Decision Making

Prof Bharat Nadkarni

 Organizational Theories and Structure Designs. Prof B M Nadkarni

Decision Making Process

Situation

Information Input

Interpretation and Advice

Choice

Authorisation

Execution

Action
DECISION MAKING PROCESS
Most organisational decisions are not made in a logical, rational
manner. Most decisions do not begin with the careful analysis of
a problem, followed by systematic analysis of alternatives, and
finally implementation of solutions. On the contrary, decision
processes are characterised by conflict, coalition building, trial
and error, speed, and mistakes. Managers operate under many
constraints that limit rationality, hence, intuition and hunch often
are the criteria for choice.
Another important idea is that individuals make decisions, but
organisational decisions are not made by a single individual.
Organisational decision making is a social process. Only in rare
circumstances do managers analyse problems and find
solutions by themselves.
Many problems are not clear, so widespread discussion and
coalition building take place. Once goals and priorities are set,
alternatives to achieve those goals can be tried. When a
manager does make an individual decision, it is often a small
part of a larger decision process. Organisations solve big
problems through a series of small steps. A single manager
may initiate one step but should be aware of the larger decision
process to which it belongs.
The greatest amount of conflict and coalition building occurs
when problems are not agreed on. Priorities must be
established to indicate which goals are important and what
problems should be solved first. If a manager attacks a problem
other people do not agree with, the manager will lose support
for the solution to be implemented. Thus, time and activity
should be spent building a coalition in the problem identification
Stage of decision making. Then the organisation can move
towards solutions. Under conditions of low technical knowledge,
the solution unfolds as a series of incremental trials that will
gradually lead to an overall solution.
The most novel description of decision making is a garbage can
model. This model describes how decision processes can seem
almost random in highly organic organisations such as learning
organisations. Decisions, problems, ideas and people flow
through organisations and mix together in various combinations.
Through this process, the organisation gradually learns. Some
problems may never be solved, but many are, and the
organisation will move toward maintaining and improving its
level of performance.
Finally, many organisations must make decisions with speed,
which means staying in immediate touch with operations and
environment. Moreover, in an uncertain world, organisations will
make mistakes, and mistakes made through trail and error
should be encouraged. Encouraging trial and error increments
facilitates organisational learning. On the other hand, an
unwillingness to change from a failing course of action can have
serious negative consequences for an organisation. Norms for
consistency and the desire to prove one’s decision correct can
lead to continued investment in a useless course of action
 Organizational Decision Making
• Management Science Approach
• Carnegie Model
• Incremental Decision Process Model
• Garbage Can Model

7
Thank You
Life Cycle Development

1. Entrepreneurial stage : Growth through creativity :

Crisis of Leadership : Growth through Direction
2. Collectivity stage :
Crisis of Autonomy : Growth through Delegation and
Control
3. Formalisation stage :
Crisis of Red Tape : Growth through Co-ordination/
Teamwork
4. Elaboration stage :
Crisis of revitalisation and renewal :
Growth through Collaboration – small company
thinking, invest –maintain- harvest
Population-Ecology Model
• It focuses on organisational diversity and adaptation within
the population of organisations. (POO)
• Innovation and change in POO take place through the birth
of new forms and kind of organisations more so than by the
reform and change of existing organisations.
• New organisations meet the new needs of society more than
established organisations that are slow to change.
• Established organisations become like dinosaurs due to
heavy investments in plants and equipments and specialised
personnel, established viewpoints of decision makers and
organisation’s own successful history.
• According to population-ecology view, the changing
environment determines which organisations will survive or
fail.
• Those organisations suffer from inertia will fail.
Process of Ecological change
1. Variation : Large number of variations appear in the
population of organisations.

2. Selection : Some organisations find a niche and survive.

3. Retention : A few organisations grow large and become

institutionalised in the environment.

Strategies for Survival / Sustainability

• Continuous adaptation with Stakeholder concept
• Invent/ Innovate – Invest – Maintain – Harvest
• ADRLI
Interorganisational Relationships
•Organisation Type on X axis
Dissimilar and Similar
•Organisation Relationship on Y axis
Co-operative and Competitive

1.Collaborative Network – Co-operative and Dissimilar

2.Resource Dependence - Competitive and Dissimilar
3.Institutionalism - Co-operative and Similar
4.Population Ecology - Competitive and Dissimilar

From Adversaries to Partners

Organisation Structure
•Functional, divisional, geographical, Matrix, Network,
Hybrid (combination of centralised and decentralised i.e. Strategy
and Biz Dev. at HQ. rest decentralised)
Horizontal and Vertical Linkages
•Horizontal
Linkage between Marketing dept., R & D and Technical dept.
and production dept. in new product developme
•Vertical
Goals and plans of higher hierarchy to be implemented
through lower hierarchy
Ensure No overlap – No gap
•Information systems in Vertical and Horizontal systems
•Full time Integrator
•Teams - Cross functional
Organizational Change

Prof Bharat Nadkarni

 Organizational Change : Prof Bharat Nadkarni

Nothing can be changed

            by changing the face...

but everything can be changed

           by facing the change...

