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Santi Novani
Undergraduate Program
School of Business & Management
Institut Teknologi Bandung MB2101 Decision Making
 What have we learn so far before
Mid Test ?
1. System 1 and System 2
2. Decision Making process
3. Problem Analysis: Fishbone, Problem Tree, Objective Tree
4. Generating Alternative: Six thinking hats
5. Generating Alternative: Brainstorming
6. Evaluating Alternative: Value Focused Thinking
7. Heuristic
8. Selecting Alternative: Simple Multi Attribute Rating
Technique (SMART)

MB 2102 Decision Making

Do you remember what a Descriptive
decision making, Normative decision
making, and a prescriptive decision
making are?

What is the connection between

them?
 Decision Science
Rational/Ideal/Normati Actual/Descrip
ve tive
Decision Making GAP Decision
Making
Bounded
Assumptions: Rational
1. Perfectly define the problem
2. Identify all criteria
Prescripti Intuition
3. Accurately weigh all criteria
according to their preference ve
Systematic Model of
4. Know all relevant alternatives Decision Process
5. Accurately asses each Heuristics or
alternative based on each Guidances to be more Biases
criterion rational
6. Accurately calculate and
choose the alternative with Integration of
Normative and Mistakes
the highest perceived value
Descriptive

Minimizing errors
caused by Judgement
Optimal Need to Not optimal
Close to
solution Improve solution
4
4
Do you remember what a system 1
and a system 2 stand for?
Two modes of decision making in
your brain!

System 2 System 1
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 System 1
• System 1 does not like a
complicated matter. If it
founds something
complicated, naturally, it will
cope with a strategy that
make the complexity
becomes simple matter
through heuristics process
• The default system is System
1

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 System 1 contains Bias

THE CONSEQUENCE
• the decision contain BIAS
• susceptible to mistakes
• often jump to conclusion

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System 2: Rational Decision Making

1. Perfectly define the problem

2. Identify all criteria
3. Accurately weigh all criteria according to their
preference
4. Know all relevant alternatives
5. Accurately asses each alternative based on each
criterion
6. Accurately calculate and choose the alternative
with the highest perceived value

if you force System 2 to run every time, your will quite exhausted 9
 Comparisons System 1 and 2
System 1 System 2
Intuition/automatic/mechanistic Rational/conscious
/unconscious
Short cut Systematic
Good solution Optimal solution
Quick Slow
The process is not explicit Explicit
Routines New
situation/experience/problems

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Do you remember what problem
solving and decision making process
model?
 Problem Solving Model- a
decision making process
Tools:
1. Root cause Analysis : 5 why’s, Fishbone,
Force Field Analysis, Scatter Diagrams ,
Process Mapping, Benchmarking
2. Problem Tree and Objective Tree
3. Idea generating tools: brainstorming, 6
thinking hats

Tools:
1. Generating Alternatives:
1. Brainstorming (structured,
unstructured, & silent type)
2. Survey method
2. Evaluating Alternatives :
1. Value Focused Thinking

Undergraduate Program
School of Business & Management
Institut Teknologi Bandung MB 2102 Decision Making
Skills you Need in Future Challenges

13
Do you remember what is
Problem and Symptoms?

What is the differences?

 STEP 1 – IDENTIFYING PROBLEM
Problem identification is undoubtedly the most important and
the most difficult step in the process. All subsequent steps will
be based on how you define and assess the problem at hand .
 What Does “Problem” Mean?
• The terms “problem” or “deliverables” can
mean
– something has gone wrong
– clarification of the situation
– defining an opportunity
– monitoring & evaluating operations
• Ultimately, they mean the objectives of the
research
 Problem is A perceived gap
between the existing state and
a desired state, or a deviation
(http://www.businessdictionary.com/definition/problem.html)

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 GAP/DEVIATION

existing a desired
state state
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Distinguish Problem and Symptom

• At this point it is important to distinguish

between a problem and a symptom.
 Symptoms vs. Problems
• Microbrewery (tempat pembuatan bir yang
menghasilkan sejumlah kecil bir)

• Symptom
– Consumers prefer the taste of
competitor’s brand
• Problem definition based on
the Symptom
– What type of reformulated
taste is needed?
• True Problem
– Old-fashioned package
influenced taste perception
Do you remember problem analysis
tools?
Problem Analysis Process

•Formulate Problem
•Problem Analysis
•5 whys
•Fishbone
•Problem Tree
•Objective Tree

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 FISHBONE DIAGRAM
(a.k.a Cause-and-Effect
Diagram
a.k.a. Ishikawa Diagram
What is it?
An analysis tool that provides
a systematic way of looking at
effects and their respective
causes
When to use?
• When identifying possible
causes for a problem
• When a team’s thinking
tends to fall into ruts
Fishbone Diagram Procedures
• Step 1 : Identify and clearly define the
outcome or EFFECT to be analyzed
• Step 2 : Draw the SPINE and create the
EFFECT box
• Step 3 : Identify the MAIN CAUSES
contributing to the effect being studied
Use generic headings : Method, Machine
(equipment), People (manpower), Material,
Measurement, Environment
• Step 4 : For each major branch, identify
other SPECIFIC FACTORS which may be
the causes of the effect
• Step 5 : Identify more detailed levels of
causes and continue organizing them
under related causes or categories
• Step 6 : Analyze the diagram
 FISHBONE DIAGRAM
(a.k.a Cause-and-Effect
Diagram
a.k.a. Ishikawa Diagram)

