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Organizationl Behavior Emerging

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Instructor’s Manual to Accompany

ORGANISATIONAL
BEHAVIOUR
EMERGING KNOWLEDGE. GLOBAL INSIGHTS. 4E
by Steven L. McShane, Mara Olekalns and Tony Travaglione

Chapter 7:
Decision Making
and Creativity
Prepared by Steven L. McShane,
University of Western Australia
This Instructor’s Resource Manual file is part of the digital resources for Organisational Behaviour 4e.
ISBN: 9780071016261
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Chapter 7: Decision Making and Creativity

7
Decision Making
and Creativity
LEARNING OBJECTIVES
7.1 Describe the rational choice paradigm
7.2 Explain why people differ from the rational choice paradigm when identifying
problems/opportunities, evaluating/choosing alternatives and evaluating decision
outcomes
7.3 Discuss the roles of emotions and intuition in decision making
7.4 Describe employee characteristics, workplace conditions and specific activities that
support creativity
7.5 Describe the benefits of employee involvement and identify four contingencies that
affect the optimal level of employee involvement

CHAPTER GLOSSARY

anchoring and adjustment heuristic—A natural implicit favourite—A preferred alternative that the
tendency for people to be influenced by an initial decision maker uses repeatedly as a comparison with
anchor point such that they do not sufficiently move other choices.
away from that point as new information is provided.
intuition—The ability to know when a problem or
availability heuristic—A natural tendency to assign opportunity exists and to select the best course of
higher probabilities to objects or events that are easier action without conscious reasoning.
to recall from memory, even though ease of recall is
prospect theory effect—A natural tendency to feel
also affected by non-probability factors (e.g. emotional
more dissatisfaction from losing a particular amount
response, recent events).
than satisfaction from gaining an equal amount.
bounded rationality—The view that people are
rational choice paradigm—The view in decision
bounded in their decision-making capabilities,
making that people should—and typically do—use
including access to limited information, limited
logic and all available information to choose the
information processing and tendency toward
alternative with the highest value.
satisficing rather than maximising when making
choices. representativeness heuristic—A natural tendency to
evaluate probabilities of events or objects by the
creativity—The development of original ideas that
degree to which they resemble (are representative of)
make a socially recognised contribution.
other events or objects rather than on objective
decision making—The conscious process of making probability information.
choices among alternatives with the intention of
moving toward some desired state of affairs.
divergent thinking—Reframing the problem in a
unique way and generating different approaches to the
issue.
employee involvement—The degree to which
employees influence how their work is organised and
carried out.
escalation of commitment—The tendency to repeat
an apparently bad decision or allocate more resources
to a failing course of action.

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Chapter 7: Decision Making and Creativity

subjective expected utility—The probability


satisficing—Selecting an alternative that is
(expectation) of satisfaction (utility) resulting from
satisfactory or ‘good enough’ rather than the
choosing a specific alternative in a decision.
alternative with the highest value (maximisation).
scenario planning—A systematic process of thinking
about alternative futures and what the organisation
should do to anticipate and react to those
environments.

CHAPTER SUMMARY BY LEARNING OBJECTIVE

 LO 7.1 Describe the rational choice paradigm.


Decision making is a conscious process of making choices from among one or more alternatives with the intention
of moving towards some desired state of affairs. The rational choice paradigm relies on subjective expected utility
to identify the best choice. It also follows the logical process of identifying problems and opportunities, choosing
the best decision style, developing alternative solutions, choosing the best solution, implementing the selected
alternative and evaluating decision outcomes.

 LO 7.2 Explain why people differ from the rational choice paradigm when identifying
problems/opportunities, evaluating/choosing alternatives and evaluating decision outcomes.
Stakeholder framing, perceptual defence, mental models, decisive leadership and a solution-oriented focus affect
our ability to identify problems and opportunities objectively. We can minimise these challenges by being aware of
the human limitations and discussing the situation with colleagues.

Evaluating and choosing alternatives is often challenging because organisational goals are ambiguous or in conflict,
human information processing is incomplete and subjective, and people tend to satisfice rather than maximise.
Decision makers also short-circuit the evaluation process when faced with an opportunity rather than a problem.
People generally make better choices by systematically evaluating alternatives. Scenario planning can help to make
future decisions without the pressure and emotions that occur during real emergencies.

Confirmation bias and escalation of commitment make it difficult to evaluate decision outcomes accurately.
Escalation is mainly caused by self-justification, the prospect theory effect, perceptual blinders and closing costs.
These problems are minimised by separating decision choosers from decision evaluators, establishing a pre-set
level at which the decision is abandoned or re-evaluated, relying on more systematic and clear feedback about the
project’s success, and involving several people in decision making.

 LO 7.3 Discuss the roles of emotions and intuition in decision making.


Emotions shape our preferences for alternatives and the process we follow to evaluate alternatives. We also listen
in to our emotions for guidance when making decisions. This latter activity relates to intuition—the ability to know
when a problem or opportunity exists and to select the best course of action without conscious reasoning. Intuition
is both an emotional experience and a rapid, unconscious analytical process that involves both pattern matching
and action scripts.

 LO 7.4 Describe employee characteristics, workplace conditions and specific activities that support
creativity.
Creativity is the development of original ideas that make a socially recognised contribution. The four creativity
stages are preparation, incubation, insight and verification. Incubation assists divergent thinking, which involves
reframing the problem in a unique way and generating different approaches to the issue.

Four of the main features of creative people are intelligence, persistence, expertise and independent imagination.
Creativity is also strengthened for everyone when the work environment supports a learning orientation, the job
has high intrinsic motivation, the organisation provides a reasonable level of job security and project leaders
provide appropriate goals, time pressure and resources. Three types of activities that encourage creativity are
redefining the problem, associative play and cross-pollination.

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Chapter 7: Decision Making and Creativity

 LO 7.5 Describe the benefits of employee involvement and identify four contingencies that affect the
optimal level of employee involvement.
Employee involvement refers to the degree that employees influence how their work is organised and carried out.
The level of participation may range from an employee providing specific information to management without
knowing the problem or issue to complete involvement in all phases of the decision process. Employee involvement
may lead to higher decision quality and commitment, but several contingencies need to be considered, including
the decision structure, source of decision knowledge, decision commitment and risk of conflict.

