Decision Making

Facilitated by
Pratap Kumar Pathak
Secretary
Ministry of Industry
Conceptual Foundations
 What is Decision Making
• Decision making is a cognitive process leading to the selection of a
course of action among the alternatives, and enabling to act for
producing desired results.

• Decision making is a series of logical steps to reach at the agreement

for moving forward.

• Systematic response to a problem situation or forward moving through

intelligence, understanding, analysis, rational logical selection,
preparedness for implementation.

• The art of determining in one's mind upon an opinion or course of

action.
• Decision making involves a problem to be solved, a number of
conflicting objectives to be reconciled, a number of possible
alternatives from which the best has to be chosen and some
way of measuring the value or pay-off of alternative courses
of action.

• A conscious and human process, involving both individual and

social phenomena, based upon factual and value premises,
and which includes a choice of one behavioural activity from
among one or more alternatives with the intention of moving
toward some desired state of affairs.
 Different Levels of Decision
• Strategic Level
– Vision
– Mission
• Policy Level
– Goals
– Objectives
• Tactical Level/Functional Level
• Operational Level
 Types of Decisions
• Rational and creative
• Regular and contingent
• Individual and group
• Democratic and autocratic
• Organizational and networked
• Programmed and non-programmed
• Structured and unstructured
• Feedback and feedforward
 What is a Problem
Problem is a reasonable gap between "what should be-
desired" and "what is-actual"
P=D-A
It is a lacking, constraint, negative symptom, process or
consequences resulting from
• Blocking of desire or goal
• Opportunity for improvement
• State of conflict, grievance, complaint
• Competitive ideas
• State of dissatisfaction
• State of imperfection
• Constraints and threats
 Basic Styles in Decision
Making/Problem Solving
• Autocratic
– Benevolent
– Exploitative-manipulative
• Democratic
– Consultative
– Participative
• Enabling and Persuasive
– Empowering
– Decentralized
 Reasoning for Decision Making and
Problem Solving
• What is the problem/issue?
• Why is it important?
• What are the cause/rationale?
• How many ways to solve/to decide upon?
• What are the relative/comparative worth?
• What is the best to choose?
• How to act upon?
• How to achieve effective result?
• Is it really going as expected?
• What should be done to be effective in the future?
 Streams and Theories
• Streams of Decision • Underlying Theories
Making – Critical social theory
– Political stream – Administrative/
– Social stream managerial/technical
– Economic stream legitimacy theory
– Administrative stream
– Technical stream
 Approaches and Models to Decision
making
• Rational DM • Strategic DM
– Comprehensive model – Logical incrementalism
– Functional process model – Adaptive
– Limited rationality model: – Entrepreneurial
Mixed scanning, constraint, • Intuitive DM
muddling through
• Conflict-dialogue-negotiation
• Creative DM model
• Incrementalism: • Populist
– Marginal incrementalism – Neo-classical
– Partisan mutual adjustment – Classical
• Group theory • Organized anarchy
– Group equilibrium – Legitimate anarchism
– Garbage can
 Rational Decision Making/Problem
Solving

