INFS 6018: Managing Business Intelligence

Week 2: Decision Making in Depth

Dr. Daniel Gozman

Prof. John Buchanan
S1 2023
Course Road Map

Fundamentals
Business decisions,
analytics and data
quality
Weeks 1-3

Horizon Scanning
Future trends and
consolidating
Critical Strategy
Creating business
value through
learning
Weeks 11-13 Thinking technology
Weeks 4-5

People & Culture

Managing
stakeholders, ethics
and change
Weeks 8-10

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2
Learning outcomes

At the end of this week students will be able to

– Discuss the different constitutive elements of decision making (intelligence,

design, choice and implementation) and their relationship with technology

– Reflect upon +/- associated with abstraction, trade-offs, and models

– Reflect upon the three cases and the challenges and potential benefits that
data and information offer for IBM, Star Casinos and HP

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Decision Making – Multiple Perspectives

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Decision Making Summary

A process of choosing among two or more alternative

courses of action for the purpose of attaining a goal(s)

Managerial decision making is synonymous with the

entire management process - Simon (1977)

Example: Planning
– What should be done? When? Where? Why? How? By whom?

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Decision-Making Disciplines
Behavioral: anthropology, law, philosophy, political
science, psychology, social psychology, and
sociology

Scientific: computer science, decision analysis,

economics, engineering, the hard sciences (e.g.,
biology, chemistry, physics), management
science/operations research, mathematics, and
statistics

Each discipline has its own set of assumptions and

each contributes a unique, valid view of how people
make decisions
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Decision-Making Trade-Offs
Better decisions
– Tradeoff: accuracy versus
speed
Fast or slow decisions
may be detrimental
Effectiveness versus
Efficiency
Effectiveness 
“goodness” “accuracy”
Efficiency  “speed”
“less resources”
A fine balance is what is
needed!
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Decision Style

The manner by which

decision makers think and
react to problems
– perceive a problem
– cognitive response
– values and beliefs

When making decisions,

people…
– follow different steps/sequence
– give different emphasis, time
allotment, and priority to each step

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Decision Style

Decision-making styles
– Heuristic versus Analytic
– Autocratic versus Democratic
– Consultative (with individuals or groups)

A successful computerized system should fit the decision

style and the decision situation
– Should be flexible and adaptable to different users (individuals vs. groups)

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Decision Style
Personality temperament tests are often used to
determine decision styles

There are many such tests

– Meyers/Briggs,
– True Colors (Birkman),
– Keirsey Temperament Theory, …

Various tests measure somewhat different aspects of

personality
– They cannot be equated!

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Decision Makers

Small organizations
– Individuals
– Conflicting objectives

Medium-to-large organizations
– Groups
– Different styles, backgrounds, expectations
– Conflicting objectives
– Consensus is often difficult to reach
– Help: Computer support, DSS, …

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Learning for the unknown future

“One of the major changes defining the new competitive environment is the
requirement to know more about knowing. You are going to have to expand
your ability to think critically about your own thinking. Experts sometimes
refer to this as meta-cognition: knowing about knowing” (May, 2010).

The latest research on executive decision making that puts one’s ability to
engage in “thinking about thinking” as the best predicator of good judgment,
even ahead of one’s intuition, experience or intelligence (Lehrer, 2008).

The ability to recognize high-level patterns and create meaning from huge
amount of data, in order to quickly assess the situation and take action, is
now considered to be a critical component of the so-called “executive brain”
(Gilkey and Kilts, 2007)

For business executives trying to make sense of a rapidly changing business

environment, superiority of pattern recognition is perhaps the greatest
advantage that can be developed” (Gilkey and Kilts, 2007)
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What is a model?

A model is a representation of a real-life situation

A model is made up of a series of elements and

relationships.

The elements are called variables and the

relationships are the constraints imposed, either
internally or externally.

There are many types of models (eg An

organisational chart , a balance sheet, a break-
even analysis
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Types of Models
Allocation Models: Spread scarce resources across various programs.

Distribution Problems: Determine the best way to move items from one
location to another.

Activity Scheduling: Determine the order and schedule for a complex set
of events.

Decision/Risk Analysis: Decide which course of action will result in the

minimal risk

Demand/Resource Forecasting: Estimate demand and predict resources

required to satisfy demand.

Process Management and Control: Monitor, coordinate and control the

assignment, schedule, sequence and progress of personnel, raw
materials, and equipment
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Why use Models?

• Simplify complex/messy situations

• Time compression
• Easy to manipulate
• Lower cost than real world
• Risk Analysis
• Large range of alternatives
• Enhance and reinforce learning and training

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Decision Making Model for Problem Solving

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Phases of Decision-Making Process

Humans consciously or
subconsciously follow a systematic
decision-making process
- Simon (1977)
1) Intelligence
2) Design
3) Choice
4) Implementation
5) (?) Monitoring (a part of intelligence?)

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Decision Making Model for Problem Solving
(Herbert Simon)

Problem Statement
Intelligence

List of Alternative Solutions

Design

Select Solution
Choice

Implementation

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 Decision Support Steps

Evaluation

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Simon’s Decision-Making Process

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