LECTURE OUTLINE (WITH POWERPOINT® SLIDE


THUMBNAILS)

Decision Making and Creativity

Decision Making and


Creativity
Slide 1

Learning Objectives
7.1 Describe the rational choice paradigm
7.2 Explain why people differ from the rational choice paradigm
Learning Objectives when identifying problems/opportunities, evaluating/choosing
Slide 2
alternatives and evaluating decision outcomes
7.3 Discuss the roles of emotions and intuition in decision making
7.4 Describe employee characteristics, workplace conditions and
specific activities that support creativity.
7.5 Describe the benefits of employee involvement and identify
four contingencies that affect the optimal level of employee
involvement.

Decision Making at HP
At HP technicians moved from being problem solvers to having the
autonomy to embrace entrepreneurialism in customer service.
Through training, the company developed the technicians’
Decision Making at HP
enthusiasm, ability and skills, resulting in happy customers and
Slide 3
employees

Page 7-4 © 2013 McGraw-Hill Education (Australia) Pty Ltd. All rights reserved.
Chapter 7: Decision Making and Creativity

Decision Making Defined


Decision making is a conscious process of making choices among
one or more alternatives with the intention of moving toward some
desired state of affairs
Decision Making
Defined
Slide 4 Pre-lesson activity
7.8 Decision making style inventory.

Rational Choice Paradigm


Rational choice paradigm—effective decision makers identify, select
and apply the best possible alternative
Rational Choice Two key elements of rational choice
Paradigm 1. Subjective expected utility: determines choice with highest
Slide 5 value (maximisation)
2. Decision-making process: systematic application of stages of
decision making

Video clip
http://www.youtube.com/watch?v=JaKMimJPxyA

Subjective Expected Utility


Estimating the best possible alternative (maximisation)
Expected—probability of an outcome occurring
Subjective Expected • E.g. chance that outcome 3 will occur is 90% (.9) if choice ‘A’ is
Utility chosen, 30% (.3) if choice ‘B’ is chosen
Slide 6
Utility—value or happiness produced by each option from value of
expected outcomes
• Choice ‘B’ has higher utility (value) than choice ‘A’
• Choice ‘B’ expected utility is (0.8 × 7) + (0.2 × –2) + (0.3 × 1) =
6.4
• Choice ‘A’ expected utility is (0.2 × 7) + (0.5 × –2) + (0.9 × 1) =
1.3

Page 7-5 © 2013 McGraw-Hill Education (Australia) Pty Ltd. All rights reserved.
Chapter 7: Decision Making and Creativity

Rational Choice Decision Process


1. Identify problem or opportunity
• Problem—difference between ‘what is’ and ‘what ought to be’
Rational Choice • Opportunity—difference between current expectations and
Decision Process potentially better situation(s) not previously expected
Slide 7 • Symptom—indicators and outcomes of fundamental root causes
2. Choose the best decision process
• How to approach the problem or opportunity
• Programmed decision process
 Follows standard operating procedures i.e. optimal solution
has already been identified and documented
Rational Choice
Decision Process  Best for routine problems with clear goals
Slide 8 • Non-programmed decision process
 Careful search for alternatives—develop solutions
3. Develop list of alternative solutions
• Usually search first for existing solutions
• Custom-made solutions created if existing ones unacceptable
4. Choose the best solution
• Rational choice paradigm—assumes people identify all factors,
assign weights to reflect importance, rate alternatives on
factors, etc., and choose the option with highest subjective
expected utility
• Subjective expected utility—expected level of happiness
produced by that alternative
5. Implement the choice
• Those implementing must have motivation, ability and role
clarity
6. Evaluate choice
• Evaluate gap between ‘what is’ and ‘what ought to be’
• Ideally, relies on systematic benchmarks

Problems with the Rational Choice Paradigm


• The model assumes that people are efficient and logical
information-processing machines
• In reality, people have difficulty recognising problems and
Problems with the
Rational Choice
failures and cannot simultaneously process huge volume of
Paradigm information
Slide 9 • The model focuses on logical thinking and completely ignores
emotions

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Chapter 7: Decision Making and Creativity

Identifying Problems and Opportunities


Stakeholder framing
• Others frame the situation as a problem or opportunity
Identifying Problems Mental models
and Opportunities
• Affect expectations, evaluation of what works
Slide 10
Decisive leadership
• Short cuts assessment of whether situation is a problem
Solution-focused problems
• Defining problems as favourite solutions
Perceptual defence
• Perceptually ignoring bad news

Identifying Problems and Opportunities Effectively


1. Be aware of perceptual and diagnostic limitations
2. Fight against pressure to look decisive (take time to contemplate
Identifying Problems the problem rather than rush to judgment)
and Opportunities
Effectively 3. Maintain ‘divine discontent’ (aversion to complacency)
Slide 11 4. Discuss the situation with colleagues—see different perspectives

Making Choices: Rational vs OB Views


Bounded rationality: people process limited and imperfect
information and rarely select the best choice
Making Choices: Problems with decision goals
Rational vs OB Views • Rational view—goals are clear, compatible with each other,
Slide 12 agreed upon by decision makers
• OB view—goals are ambiguous, conflicting, not agreed upon
Problems with information processing
• Rational view—people can process all information about all
alternatives and their outcomes
• OB view
 People have limited information processing capacity
 Limited search for alternatives and their outcomes
 Tend to evaluate a limited number of alternatives
Problems with evaluation timing
• Rational view—choices evaluated simultaneously
• OB view—choices evaluated sequentially

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Chapter 7: Decision Making and Creativity

Making Choices: Rational vs OB continued


Problems with evaluation standards
• Rational view—evaluate against absolute standards
• OB view—evaluate against implicit favourite
Making Choices:
Rational vs OB Views Problems with information quality
continued
• Rational view—information is factual
Slide 13
• OB view—information is perceptually distorted
Problems with decision objective
• Rational view—maximisation: people try to select the best
alternative (subjective expected utility)
• OB view—satisficing: people try to select a ‘good enough’
alternative

Biased Decision Heuristics


People have built-in decision heuristics that bias evaluation of
alternatives
1. Anchoring and adjustment—initial information (e.g. opening bid)
Biased Decision
Heuristics influences evaluation of subsequent information
Slide 14 2. Availability heuristic—we estimate probabilities by how easily we
can recall the event, but other factors influence ease of recall
3. Representativeness heuristic—we estimate probabilities by how
similar they are to something else (e.g. stereotypes) even when
better information about probability is available