 Organizational Change : Prof Bharat Nadkarni

Test Your Memory

• When did you last see, or hear about these?

– Typewriter / Stencils / Cyclostyling
– Telex / teleprinter / telegram
– Fountain pen / ink / blotting paper
– Pagers
– Black & white TV
– VCR
– On the way out: Fax / Film roll / conventional
telephone
– 9 to 5 working hours
 Organizational Change : Prof Bharat Nadkarni

The Rise & Decline of………..

• All species (and organizations) go through a common life-

cycle of Introduction  growth  maturity  decline

• Transformation & change management is about:

– Hastening the growth phase
– Prolonging life by arresting the decline phase
– Adapting to emerging opportunities & threats
– Continuous Growth & Expansion
 Organizational Change : Prof Bharat Nadkarni

Types of Systems
1. Open System: Recognizes dynamic interaction with its
environment. Ex. Most admired organizations.
2. Closed System: Essentially ignores the effect of the
environment on the system. Ex. Ford, AT & T.

Characteristics of Open System

1. Environment Awareness.
2. Feedback.
3. Negative entropy.
4. Steady state.
5. Balance of maintenance and adaptive activities
6. Equifinaliy
7. Movement toward growth and expansion.
 Organizational Change : Prof Bharat Nadkarni

Intriguing Ineptitude

• An oft-repeated cliché: “The only thing constant in life is

change”
• Yet, we are hopelessly clumsy at managing change.
• Most attempts at change not only fail to lead to
improvements, but also result in organizational trauma.
 Organizational Change : Prof Bharat Nadkarni

Lessons From Dr. Christian Barnard

• The recipient of the first heart transplant died within a

fortnight of his operation.
• Cause of death: “physiological shock”
• The patient’s body rejected the healthy transplanted
heart.
• Lesson learnt: First, suppress the body’s immune system
to prepare it to accept an alien organ.
 Organizational Change : Prof Bharat Nadkarni

The Typical Change Process

• A key person has a ‘brilliant idea’

• Overcome by the brilliance of his own idea, he is in a
tearing hurry to implement it.
• He is totally insensitive to the ‘immune system’ of his
organization.
• He follows through unilaterally. Result:
– Surprise
– Anger
– Rejection
 Organizational Change : Prof Bharat Nadkarni

Remember !!

• The brilliance of an idea is not enough

• Change strikes fear in the subconscious minds of those
affected by it.
• Therefore, it must be communicated & sold well—in order
to be understood.
• The time invested in this preparatory phase of
communicating the need for, and advantages of, change
is vital for the success of any change effort.
 Organizational Change : Prof Bharat Nadkarni

The Successful Approach: I4

• Inform
– Highlight the dangers lurking round the corner
– Establish the need for change
• Inspire
– Highlight the benefits from change
• Implement
– Involve people
– Allow experiments & tolerate failures
• Institutionalize
– Celebrate successes
 Organizational Change : Prof Bharat Nadkarni

What You Can Do

• Accept change yourself

• Communicate, communicate & communicate.
• Listen. Understand and remove fears
• Involve people in planning & implementation
• Develop strategy for overcoming resistance
• Help people learn new skills
• Challenge complacency
– Share information about competition / threats
– Set high standards of performance
 Organizational Change : Prof Bharat Nadkarni

A 7-step Roadmap

• Creating a shared need: Why do it?