– Goal-oriented process in reaching a decision

– Guided by consequences likely to result from the
selection of a given alternative.
– Based on analysis and cost-benefit logic.
– Use of information and facts for interpretation and
conclusion.
– May be comprehensive and limited based on
capability and urgency.
 Rational Decision Making
• Principle of optimality
• Principle of efficient goal achievement
• Comprehensive and limited rationality
• Political, social, administrative, technical and
economic
• Minimax and Maximin syndromes
• Expected value maximization
 Creative Decision Making/Problem
Solving
• Mental process of creating a solution to a
problem.
• Independent creation of solution rather than
learned with assistance.
• Requires more than just knowledge, skill and
thinking - innovation/inventing
 Creative Problem Solving/Decision
Making
• Creative decision • Forms of creativity
making – Innovation
– Saturation – Synthesis
– Deliberation – Extension
– Incubation – Duplication
– Illustration – Brainstorming
– Accommodation
– Imaging/visualisation
– Outcome psychodrama -
role playing
 Creative Decision Making
• Transformational thinking
• Brainstorming: forward • Critical thinking
and reverse
• Lateral thinking
• Group interaction
• Metaphorical thinking
• Stimulating and motivating
• Radical approach
• Synectics
• Cross-cultural factors
– bringing in irrelevant
assessment
ideas/options to change
the situation • Artificial intelligence
– useful backstop • Common sense reasoning
creativity process • Abductive reasoning
• Mind mapping • Deductive reasoning
• Intelligence amplification
 CPS
• Alex Osborn (1963), Isaksen and Treffinger
(1985)
– mess finding: situational understanding
– data finding: search and intelligence
– problem finding
– idea finding
– solution finding
– acceptance finding
Phases and Logical Steps
 Basic Steps in a Rational Decision
Making
• Pre-decision phase
– Issue or problem: agenda setting
– Analysis of issue or problem: Interpretation,
identification and understanding
– Designing alternatives
– Examination of alternatives
• Decision phase
– Ranking the alternatives
– Determination
– Choice
• Post-decision phase
– Preparedness for implementation
– Action plan
– Monitoring
– Feedback
– evaluation
• Re-decision phase
– Acknowledging the lessons learnt
– Reformed/improved decision making
 Phases of Problem Solving
I. Problem Exploration Phase
3. Explain the Problem.
1. State the Problem. A. Discuss the problem with
A. State what the problem is someone else.
B. Restate the problem B. Look at the problem from
C. State the problem more different viewpoints.
C. Ask a series of whys.
2. Clarify the Problem.
A. Define the Key terms of the
problem. 4. Put the Problem in Context.
B. Articulate the assumptions A. What is the history of the
C. Obtain needed information problem?
B. What is the problem
environment?
C. What are the constraints?
II. Goal Establishment phase
1. Consider Ideal Goals.
2. Establish Practical Goals.
III. Idea Generation phase
1. Generate Ideas for Possible Solutions.
IV. Idea Selection phase
1. Evaluate the possibilities.
2. Choose the solution(s).
V. Implementation phase
1. Try the solution.
2. Monitor and track the application
3. Make adjustments.
VI. Evaluation phase
1. Determine whether the solution worked.
VII. Reforming and revisiting phase
 Basic Steps for a Problem Solving
• Comprehending the problem situation
• Defining the problem
• Causal analysis: what, how, when, why
• Alternatives to resolve: brainstorming
• Analysis of the alternatives
• Decision for problem solving
• Taking action
• Evaluating the action: verify if the problem has been resolved
or not
• Lessons learnt
Decision Making under Uncertainty
• Risk Analysis: Minimax, Maximax, Maximin,
Minimin
• Decision Tree Analysis: Comparison of
alternatives
• Preference Analysis or Utility Analysis:
Comparison based on expectancy
n

EV= ΣPiVi
i=1
Tools and Techniques
 Mind Tools and Techniques in Decision
Making/Problem Solving
• Brainstorming • Pareto Analysis: choosing what to
• Appreciative inquiry change
• Critical Path Analysis • Paired comparison analysis:
working out the relative
• Decision Tree Analysis
importance of the alternatives
• Plus-Minus-Interesting (PMI)
• Grid analysis: making choice taking
• SWOT Analysis into account many factors
• Force Field Analysis • Delphi Technique: Achieving well
• Expected Value Analysis: thought through consensus among
EV = ∑PV experts
• Decision Support Systems (DSS) • Six thinking hats: looking at a
• Somatic Markers -intuition and decision from various perspectives
emotional intelligence
• Inductive reasoning
• Inference laddering
 Force Field Analysis
• Built on Kurt Lewin's model
• Situation is the result of opposing forces: driving and
restraining
• Problem can be solved by changing the situation of
opposition: causes and mode of interaction
• Understanding the forces and the impact is necessary
• Assessment of driving and restraining forces
• Moderation of interacting forces
• Comparing objectively the strengths of these forces
• Logically conclude for decision making
 Critical Path Analysis
• Prioritizing the activities to be done
• Sequencing the activities on the basis of priority
• Making decisions and carryout action on the basis of priority
• Independent and dependent activities
• Time/cost effective scheduling
 Theory of Inventive Problem Solving
(TRIZ)
• Genrich S. Altshuller, the Father of TRIZ
At a minimum, Altshuller felt a theory of invention should satisfy the following
conditions:

• be a systematic, step-by-step procedure

• be a guide through a broad solution space to direct to the ideal solution
• be repeatable and reliable and not dependent only on psychological tools
• be able to access the body of inventive knowledge
• be able to add to the body of inventive knowledge
 Techniques in Group Decision Making/Problem
Solving
– Brainstorming – Nominal Group Technique
– Inductive reasoning • Minimum interaction within the
group
– The Delphi Technique • Issues shared within the group
• Panel of relevant people chosen • Individually designate ideas and
to facilitate group share each other
• Interaction with panelists
– Dialectic Decision Method
• Stimulus-Organism-Response
repeated • Devil's advocacy: challenging the
alternatives
• Conclusion and agreement
• Decision making groups
converging and interacting each
other
• Cross-analysis of proposals
• Compromise on new proposal
 Groupthink in GDM
• Sacrificing individual rationality, capability and
ethics
• Compromise for group interest
• Illusion of morality
• Pressure to seek conformity
• Group behaviour predominant over individual
behaviour
 Decision Support Systems in Decision
Making
• Information-based decision
• Use of computer systems for making decisions
• Hardware, software, humanware, infrastructure and the
supportive environment is essential for DSS
• Types of DSS
– MIS
– PPIS
– FMIS
– Preference determination system
– Personnel information system
– .........
 Key to Effective Group Decisions
• Synergy
• Teamwork and team culture
• Consensus
• Common goal and objectivity
• Clear rules and guidelines
• Active participation
• Capability of group members
• Enabling environment
• Entertaining activities
• Incentives
• Equality
Challenges and Way Forward
 Challenges in Decision Making
• Socio-cultural challenges
• Political challenges
• Globalization effects
• Technological challenges: Use of information
technology
• Institutional challenges
• Behavioural challenges
– Fact vs value syndromes
– Ethical values and norms
 Constraints in DM
• Information
• Capability
• Attitudinal/Psychological
• Participational
• Resource and Time
• Political
• Socio-cultural
 Risks in DM/PS
• Structural risks • Institutional and
– Process administrative risks
– Information
– Authority
– Formal structure • Environmental risks
– Resources
• Non-structural risks • Technological risks
– attitude
– ignorance
– Capability
– non-compliance
 Ethical Framework for Decision
Making and Problem Solving
Five Sources of Ethical Standards for Decision Making
The Utilitarian Approach
The ethical action is the one that will produce the greatest balance of benefits over
harms.
The Rights Approach
The ethical action is the one that most dutifully respects the rights of all affected.
The Fairness or Justice Approach
The ethical action is the one that treats people equally, or if unequally, that treats
people proportionately and fairly.
The Common Good Approach
The ethical action is the one that contributes most to the achievement of a quality
common life together.
Virtue Approach
The ethical action is the one that embodies the habits and values of humans at their best.
 How to Overcome Indecisiveness
• Avoid decidophia: fear of making • Networking with like-minded
wrong decisions persons
• Be entrepreneurial • Manage stress
• Better preparedness • Dialogue for negotiation
– Ability (knowledge, skill, • Avoid passing buck and rent-
information) seeking tendencies
– Willingness (desire, aptitude, • Logically frame the problem
confidence)
realities
• Do analysis
• Use time management skills
• Develop team and teamwork
• Balance value and fact
 Securing Compliance to Decisions
For ensuring and securing compliance, we need
– Participation of stakeholders since the starting
– Proper and adequate communication of decisions
– Sensitization, capacity building and empowerment
– Transparency and accountability
– Participatory implementation and monitoring
– Consensus building
– Developmental feedback and improvements
– Incentives, reward and punishment
 Factors Influencing Decision
Making
• Cognitive and personal biases
• Emotional bias
• Skills and competencies
• Situational factors
• Instrumental factors
• Technological factors
• Cultural factors
 Management Techniques for Effective
Decision Making and Problem Solving
• Participative management
• Management by objectives
• Team-building and team culture
• Positive reinforcement
• Total quality decision making
• Formation of Quality circles
Basic Requirements Framework for
Effective Decision Making/Problem
Solving
Effective DM/PS
=
Ability factors x Willingness factors x environmental factors
Ability factors = Knowledge, professional skill, information,
technology, resources
Willingness factors = Moral and ethical strengths,
motivation, commitment
Environmental factors = political, social, administrative
environment supportive and responsive to dm/ps
 Requirements for an Effective
Decision Making
• Readiness of decision maker
• Decentralization
• Information technology
• Support from leadership
• Response from client
• Participatory approach
• Collaborative
• Compliance
• Resource framework
• Networking
 Assessment of Nepalese Situation
I. Bases of Decision Making/Problem Solving
– Constitution
– Policy and law
– Court decisions
– Budgetary instruments
– Administrative procedures
– Executive orders
– International conventions, declarations and commitments
– Agreements with international development community: bilateral and multi-
lateral
– Parliamentary directives
– Public service delivery manual
– Decentralization and delegation
– NDAC and MDAC
Principles, Approaches and Models Applied and
Key Issues in Nepalese Context
– Intuitive decision making 'Tok-
– Incrementalism: marginal and aadesh': lack of judgemental
partisan mutual adjustment capacity and discrimination
– Political stream subordinating – Decision politics
analysis and rationality – Arbitrariness
– Classic populism – Group pressures: unstable
– Administrative legitimacy equilibrium
model rather than critical – Citizen's response: reluctance
social model and indifference
– Organized anarchy and – Sustainability and continuity
garbage can syndrome issues
– Ethical issues
– Consistency and uniformity
– Rational ignorance to institutional – Innovation and creativity
interest: rentseeking and – Accountability issues
buckpassing tendencies
– Professionalism issues
– Centralized decision making
– Participatory decision making,
– Focus on decision making rather
teamwork
to implementation
– Feedforward decision making and
– Preparedness for implementation
feedback decision making
– Risk analysis, predictability and
– Random-jumping
preparedness
– Forced choice syndrome
– Use of decision support systems
– Institutional memory system
– Legitimacy issues
– Compliance problems
– Reluctance and indifference to
use of decision support systems – Decision marketing
• Transaction
• Information
• Relationship
• Social
Any queries, comments,
suggestions....PLEASE
Thank you