Paralysed by Choice
• Decision makers are less likely to make any decision at all as
the number of options increases
• Occurs even when there are clear benefits to selecting any
Paralysed by Choice
alternative (such as joining a company retirement plan)
Slide 15
• Evidence of human information processing limitations

Page 7-8 © 2013 McGraw-Hill Education (Australia) Pty Ltd. All rights reserved.
Chapter 7: Decision Making and Creativity

Emotions and Making Choices


1. Emotions form preferences before we consciously evaluate
those choices
Emotions and Making  We rarely enter a decision with no opinion about some
Choices alternatives
Slide 16
 We ultimately rely on emotions to energise us to make a
preferred choice
2. Moods and emotions influence how well we follow the decision
process
 E.g. we pay more attention to details when in a negative
mood
3. We ‘listen in’ on our emotions and use that information to make
choices
 Temporary heightened emotional self-awareness to gauge
self-reaction to alternatives

Points for discussion:


 What emotions are involved in decision-making processes
such as buying a house or dismissing an unproductive
employee?
 What was the contribution of emotion in the decision-making
processes that led to the mortgage crisis in the US?

Intuitive Decision Making


Ability to know when a problem or opportunity exists and select the
best course of action without conscious reasoning
Intuitive Decision Intuition as emotional experience
Making • Gut feelings are emotional signals
Slide 17 • Not all emotional signals are intuition
Intuition as rapid unconscious analysis
• Uses action scripts—pre-programmed routines that allow us to
respond quickly to pattern matches or mismatches

Making Choices More Effectively


• Systematically evaluate alternatives against relevant factors
• Balance emotions and rational influences
• Scenario planning
Making Choices More
Effectively
Slide 18

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Chapter 7: Decision Making and Creativity

Implementing Decisions

Execution—translating decisions into action—is one of the most


important and challenging tasks of leaders
Implementing Decisions
Slide 19

Evaluating Decision Outcomes


• Post-decisional justification is the tendency to inflate quality of
the selected option; forget or downplay rejected alternatives
• Caused by need to maintain a positive self-identity
Evaluating decision
outcomes • Initially produces excessively optimistic evaluation of decision
Slide 20

Escalation of Commitment
The tendency to repeat an apparently bad decision or allocate more
resources to a failing course of action
Escalation of Four main causes of escalation:
Commitment
1. Self-justification
Slide 21
• Persistence shows confidence in the decision
• Saving face and engaging in impression management
2. Prospect theory effect
• Losing a given amount is more disliked than winning the same
amount
• We take fewer risks to receive gains and take more risks to
avoid losses.
3. Perceptual blinders
• Perceptual defence screening out or explain away negative
information
4. Closing costs
• High/unknown costs of ending project

Points for discussion:


If you have already invested $10 000 in a start up organisation and
so far it has failed, would you invest a further $2000 on the chance it
may succeed?
Discuss the rational and emotional decision-making processes to
explain the escalation of commitment.

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Chapter 7: Decision Making and Creativity

Evaluating Decisions More Effectively


• Separate decision choosers from evaluators
• Establish a preset level at which to abandon the project
• Find sources of systematic and clear feedback
Evaluating Decisions
More Effectively
• Involve several people in the evaluation process
Slide 22

Creativity at Google
Google encourages its engineers to use 20% of their time to develop
projects of their choosing
Creativity at Google The company initially allocates limited resources to initiatives, then
Slide 23 assigns more people and budget to projects that show progress and
viability, like Google Maps

Creativity Defined
Developing an original idea that makes a socially recognised
contribution
Creativity Defined • Creativity identifies problems, alternatives, solutions
Slide 24 • Creativity is found in all decisions, not something separate from
usual decisions
Video clip
http://www.youtube.com/watch?v=86x-u-tz0MA Elizabeth Gilbert: A
new way to think about creativity on TED (20 minutes)

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Chapter 7: Decision Making and Creativity

Creativity
Preparation
• Acquiring knowledge and skills appropriate to the problem or
Creativity opportunity
Slide 25 • Developing a clear understanding of what you are trying to
achieve and studying information related to the topic
Incubation
• Time of reflective thought
• Putting the problem aside by maintaining low-level awareness of
it—working on something different
• Assists divergent thinking
• Reframing the problem in a unique way and generating different
approaches to the issues
• Contrasts with convergent thinking—calculating the
conventional ‘right answer’ to a logical problem
Illumination (insight)
• Fleeting awareness of unique idea
• Can be lost quickly if not documented
Verification
• Evaluate and experiment with the idea

Pre-lesson activities:
7.6 Measuring your creative personality
7.7 Testing your creative bench strength

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Chapter 7: Decision Making and Creativity

Characteristics of Creative People


Cognitive and practical intelligence
• Above average intelligence to synthesise information (ability to
Characteristics of connect small bits of information), analyse and apply ideas
Creative People • Practical intelligence—capacity to evaluate the potential
Slide 26 usefulness of ideas
Persistence
• Drive to continue developing and testing after others give up
• Caused by:
 High need for achievement
 Motivation from the task itself
 Moderate/high self-esteem
Subject knowledge and experience
• Sound knowledge and experience of the subject
• Some suggest creativity highest after several years of
experience (e.g. Beatles song writing)
• But longer experience increases reliance on mental models
 May be better to have people from other industries
Independent imagination
• Cluster of personality traits and values, including:
 Openness to experience (Big Five personality dimension):
extent to which a person is imaginative, curious, sensitive,
open-minded and original
 Openness to change values (including self-direction and
stimulation)
 Relatively low need for affiliation (social approval)

Organisational Conditions Supporting Creativity


 Learning orientation in the organisation
 Forgiveness for mistakes
Organisational  Creating intrinsically motivating jobs
Conditions Supporting
Creativity  Open communication and sufficient resources
Slide 27
 A reasonable level of job security
 Support from leaders and co-workers

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Chapter 7: Decision Making and Creativity

