 is  one  in  which  managers  do  everything  possible  to  maximize  
the   ability   of   individuals   and   groups   to   think   and   behave  
crea5vely   and   thus   maximize   the   poten5al   for   organiza5onal  
learning  to  take  place.    
Crea5vity   ,which   is   the   ability   of   a   decision   maker   to   discover  
original  and  novel  ideas  that  lead  to  feasible  alterna5ve  courses  
of  ac5on.    
ENTREPRENEURS  AND  CREATIVITY  

q    Entrepreneurs   are   individuals   who   no5ce   opportuni5es  

and   decide   how   to   mobilize   the   resources   necessary   to  
produce  new  and  improved  goods  and  services.    
q Entrepreneurs   make   all   of   the   planning,   organizing,  
leading,   and   controlling   decisions   necessary   to   start   new  
business  ventures.  
q   Entrepreneurs  are  an  important  source  of  crea5vity  in  the  
organiza5onal  produc5on.  
 
q Some   entrepreneurs   who   start   a   new   business   have  
difficulty   deciding   how   to   manage   the   organiza5on   as   it  
grows;  entrepreneurship  is  not  the  same  as  management.  
q Entrepreneurship   is   no5cing   an   opportunity   to   sa5sfy   a  
customer   need   and   then   deciding   how   to   find   and   use  
resources  to  make  a  product  that  sa5sfies  that  need.    
q  When   an   entrepreneur   has   produced   something  
customers   want,   entrepreneurship   gives   way   to  
management   because   the   pressing   need   becomes  
providing  the  product  both  efficiently  and  effec5vely.    
q Some   entrepreneurs   find   it   hard   to   delegate   authority  
because   they   are   afraid   to   risk   their   company   by   leVng  
others  manage  it.    

q As   a   result   they   become   overloaded   and   the   quality   of  

their  decision  making  declines.  
 
q   Thus,  to  succeed,  it  is  necessary  to  do  more  than  create  a  
new   product;   an   entrepreneur   must   hire   managers   who  
can   create   an   opera5ng   system   that   will   let   a   new  
venture  survive  and  prosper.    
THANK  YOU