Basic Template of
Fishbone Diagram
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 Problem Tree and Decision Tree

Problem Tree
Objective Tree
(Negatives)
(Positives)

EFFECT END

CAUSE MEANS

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 What You’ve Learned at The Auditorium
Unhealthy
EFFECT Lifestyle
Problem Tree
Overweight

Unfit Eat unhealthy foods

Can’t afford Healthy Only eat staple

Can’t afford Gym Can’t afford stove Foods foods

No Motivation/
Boring Eat Convenience
Work Functions Foods
CAUSE

Too Busy/ Old Habits/ Past Laziness/ Mis-information on No Time to prepare No access to Fresh
No Time to Exercise failures No discipline adverts healthy meal Produce
 What You’ve Learned at The Auditorium
• Objective : Lead a Healthy Lifestyle
Unhealthy
END
EFFECT Healthy Lifestyle
Lifestyle
Objective Tree
Weight loss
Overweight

Eat unhealthy
Unfit
Regular Exercise Eat Correctly
foods

Affordable exercise Record of daily food Can’teating

Healthy affordplan Only eat staple
Vegetable garden
Can’t afford Gym
routine established
Can’t afford
intake
stove established established
Healthy Foods foods

No Motivation/
Develop a Positive Eat less at work Eat Convenience
Stop Buying Fast
Attitude
Work Functions
functions Foods &Foods
Save Money
Boring

MEANS
CAUSE
Too Busy/ Laziness/ No Time to
Effective Time Deal
Old
Deal with
Habits/ Past
Past
with Past Develop key Nutritional
Mis-information
Obtain nutritional Learn how to make a No Learn how
access
Learn how to to
Fresh
to grow
PlanNo Time
time to
effectively
Failures
Get Disciplined
Nodisciplines
discipline Education
prepare healthy
quick healthy meal vegetables
Planning Failures
failures Education
on adverts growProduce
vegetables
Exercise meal
Do you remember the problem analysis steps?

❑Step 1: Formulate problems

❑Step 2: Develop the problem tree

❑Step 3: Developing the Objectives Tree

❑Step 4: Alternative Analysis

❑Step 5: Selecting the Activity Strategy

Do you remember the generating alternatives tools ?

▪ Brainstorming
▪ Six Thinking Hat
▪ Survey
▪ Discussion Group – leads to an Effective
Meeting
 1. Explore Alternatives

• The second step in the decision-making

process is to explore alternative solutions to
the problem identified in step 1.

• This step really consists of two parts:

1. Generating alternatives
2. Evaluating alternatives
 Do you remember the generating
alternatives tools ?
• There are ways to generate alternative

1. Brainstorming

2. Survey

3. Discussion Groups

4. Six Thinking Hat

5. Value Focus Thinking

Do you remember the brainstorming process?

◼ The environment
◼ Setting the scene
◼ Rules for the session
◼ Running the brainstorming session
◼ Affinity analysis
◼ Summary and further action
 Brainstorming
• Definition : is a process or can be say as a tool, used by teams
or groups to generate a large numbers of idea about a specific
problem or topic.
• The key ingredient is to provide an environment free of
criticism for creative and unrestricted exploration of options or
solutions
• Type of brainstorming :
1. Structured brainstorming (one-at-a-time method)
2. Unstructured (or open-door) brainstorming
3. Silent (or write-it-down) brainstorming
• Some benefits of brainstorming :
– Creativity; Sense of ownership in decision
– Large number of ideas; All team members involved

MB 2102 Decision Making

Do you remember the brainstorming benefits?

▪Creativity
▪ Large number of ideas
▪ All team members involved
▪ Sense of ownership in decisions
▪ Input to other tools
Do you remember the brainstorming process?

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 Two Main Purposes of
Six Thinking Hats

• Simplifies thinking by having to deal with one

thing at a time.

• Allows a switch in thinking without

threatening ego.
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Do you remember the 6 thinking hats benefits?
Do you remember how to evaluating
the alternatives?
 Alternative versus value-focused thinking
Alternative-focused thinking (The typical way to make
decisions)
1. Recognize a decision problem/opportunity
2. Identify decision alternatives
3. Specify values
4. Evaluate alternatives
5. Select an alternative

Value-focused thinking
1. Recognize a decision problem/opportunity
2. Specify values
3. Create decision alternatives
4. Evaluate alternatives
5. Select an alternative
Methods to identify fundamental values

• Generating a wish list of what you would like to achieve

• Comparing alternatives
• Thinking about potential problems and shortcomings
• Thinking about consequences
• Goals, constraints and guidelines
• Thinking about different perspectives
• Thinking about ultimate values (what do you care about the
most in life?)
• Generic values (what do you usually care about?)
• Structuring objectives (why-how)
• Quantifying objectives 42
 Attribute Alternative

Fundamenta
l Objective

Means
Objective
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 Value Focused Thinking

Why is it
important?

: minimize maintenance cot : maximize quality of life

: maximize enjoy of life FUNDAMENTAL OBJECTIVE
: minimize number of mechanical trouble
MB 2102 Decision Making