Creative Work Environments


Learning orientation
• Encourage experimentation
• Recognise the value of making reasonable mistakes
Creative Work
Environments Intrinsically motivating work
Slide 28 • Creativity higher when job has:
 High task significance (sense of importance)
 Autonomy (freedom to pursue novel ideas)
• Need to ensure jobs are challenging and aligned with the
employee’s competencies
Open communication and sufficient resources
• Provide a reasonable level of job security
• Provide support and encouragement, but also enough pressure
for employees to complete their work
Team competition and time pressure
• Complex effect on creativity—avoid a lot, but too little may also
undermine creativity

Creative Activities
Redefine the problem
• Look at abandoned projects—might be seen in new ways
Creative Activities • Ask people unfamiliar with the issue to explore the problem
Slide 29 Associative play
• Playful activities assist divergent thinking
• Telling impromptu story with objects provided
• Art activities
• Morphological analysis—systematically thinking about all
possible combinations of elements in a product or service
Cross-pollination
• Most creative ideas generated through teams and informal
social interaction.
• Diverse teams—rotate people through different projects
• Formal information sessions
• Internal trade shows

Page 7-14 © 2013 McGraw-Hill Education (Australia) Pty Ltd. All rights reserved.
Chapter 7: Decision Making and Creativity

Solutions to Creativity Brainbusters


This PowerPoint presentation includes a set of slides showing
solutions to the creativity brainbusters activity

Solutions to Creativity
Brainbusters
Slides 30-34

Employee Involvement Defined


• The degree to which employees influence how their work is
organised and carried out
• Different levels and forms of involvement
Employee Involvement
Defined  Decide alone
Slide 35  Receive information from individuals
 Consult with individuals
 Consult with the team
 Facilitate the team’s decision

Page 7-15 © 2013 McGraw-Hill Education (Australia) Pty Ltd. All rights reserved.
Chapter 7: Decision Making and Creativity

Employee Involvement Model


Employee involvement produces several potential beneficial
outcomes, but only under specific circumstances. The benefits
include:
Employee Involvement
Model 1. Better problem identification
Slide 36 • Recognising problems more quickly and defining them more
accurately
2. Synergy produces more and/or better solutions
• Team members create synergy by pooling their knowledge to
form new alternatives
3. Better at picking the best choice
• Decision is reviewed by people with diverse perspectives and a
broader representation of values
4. Higher decision commitment
• Increases sense of personal responsibility for decision’s
success and representation of interests

Contingencies of Involvement
Appropriateness and effectiveness of employee involvement
depends on the situation. Main contingencies in choosing the
optimal level of involvement:
Contingencies of
Involvement Decision structure
Slide 37 • Involvement better when problem is new and complex
• Programmed decisions need less involvement
Source of decision knowledge
• Involve employees when leader lacks knowledge and
employees have information
• Employees likely to have relevant information for complex
decisions
Decision commitment
• Involve employees when they are unlikely to accept a decision
made without their involvement
Risk of conflict
• Only low level of involvement possible if employee norms
conflict with firm’s goals
• High involvement ineffective if employees cannot agree on
solution

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Chapter 7: Decision Making and Creativity

Summary
The rational choice paradigm relies on subjective expected utility to
identify the best choice, but it has limitations

Summary Emotions and intuition also have an important role, not just our
Slide 38
rational decision-making
Creativity is the development of original ideas that make a socially
recognised contribution. The four creativity stages are preparation,
incubation, insight and verification.
In the right conditions, employee involvement can contribute greatly
to the decision-making process, as well as to the employees and the
organisation

Decision Making and Creativity

Decision Making and


Creativity
Slide 39

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Chapter 7: Decision Making and Creativity

SUGGESTED ANSWERS TO CRITICAL THINKING


QUESTIONS
1. A management consultant is hired by a manufacturing firm to determine the best site for its next
production facility. The consultant has had several meetings with the company’s senior executives
regarding the factors to consider when making the recommendation. Discuss the decision-making
problems that might prevent the consultant from choosing the best site location.
This question directly relates to the section on evaluating and choosing solutions. The consultant is asked to
determine the best site location, and this process is subject to the problems presented below. Each problem
should include an example relating to this incident.
Problems with Goals. The consultant probably discovered that executives at the manufacturing firm are not fully
agreed on the priority of factors to consider when choosing a site. They may have conflicting goals— such as a
site that is conveniently located yet low cost. Some of the goals will be ambiguous, such as ‘convenience’.
Problems with Information Processing. The consultant is subject to the same human limitations as other people.
The consultant’s personal biases may cause some information to be screened out or viewed in an
unrealistically favourable light. The consultant is unable to evaluate all possible sites (there must be thousands
of them!), let alone consider every factor for each site. Finally, the consultant probably compares sites against
an implicit favourite, rather than look at all prospective sites simultaneously.
Problems with Maximisation. The consultant’s recommendation probably won’t be the absolutely best site.
Given the volume of information and the sequential decision process, the recommended site is probably one
that is ‘good enough’. In other words, the consultant will satisfice.

2. You have been asked to personally recommend a new travel agency to handle all airfare,
accommodation and related travel needs for your organisation of 500 employees. One of your co-
workers, who is responsible for the company’s economic planning, suggests that the best travel agent
could be selected mathematically by inputting the relevant factors for each agency and the weight
(importance) of each factor. What decision-making approach is your colleague recommending? Is this
recommendation a good idea in this situation? Why or why not?
The rational choice paradigm approach is being recommended for this decision.
The idea that relevant factors should be identified and weighted is good. At least this would help us to think
about which factors are most important for the company. These could include such factors as cost, speed of
service, quality of service, etc.
However, his suggestion that the best decision could be arrived at mathematically is somewhat misleading.
While the rational choice paradigm may rest on the assumption that people evaluate and choose the best
alternatives logically, that is not borne out by empirical evidence.
OB experts have demonstrated that decision makers may not choose the best alternatives for a variety of
reasons. For example, decision makers have limited information processing abilities, evaluate alternatives
sequentially and against implicit favourites, and are influenced by perceptual errors, biases and emotions.
Moreover, when it comes to making a final choice their decisions are often made on the basis of satisficing
rather than maximisation.

3. Intuition is both an emotional experience and an unconscious analytical process. One problem,
however, is that not all emotions that signal that there is a problem or opportunity represent intuition.
Explain how we would know if our ‘gut feelings’ are intuition or not. If they are not intuition, suggest
what might be causing them.
All gut feelings are emotional signals that yield emotional experiences. However, not all emotional experiences
constitute intuition.

