Steps in the decision making process

Anthony Lawrence C. Rosqueta

Using the work of March and Simon as a basis, researchers have developed a step-by-step model of the decision-making process and the issues and problems that managers confront at each step. Perhaps the best way to introduce this model is to examine the real-world nonprogrammed decision making that Scott McNealy, CEO of Sun Microsystems, had to engage in at a crucial point in his company’s history. It was early August 1985, and Scott McNealy, had to decide whether to go ahead with the launch of the company’s new Carrera workstation computer, scheduled September 10. Sun’s managers ha chosen the September 10 date nine months earlier when the development plan for the Carrera was first proposed. McNealy knew that it would take at least a month to prepare for the September 10 launch and that the decision could not be put off. McNealy knew, however, that committing to the September 10 launch date was risky. Motorola was having problems with the 16 megahertz 68020 microprocessor and could not guarantee Sun a steady supply of these chips. If Sun launched the Carrera on September 10, the company might have to ship some machines with software that was not fully operational and prone to crash the system and that utilized Motorola’s less-powerful 12 megahertz 68020 microprocessor instead of the 16 megahertz version. McNealy wondered what he should do. He had to decide quickly whether to launch the Carrera, but he was not in full possession of the facts.

Step 1: Recognize the need for a decision

Scott McNealy recognized this need, and he realized that a decision had to be made quickly because it would take a month to get ready for the September launch Some stimuli usually spark the realization that there is a need to make a decision. These stimuli often become apparent because changes in the organizational environment result in new kinds of opportunities and threats. The stimuli park decision making are as likely to result from the actions of managers inside an organization as they are from changes in the external environment.

Step 2 : Generate Alternatives

Having recognized the need to make a decision, a manager must generate a set of feasible alternative courses of action to take in response to the opportunity or threat. Management experts cite failure to properly generate and consider different alternatives as one reason why managers sometimes make bad decisions. One major problem is that managers may find it difficult to come up with creative alternative solutions to specific problems. Perhaps some of them are used to seeing the world from a single perspective. They have a certain “managerial mindset.”

Step 3: Evaluate Alternatives

Once managers have generated a set of alternatives, they must evaluate the advantages and disadvantages of each one. The key to a good assessment of the alternatives is to define the opportunity or threat exactly and then specify the criteria that should influence the selection of alternatives for responding to the problem or opportunity. In general, successful managers use four criteria to evaluate the pros and cons of alternative courses of action

The Four Criteria

Legality: Managers must ensure that a possible course of action is legal. Ethicalness: Managers must ensure that a possible course of action is ethical and that it will not unnecessarily harm any stakeholder group. Economic Feasibility: Managers must see to it that the alternatives can be accomplished, given the organization’s performance goals. Practicality: Managers must decide whether they have the capabilities and resources required to implement the alternative, and they must be sure that the alternative will not threaten the attainment of other organizational goals.

Step 4: Choose among alternatives

Once the set of alternative solutions has been carefully evaluated, the next task is to rank the various alternatives and make a decision. When ranking alternatives, managers must be sure that all the information that is available be brought to bear on the problem or issue at hand.

Step 5: implement the Chosen Alternative

Once a decision has been made and an alternative has been selected, it must be implemented, and many subsequent and related decisions must be made. Once a course of action has been decided, thousands of subsequent decisions are necessary to implement it. To ensure that a decision is implemented, top managers must assign to middle managers the responsibility for making the follow-up decisions necessary to achieve the goal.

Step 6: learning from Feedback

Effective managers always conduct a retrospective analysis to see what they can learn from past successes failures. Managers who do not evaluate the results of their decisions do not learn from experience; instead, they stagnate and are likely to make the same mistakes again and again. To avoid this problem, managers must establish a formal procedure with which they can learn from the results of past decisions.

The procedure should include these steps:

Compare what actually happened to what was expected to happen as a result of the decision. Explore why any expectations for the decision were not meant. Derive guidelines that will help in the future. Managers who always strive to learn from past mistakes and successes are likely to continuously improve the decision they make.

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