Seven Approaches to Management Decision-making

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Seven Approaches to Management Decision-making

• Wayne Smith, Ph.D.
• Department of Management
• CSU Northridge

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Management Approaches to Decision-making
(Philosophical)
Approach Benefits Cautionary Messages
Intuition (relying on ones gut and experience) Easy to do and requires little-to-no data The subconscious can be effective at weighing options Typically the least accurate of decision approaches Decision-makers can be easily swayed by context
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Management Approaches to Decision-making(Sociocr
atic)
Approach Benefits Cautionary Messages
Small-Group Processes (using just a few, knowledgeable people) Clear responsibilities can be assigned Multiple alternatives can be examined Watch for emotional responses Everyone needs to be on board with the process
more concentrated
Type of Knowledge
more diffused
Approach Benefits Cautionary Messages
Wisdom of Crowds (using various methods to collect data from large groups of people) Those closest to the issue likely know the truth well Crowd-based decisions can be very accurate Members of the crowd must not influence one another Ongoing participation can be difficult to maintain
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Management Approaches to Decision-making
(Technocratic)
Approach Benefits Cautionary Messages
Analytics (using numeric data and quantitative analysis) Scientific method adds analytical rigor Decisions are more likely to be correct (reject falsity) Getting representative data may be difficult Correct assumptions are critical
more non-programmed
Type of Activity
more programmed
Approach Benefits Cautionary Messages
Automation (using decision rules and digital algorithms) Gains in speed and accuracy Criteria for decisions are clear Difficult to develop and maintain initially Decision criteria may change over time
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Management Approaches to Decision-making
(Scientific)
Approach Benefits Cautionary Messages
Neuroscience (incorporating modern brain research about decision-making) Know when to use the emotional brain Trains the rational brain to perform more effectively Individual decision-making may be overvalued The brain is still poorly understood
more physical
Root Mechanism
more psychological
Approach Benefits Cautionary Messages
Behavioral Economics (balancing economic thinking with psychological thinking) Illuminates biases and areas of irrationality Can nudge decisions in a particular direction Findings in this new field are still incomplete Context and wording can inadvertently manipulate decisions
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References

• This material was excerpted and adapted from
• Davenport, T. (2009), Make Better Decisions,
  Harvard Business Review, Nov. 87(11), p. 117-123.