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Chapter 7: Decision Making and Creativity

Intuition involves using well-established mental models and templates (derived from tacit knowledge we have
acquired) to compare what fits or doesn’t fit in an observable situation. The unconscious comparison allows us
to anticipate future events. Intuition also relies on action scripts, which are pre-programmed routines for
responding to matched or mismatched patterns. These scripts allow us to act without having to consciously
evaluate the alternatives.
Gut feelings, on the other hand, are not based on well-grounded templates or mental models. Therefore, gut
feelings would be more likely to occur in situations where one has limited experience. The cause of these
feelings would be due to some emotional reaction to a given situation.

4. A developer received financial backing for a new business financial centre along a derelict section of
the waterfront, a few kilometres from the central business district area of a large European city. The
idea was to build several high-rise structures, attract large tenants to those sites, and have the city
extend transportation systems out to the new centre. Over the next decade, the developer believed that
others would build in the area, thereby attracting the regional or national offices of many financial
institutions. Interest from potential tenants was much lower than initially predicted, and the city did
not build transportation systems as quickly as expected. Still, the builder proceeded with the original
plans. Only after financial support was curtailed did the developer reconsider the project. Using your
knowledge of escalation of commitment, discuss three possible reasons why the developer was
motivated to continue with the project.
Escalation of commitment occurs when an individual repeats a bad decision or continues to allocate resources
to a failing cause of action. Students should be encouraged to consider the causes of escalation when discussing
this case.
The four causes are:
Self-justification. It is possible the developer felt that cancelling construction would result in losing face. That is,
because of a personal identification and link with the project, failure would mean a loss of his or her reputation
as well.
Perceptual blinders. Negative information, such as the possibility of failure, may have been unconsciously
screened out or neutralised to protect self-esteem.
Prospect theory effect. The discomfort associated with losing money on this project may have outweighed the
desire for gains. In other words, knowing that stopping the project would mean certain loss, the developer was
willing to go to great lengths to avoid this, even it meant a smaller pay off in the end.
Closing costs. This is closely tied to the prospect theory effect. While there is no evidence of an explicit
monetary penalty clause for non-completion, the developer might have been concerned with these nonetheless.
Aside from monetary loss, costs include loss of reputation, trust, influence etc. One way to avoid these costs is
to carry on with the completion.

5. Ancient Book Company has a problem with new book projects. Even when others are aware that a book
is far behind schedule and may engender little public interest, sponsoring editors are reluctant to
terminate contracts with authors whom they have signed. The result is that editors invest more time in
these projects rather than on more fruitful projects. Describe two methods that Ancient Book Company
can use to minimise this problem, which is a form of escalation of commitment.
Escalation of commitment occurs in large part because individuals identify personally with a certain course of
action they might have chosen, which interferes with the evaluation to continue or abandon a project.
One way to minimise escalation of commitment is to separate the initial decision maker from the evaluator of
the project. These could be two different individuals.
Another way to limit escalation of commitment would involve having clear guidelines or rules that are publicly
established to determine when a project should be abandoned. That would enable the evaluation and
subsequent decision to abandon the project less subjective, and more impersonal.

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Chapter 7: Decision Making and Creativity

Students may also suggest a third way, which is to involve more than one person (team) in the initial decision.
This is predicated on the assumption that it is less likely two or more people would be similarly attached
personally to the decision.

6. Employee involvement applies just as well to the classroom as to the office or factory floor. Explain how
student involvement in classroom decisions typically made by the instructor alone might improve
decision quality. What potential problems may occur in this process?
Problem identification. Because students have a different perspective from the instructor, their involvement
might help to identify issues or problems of which the instructor was unaware. This could lead to
improvements in the quality of the learning experience.
Generating alternatives. Student involvement could potentially improve the number and quality of solutions
generated. This typically happens when more people look for solutions, because individuals have different
perspectives.
Better solutions. The likelihood of choosing the best solution, from the list of alternatives generated, would be
increased due to diverse perspectives and values.
Increased commitment. When students are involved in identifying the issues, generating alternative solutions,
and choosing a solution they may also feel more committed to the decision taken.
Increased perception of fairness. Being involved in the process may also promote a sense of fairness among
students.
To avoid problems with this process, limits should be placed on the extent of participation, and the number of
issues requiring student involvement. For example, the determination of grades should be left up to the
instructor. The types of questions and weightings of exams should also be predetermined.
The instructor would have to make sure all students are equally involved to avoid a small influential and vocal
group of students from dominating the others.
Lastly, the instructor should be mindful that increasing student involvement requires more time, which may in
turn reduce teaching time.

7. Think of a time when you experienced the creative process. Maybe you woke up with a brilliant (but
usually sketchy and incomplete) idea, or you solved a baffling problem while doing something else.
Describe this incident to your class and explain how the experience followed the creative process.
For this question, students should be encouraged to think about a recent project they may have completed and
done well (e.g. major research project). They may initially recall the event in a general sense, but should strive
to divide it according to the four stages outlined in the creative process model.
The insight stage should be particularly relevant since it is the point at which one idea may come while
thinking or doing something else. Students should try to remember how the idea came to them and how they
documented and tested it. Once done, they may be able to also recall the previous stage (incubation).

8. Two characteristics of creative people are that they have relevant experience and are persistent in
their quest. Does this mean that people with the most experience and the highest need for achievement
are the most creative? Explain your answer.
The answer is probably ‘No’. The textbook states that there is a dilemma regarding experience. On the one
hand, people need plenty of experience to be familiar with the issues. The literature on creativity suggests that
it may take several years of experience before a person has reached creative potential.
The dilemma is that the longer a person is in one field of study, the more he or she develops a mental model
that stifles creativity. Some companies prefer people with no experience in an industry so they are more
creative. These two points are not exactly contradictory— a person may be new to an industry but has many
years of experience in a particular skill or trade. However, the issue does suggest that there is an optimal level
of experience before mental models undermine creative potential.

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Chapter 7: Decision Making and Creativity

It is less certain whether creativity continues to increase with need for achievement. The textbook explains that
need for achievement makes creative people more persistent, which is necessary in the face of short-term
failures and doubts from others. Would a very strong need for achievement undermine creative potential? This
is a matter for debate. Most likely too much need for achievement will create a blind drive which can prevent
people from seeing alternative strategies and the obvious inappropriateness of existing routes.

