Individual Decision

Making and
Creativity
Decisions
Decision defined
What takes place when a
person chooses among
two or more alternatives in
order to solve a problem.
Problem
A discrepancy between the
ideal and the real that
requires a decision about
which alternative should
be chosen to remedy the
discrepancy.
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Types of Decisions
Programmed Decisions
Programmed (routine) decisions use standardized
response alternatives to recurring problems.
Non-programmed Decisions
Nonroutine decisions involving creative thinking to
develop unique responses to nonrecurring problems
for which alternatives are not known in advance.

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Degree of
Risk and Certainty Risk Uncertainty
Uncertainty Facts are unknown.
Facts are well known. Facts are known.
Associated
with Alternatives are known Alternatives are less Few alternatives are
and known.
Decisions outcomes can be
clearly defined.

predicted accurately. The probability of The probability of

outcomes is predicted outcomes cannot be
Usually involves from experience. predicted accurately.
lower-level issues

Low Degree of Risk and Uncertainty High

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Risk and Uncertainty
Prospect theory.
Prospect theory also known as the "loss-aversion" theory,
assumes that losses and gains are valued differently, and
thus individuals make decisions based on perceived gains
instead of perceived losses.
 If decision risk is framed in terms of winning, managers are
more likely to take a chance on an outcome of potential value.
 If decision risk is framed negatively, managers are less likely
to take the risk.

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Decision-Making
Models
Classical decision model
 The environment is certain and stable.
 Managers are rational decision-makers.

Behavioral decision model

 There is environmental uncertainty and instability.
 Managers have cognitive limitations and make decision
based on their perceptions of a situation.

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The Decision-
Making Step 1 Step 2 Step 3 Step 4

Process Identify and Establish Develop Evaluate

Diagnose the Decision Creative the
Problem Criteria Alternatives Alternatives

Step 5 Step 6 Step 7

Choose Implement Evaluate

One the and Control
Alternative Decision

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Bounded Rationality and
Influences on Decision Making

Bounded rationality (Herbert Simon)

The rationality of decisions is limited by:
 The extent of the decision maker’s mental abilities.
 External influences over which the decision maker has little
or no control.
 Satisficing decisions: when the first sufficient alternative that
is adequate, acceptable, or passable is chosen
 Heuristics: simplified strategies (rules of thumb) for decision
making.

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Influences on
Bounded An experience-based way of knowing or reasoning in
Rationality Intuition
which weighing and balancing evidence are done
automatically without using a step-by-step logical
process.

Self-efficacy The feeling of being an effective and competent

person with respect to a task.

Procrastination Delaying taking action without a valid reason results in

indecisiveness and inaction.

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The Nature of Creativity

 Is the process of developing good ideas that can

be put into action.
 Is essential to dealing with nonprogrammed
decisions.
Approaches to understanding creativity:
 Steps in the creative process
 Characteristics of creative people
 Conditions necessary for creativity
Steps in the
Creative
Process
1

Preparation
2

Incubation 3

Illumination
Evaluation
5

Verification
and
application

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Characteristics of Creative People

Knowledge Intellectual abilities Personality

 Are bright but not brilliant;  Have a positive self-image;
Have acquired a
possessing creative not blindly self-confident.
broad background
intelligence.  Able to cope with criticism of
of facts and
 Are good at generating and their ideas.
information needed
choosing alternatives  Can tolerate the isolation
to support creative
(thinking necessary for developing
problem solving
divergently/convergently). ideas.
when combining
 Are youthfully curious and  Are frequently
ideas and things in
empathetic. nonconformists and do not
new and different
 Creatively use both fluid need strong approval from
ways.
(processing) and the group.
crystallized (accumulated  Are persistent in carrying
intelligence). through on an idea.
 Can deal with ambiguity and
chaos.
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Conditions Internal factors affecting creativity:
Necessary for
Creativity  Expertise
 Creative-thinking skills

 Internal (intrinsic) motivation

External factors affecting creativity:

. An environmental need that stimulates goal setting

 Conflict and tension that put people on edge

 Encouragement from others

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 Enhancing and Improving Creativity
Creative problem solving requires:
 Overcoming traditional ways of thinking by breaking down the rigid thinking that blocks new
ideas.
 Encouraging creative persons to “think outside the box. ”

Techniques for Enhancing Creativity

Brainstorming:
 Use groups of five to seven people.
 Encourage spontaneous expression of ideas
 Gather the largest quantity and variety of ideas to increase the likelihood of a breakthrough
 Encourage combination and improvement of ideas
 Keep a record of ideas by writing them down
 Do not overstructure the session by following the rules to rigidly

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 Techniques for Enhancing Creativity (cont’d)

Idea quotas:
 Demand that employees come up with new ideas on a regular basis.
Heterogeneous group
 Form professionally and culturally diverse groups for a variety of viewpoints.
Financial incentives
 Offer monetary rewards for suggestions and implemented ideas.
Architecture and physical layout
 Remove structural barriers to communication and interaction to foster creative thinking.
Inspiration
 Inspire workers to think creatively through managerial leadership.

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End of Presentation.
Thank you and
Good day!

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End of Presentation.
Thank you and
Good day!

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