• Visioning: What will it look like when done?
• Leading change: Who will be responsible?
• Mobilizing commitment: Who else to involve?
• Modifying systems / structures: How will it be
institutionalized?
• Monitoring progress: How will it be measured?
• Making it last: How will it get started and last?
Survival Rate for Globalised Corporates

Age in Percentage Perish Percentage surviving

Years
5 62 38
10 79 21
15 86 14
20 90 10
25 93 7
50 98 2
75 99 1
100 99.50 0.50
Changing Characteristics of Corporates

Old New
Goal Oriented Vision oriented
Price focused Value focused
Product quality Total quality
Product driven Customer driven
Shareholder focused Stake holder focused
Finance oriented Speed oriented
Efficient, Stable Innovative, entrepreneurial
Hierarchical Flat, empowered
Machine based Information based
Functional Cross functional
Rigid, Committed Flexible, learning
Local/regional/National Global
 Organizational Change : Prof Bharat Nadkarni
Dealing with Resistance to Change
1. Education and Communication

2. Participation

3. Facilitation and Support

4. Negotiation

5. Cooptation

6. Coercion
 Organizational Change : Prof Bharat Nadkarni

Concluding Thoughts
• Change is a sign of life
• Change is an endless journey
• Change efforts often fail because:
– Of obsession with what to change—at the expense of
how to change.
– Undue haste
– They are introduced more out of fashion—than out of
clear assessment of needs.
• Steady, continuous, incremental change may not be as
attention-grabbing as ‘breakthrough heroic’ changes—but
is more value-adding.
 Organizational Change : Prof Bharat Nadkarni

V U C A

Volatility, Uncertainty,
Complexity and
Ambiguity
 Organizational Change : Prof Bharat Nadkarni
• The deeper meaning of each element of VUCA serves to
enhance the strategic significance of VUCA foresight and
insight as well as the behaviour of groups and individuals
in organizations. It discusses systemic failures and
behavioural failures, which are characteristic of
organisational failure.
• V = Volatility. The nature and dynamics of change, and
the nature and speed of change forces and change
catalysts.
• U = Uncertainty. The lack of predictability, the prospects
for surprise, and the sense of awareness and
understanding of issues and events.
• C = Complexity. The multiplex of forces, the confounding
of issues, no cause-and-effect chain and confusion that
surrounds organization.
 Organizational Change : Prof Bharat Nadkarni

• A = Ambiguity. The haziness of reality, the potential for

misreads, and the mixed meanings of conditions; cause-
and-effect confusion.
These elements present the context in which organizations
view their current and future state. They present
boundaries for planning and policy management. They
come together in ways that either confound decisions or
sharpen the capacity to look ahead, plan ahead and move
ahead. VUCA sets the stage for managing and leading.
 Organizational Change : Prof Bharat Nadkarni

The particular meaning and relevance of VUCA often relates

to how people view the conditions under which they make
decisions, plan forward, manage risks, foster change and
solve problems. In general, the premises of VUCA tend to
shape an organization's capacity to:
•Anticipate the Issues that Shape Conditions
•Understand the Consequences of Issues and Actions
•Appreciate the Interdependence of Variables
•Prepare for Alternative Realities and Challenges
•Interpret and Address Relevant Opportunities
 Organizational Change : Prof Bharat Nadkarni

For most contemporary organizations – business, the

military, education, government and others – VUCA is a
practical code for awareness and readiness. Beyond the
simple acronym is a body of knowledge that deals with
learning models for VUCA preparedness, anticipation,
evolution and intervention.
 Organizational Change : Prof Bharat Nadkarni
At some level, the capacity for VUCA management and
leadership hinges on enterprise value systems, assumptions
and natural goals. A "prepared and resolved" enterprise is
engaged with a strategic agenda that is aware of and
empowered by VUCA forces.
The capacity for VUCA leadership in strategic and operating
terms depends on a well-developed mind set for gauging the
technical, social, political, market and economic realities of
the environment in which people work. Working with deeper
smarts about the elements of VUCA may be a driver for
survival and sustainability in an otherwise complicated world.
Psychometrics which measure fluid intelligence by tracking
information processing when faced with unfamiliar, dynamic
and vague data can predict cognitive performance in VUCA
environments.
 Organizational Change : Prof Bharat Nadkarni

Themes
•Failure in itself is not a catastrophe, but failure to learn from
failure definitely is. It is not enough to train leaders in core
competencies, without identifying the key factors that inhibit
their use the resilience and adaptability that are vital in order
to distinguish potential leaders from mediocre managers.
Anticipating change as a result of VUCA is an outcome to a
resilient Leader. The capacity of individuals and
organizations to deal with VUCA can be measured with a
number of engagement themes:
•Knowledge Management and Sense-Making
•Planning and Readiness Considerations
•Process Management and Resource Systems
 Organizational Change : Prof Bharat Nadkarni

• Functional Responsiveness and Impact Models

• Recovery Systems and Forward Practices
• Systemic failures
• Behavioural failures
Organizational Change : Prof Bharat Nadkarni