CLASS EXERCISE 7.1: EMPLOYEE INVOLVEMENT


SCENARIOS

Scenarios Synopsis
These two scenarios provide an excellent opportunity for students to discuss the conditions under which various
levels of employee involvement should be applied. To decide the best level, students should consider the benefits of
and problems with employee involvement described in this chapter.

In the first incident, students take the role of head of research and development (R&D) at a major beer company.
One of the scientists has stumbled on a new sugar substitute and the decision is whether to continue funding this
project in light of limited budget and the company’s unlikely use of this product. The second incident involves the
captain of a Coast Guard cutter who is searching for a plane that has crashed offshore. After 20 hours of searching, a
major storm is approaching and the captain must decide whether to abandon the search or to continue and place
the ship at risk.

Suggested Answers to Scenario Questions

Scenario 1: The Sugar-Substitute Research Decision

1. To what extent should your subordinates be involved in this decision? Select one of the following levels
of involvement:
(a) No involvement: You make the decision alone without any participation from subordinates.
(b) Low involvement: You ask one or more subordinates for information relating to the problem, but you don’t
ask for their recommendations and might not mention the problem to them.
(c) Medium involvement: You describe the problem to one or more subordinates (alone or in a meeting) and
ask for any relevant information as well as their recommendations on the issue. However, you make the final
decision, which might or might not reflect their advice.
(d) High involvement: You describe the problem to subordinates. They discuss the matter, identify a solution
without your involvement (unless they invite your ideas), and implement that solution. You have agreed to
support their decision.
Most teams will likely identify the ‘medium involvement’ category, although some tend to suggest high
involvement. The answer to the next question explains why medium involvement is probably best here.

2. What factors led you to choose this alternative rather than the others?
This question can be answered by reviewing the four contingencies of employee involvement discussed in the
textbook.
Decision structure: This decision has low structure. The scenario says that there is a decision process for
funding projects behind schedule, but there are no rules or precedents about funding projects that would be
licensed but not used by the organisation. Consequently, some level of involvement may be valuable.
Source of decision knowledge: The scenario clearly says that the sugar substitute project is beyond your
technical expertise and that it is difficult to determine the amount of research required. Scientists have

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Chapter 7: Decision Making and Creativity

information unavailable to the leader, but they would not have sufficient information to make the decision
alone. Overall, this suggests that some involvement (probably at least a medium level) is desirable.
Decision commitment. This might be debatable, but most employees know that funding decisions are ultimately
in the hands of executives who must take responsibility for those decisions. Also, it sounds like past funding
decisions are made by the leader, not employees (mainly due to conflict problems described below). Moreover,
employees don’t implement anything as a result of this decision, so there is probably minimal adverse effect of
low commitment.
Risk of conflict. There are two dimensions of this contingency. First, with respect to goal compatibility between
employees and the company, the scenarios says that you believe that most researchers in the R&D unit are
committed to ensuring that the company’s interests are achieved. Second, it is almost certainly true that
conflict will occur among employees. This is a win–lose situation where funding one project reduces or
eliminates funding on other projects. Overall, the conflict among employee discourages high involvement, but
will allow a medium level of involvement.

3. What problems might occur if less or more involvement occurred in this case (where possible)?
A higher degree of involvement would probably be difficult because of the problem of conflict among
employees. Employees could not agree because a decision to fund the project would reduce their own funding.
A low level of involvement would lose some of the synergy of discussion about the issue. This synergy brings
out valuable information and potentially more creative solutions to the problem.

Case 2: Coast Guard Cutter Decision

1. To what extent should your subordinates be involved in this decision? Select one of the following levels
of involvement:
The preferred level of involvement is no involvement. Specifically, the captain would solve the problem or
make the decision using information available at the time.

2. What factors led you to choose this alternative rather than the others?
This question can be answered by reviewing the four contingencies of employee involvement discussed in the
textbook.
Decision structure: This decision probably has high structure because the captain must ultimately protect the
ship and crew, or would have reasonably clear rules on taking this sort of risk.
Source of decision knowledge: The captain has as much information as anyone on the ship about which option to
select.
Decision commitment. The crew will likely support the captain’s decision without any involvement.
Risk of conflict. There is a reasonable possibility that crew members will be divided (i.e. conflict will occur) over
the preferred alternative.

3. What problems might occur if less or more involvement occurred in this case (where possible)?
The main problem with applying a higher level of employee involvement here is that the problem is well
structured and the time-consuming process may be redundant. There is also a chance that subordinates would
engage in dysfunctional conflict if they were asked to make the decision.

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Chapter 7: Decision Making and Creativity

TEAM EXERCISE 7.2: WHERE IN THE WORLD ARE


WE?
Purpose
This exercise is designed to help students to understand the potential advantages of involving others in decisions
rather than making decisions alone.

Materials
Students require an unmarked copy of the map of Asia with grid marks (provided in the textbook). Students are not
allowed to look at any other maps or use any other materials. The instructor will provide a list of communities (see
below) located somewhere on the map. The instructor will also provide copies of the answer sheet after students
have individually and in teams estimated the locations of communities.

Instructions
1. Students are asked to write down in Exhibit 2 the list of communities identified by the instructor. Then, working
alone, students estimate the location in Exhibit 1 of these communities, all of which are in Asia. For example, they
would mark a small ‘1’ in Exhibit 1 on the spot where they believe the first community is located. They would mark
a small ‘2’ where they think the second community is located, and so on. Students need to number each location
clearly and with numbers small enough to fit within one grid space.
2. The instructor will organise students into approximately equal sized teams (typically five or six people per
team). Team members should reach a consensus on the location of each community listed in Exhibit 2. The
instructor might provide teams with a separate copy of this map, or each member can identify the team’s numbers
using a different coloured pen on their individual maps. The team’s decision for each location should occur by
consensus, not voting or averaging.

3. The instructor will provide or display an answer sheet, showing the correct locations of the communities. Using
this answer sheet, students will count the minimum number of grid squares between the location they individually
marked and the true location of each community. Students then write the number of grid squares in the second
column of Exhibit 2, then add up the total. Next, they count the minimum number of grid squares between the
location the team marked and the true location of each community. They should then write the number of grid
squares in the third column of Exhibit 2, then add up the total.

4. The instructor will ask for information about the totals and the class will discuss the implication of these results
for employee involvement and decision making.

Comments for Instructors


This exercise demonstrates the importance of employee involvement for better decision making. Generally, teams
make better decisions than do individuals working alone. This is reflected by a team score that is almost always
lower than the individual score (a lower score indicates better accuracy). This is particularly true in this exercise
because students typically have varied backgrounds in terms of where they have lived or where their families live.
Here are results for two classes of MBA students and middle managers in an executive program, all of whom live in
Asia.

Individual average: 51.5 (Lowest: 27 Highest: 103)


Team average: 33.7 (Lowest: 26 Highest: 43)

(Note: A lower score indicates better accuracy)

The discussion should focus on the reasons why groups tend to make better decisions. Specifically, team
members bring diverse knowledge to the decision-making process, so the collective decision is usually more
accurate than the typical individual’s decision. The class should also explore why some individuals score lower than
the team. Students will usually point out that they were unsure of their knowledge, so did not push their point of
view. Occasionally (but not often stated in class), individual students dominate the discussion, thereby preventing
more knowledgeable students from presenting their information.

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Chapter 7: Decision Making and Creativity

Communities in Asia

[Note: These names are NOT jumbled. This is how they are actually spelt. The names are not listed in any particular
order.]

Bagan
Chennai
Ho Chi Minh City
Ipoh
Khon Kaen
Kuching
Medan
Wuhan

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Chapter 7: Decision Making and Creativity

Student Handout: Answer to ‘Where in the World Are We?

1. Bagan, Myanmar 2. Chennai, India 3. Ho Chi Minh City, Vietnam


4. Ipoh, Malaysia 5. Khon Kaen, Thailand 6. Kuching, Malaysia
7. Medan, Indonesia 8. Wuhan, China

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Chapter 7: Decision Making and Creativity

CLASS EXERCISE 7.3: WINTER SURVIVAL EXERCISE

Purpose
This exercise is designed to help students understand the potential advantages of team decision making compared
with individual decision making.

Instructions
1. Students are asked to rank the 11 items shown in the chart following the exercise according to their importance
to their survival. In the ‘Individual Ranking’ column, students indicate the most important item with ‘1,’ going
through to ‘11’ for the least important. They should keep in mind the reasons why each item is or is not important.

2. The instructor will then divide the class into small teams (typically five members) and each team will rank order
the items in the second column. Team rankings should be based on consensus, not simply averaging the individual
rankings.

3. When the teams have completed their rankings, the instructor will provide the expert’s ranking (see below).
Students enter the expert’s ranking in the third column.

4. Each student will compute the absolute difference (i.e. ignoring minus signs) between the individual ranking and
the expert’s ranking, record this information in column 4, and sum the absolute values at the bottom of column 4.

5. In column five, they record the absolute difference between the team’s ranking and the expert’s ranking, and sum
these absolute scores at the bottom. A class discussion of the absolute merits of individual versus team decision
making will follow.

Comments for Instructors


This exercise demonstrates the importance of employee involvement for better decision making. Generally, teams
make better decisions than do individuals working alone. This is reflected by a team score that is usually lower than
the individual score. However, some individuals score better than the group because they have expertise on this
topic and their team does not rely completely on the suggestions of members who claim to be experts.

The discussion following the exercise should focus on the reasons why groups tend to make better decisions.
Specifically, team members bring diverse perspectives and a better representation of values to the decision-making
process, thereby increasing the team’s ability to see the problem in different ways and to avoid narrow mental
models. Moreover, team members bring more information to the decision, so the collective decision is usually more
accurate than the typical individual’s decision.

The instructor should also ask about situations in which team members ignored ideas from members who would
have provided a more accurate solution. Also inquire about power struggles in the groups.

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Chapter 7: Decision Making and Creativity

Winter Survival Exercise Solution

Item Expert Reasoning


Ranking

Ball of steel wool 2 Best substance to catch spark and support a flame, even if it is wet.

Newspapers 8 Used for starting fire and as insulation (e.g. wrapped around legs
with dead air space). Can also be rolled into a cone to yell with.

Compass 11 Might tempt survivors to walk away from crash site. Top might be
used as a reflective device, but not very effectively.

Hand axe 6 Useful for cutting wood for fire, as well as clearing sheltered
campsite, cutting boughs for ground insulation and frame for shelter.

Cigarette lighter 1 Even without fluid, the cigarette lighter is very important for creating
sparks for fire. Fire is necessary to keep warm and can be used as a
signal (smoke during day; firelight at night.)

Sectional air map 10 Dangerous item because it would encourage survivors to attempt to
walk to the nearest town, condemning them to almost certain death.

Canvas 5 Useful for shelter because it keeps out wind and snow.

Shirt and pants 3 A very versatile material. Needed mainly for warmth, signalling and
tinder to make fires. Can also be used for bedding, bandages, string
when unravelled and drawing a map.

Can of shortening 4 The shortening is useful for the tin container that typically holds this
(animal fat) product. The top can be used as a reflective device. The container
can be used to melt snow into drinking water. The shortening is also
useful to protect the face, lips and hands from cold weather. When
melted, shortening can be used to start fires and, when soaked into a
piece of cloth, can create a candlewick.

Whisky 9 Only use is as fuel for fire. Can create a torch by soaking cloth in
whisky. Dangerous to drink because (a) it takes on ambient
temperature and would therefore freeze the drinker’s oesophagus,
(b) increases risk of dehydration, and (c) increases hypothermia by
dilating blood vessels.

Chocolate bars 7 Supplies energy to sustain survivors. Good source of energy without
putting digestive demands on the body.

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Chapter 7: Decision Making and Creativity

CLASS EXERCISE 7.4: THE HOPPING ORANGE

Purpose
This exercise is designed to help students understand the dynamics of creativity and team problem solving.

Instructions
Students are placed in teams of six students. One student serves as the official timer for the team and must have a
watch, preferably with stop watch timer. The instructor will give each team an orange (or similar object) with a
specific task involving use of the orange. Each team will have a few opportunities to achieve the objective more
efficiently.

The instructor will read the following instructions. These instructions ARE NOT provided in the textbook so
students have not had an opportunity to think about the exercise beforehand.

The task for this exercise is to have each team member individually handle the orange—
toss to each other, or anything you want—but the orange must end up in the hands of the
person who first held it. This is a timed exercise. The winning team accomplishes the task
in the shortest length of time. You will have a few trials to improve your speed.

Comments for Instructors


This quick exercise works best if you avoid cueing students about the possibility of rolling or dropping the orange.
The title and instructions create a mental model that assumes team members should toss the orange from one
person to the next. In fact, this is not the most efficient method and the exercise does not limit the method in which
all team members touch the orange.

The most efficient way to satisfy the requirements of this exercise is to have team members use their hands to
create a vertical tube. They should each have a few fingers sticking into the tube. Then, one person drops the
orange through the tube so that it touches everyone and the person’s other hand is at the bottom of the tube to
catch it.

If there are some doubts about the meaning of ‘handle the orange’, then a second strategy is to create a slide for the
orange. The slide consists of the cupped hands of five of the six team members held together so that the orange is
rolled from the top set of hands to the bottom. The sixth person drops the orange onto the slide, then runs to the
other end to catch it as it rolls down.

Although balls or other round objects may be used, an orange or other semi-round fruit or vegetable (e.g. apple,
lemon, potato) works best because students quickly identify balls with rolling. They are less likely to break out of
the mental model of tossing where fruit or vegetables are involved.

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Chapter 7: Decision Making and Creativity

CLASS EXERCISE 7.5: CREATIVITY BRAINBUSTERS

Purpose
This exercise is designed to help students understand the dynamics of creativity and team problem solving.

Instructions
This exercise may be completed alone or in teams of three or four people, although the latter is more fun. If teams
are formed, students who already know the solutions to these problems should identify themselves and serve as
silent observers. When finished (or time is up), the instructor will review the solutions and discuss the implications
of this exercise. In particular, be prepared to discuss what you needed to solve these puzzles and what may have
prevented you from solving them more quickly (or at all).

Comments for Instructors


[NOTE: The PowerPoint file for this chapter includes slides that visually display the answers to these creativity
brainbusters.]

Double Circle Problem. I have found that students are usually dumbfounded and don’t even try. How can you draw
two circles with one line and no connection between them? Here’s the answer: Draw the outer circle anywhere on
the page. When finished, fold a corner of the paper over so that it lies on top of the circle and the paper edge is
beside your pencil (see (a) below). Move the pencil across this folded over edge to a point inside the circle you just
drew. Move the corner back to its original position and complete the second circle.

Nine Dot Problem. (Note: This is sometimes known as the Eskimo puzzle because Inuit people apparently have less
trouble solving it. The reason is that they have no fences, so their brain doesn’t restrict their solutions within the
area of the dots.) There are many ways to solve this puzzle. The first solution below ((b)) is the most common.
Solution (c) is somewhat questionable because the pencil doubles back across existing lines. Some might say that
there are more than four lines, although we see only four lines.

Nine Dot Problem Revisited. Some students will figure out the nine dot problem with four lines. Fewer will figure out
the three line solution. The most obvious solution is shown in (d) below. Now, ask students for a solution with
FEWER than three lines. There are a few ways of doing this. Draw nine large dots on a very large piece of paper,
then roll the paper into a large tube. Next, draw a single line on a slight angle from the top of one column of dots
down and around the tube to the middle row, then around the tube again to the third column of dots. The result is
shown in (c) below. If students suggest that this method would not cover the dots correctly, you could suggest that
the paper could be so large that the angle becomes asymptotically minuscule. Also, you could keep the paper flat
and draw a straight line twice around the earth. Another way to pass a pencil line through all dots with a single
straight line is to make the line wide enough to cover all of the dots. Some students might also consider folding the
paper so that the dots are folded on top of each other. Then punch a hole with your pencil through all of the dots. It
would be an unusual line, but it seems to fit within the protocol!

(c)

(b) (d) (e)


(a)

Word Search Problem. The trick here is to correctly interpret the meaning of the instructions. Many people tend to
look for five letters that they can cross out. Instead, they should cross out the words ‘five letters’ that are embedded
in the row of letters. This leaves the word ‘creative’. [Note: This exercise is fairly new, so it may be possible that

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Chapter 7: Decision Making and Creativity

students can cross out any five letters in the sequence to form a single word. However, we have not yet found this
option.]

Burning Ropes. This is a real challenge to most students in my class, but a few people get the solution. At time 0,
light BOTH ends of one rope and one end of the second rope. The first rope will necessarily burn up in 30 minutes.
When this is done, light the second end of the second rope. With 30 minutes of the second rope burned up, burning
both ends of the remainder will take exactly 15 minutes. Some students suggest cutting the rope in half, but they
forget that burn time is not equal across the rope. If you cut a rope in half and burn both ends of each, one might
burn for five minutes and the other for 25 minutes (not necessarily 15 minutes each).

Bonus Brainbuster
Roman Numeral Problem. Draw the roman numbers ‘IX’ (without quote marks) on an overhead or whiteboard.
Then say to students: ‘Here is the Roman numeral 9. Add only one line to create a six.’

Answer to Roman Numeral Problem: This puzzle can be solved by drawing an ‘S’ in front of the ‘IX’. Alternatively, the
solution could simply be to draw a ‘6’, because this a single line, too. A third solution requires a wide marker the
same colour as the paper on which the IX is written. Turn the paper upside down (so you see an XI). Now, draw a
straight line across the bottom half of the two Roman numerals (thereby hiding them against the paper
background). The result shows the Roman numeral ‘VI’.

SELF-ASSESSMENT 7.6: MEASURING YOUR


CREATIVE PERSONALITY?

Purpose
This self-assessment is designed to help you to measure the extent to which you have a creative personality.

Overview and Instructions


This instrument estimates the student’s creative potential as a personal characteristic. The scale recognises that
creative people are intelligent, persistent and possess an inventive thinking style. Creative disposition varies
somewhat from one occupational group to the next.

This self-assessment consists of an adjective checklist with 30 words. Students are asked to put a mark in the box
beside the words that they think accurately describe them. They MUST NOT mark the boxes for words that do not
describe them. Students need to be honest with themselves to receive a reasonable estimate of their creative
personality.

Feedback for the Creative Personality Measure


The table below is based on norms for undergraduate and graduate university students in the United States.
Scores range from –12 to +18. People with higher scores have a higher creative personality.

Score Interpretation

+10 to +18 High creative personality


+1 to +9 Average creative personality
-12 to 0 Low creative personality

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