This chapter examines decision-making and organizational learning. Organizational decision-making is the problem-solving process that searches for a solution to create value for stakeholders. Programmed, or routine, decisions are distinguished from nonprogrammed decisions.
There are several models of decision-making. The rational model assumes that decision makers have the right information and the ability to make correct decisions. The model assumes that decision makers agree about goals. The Carnegie model recognizes that decision makers satisfice and have bounded rationality and that organizations are coalitions of various interests. The incrementalist model suggests that managers make small changes to avoid failure. The unstructured model acknowledges that managers start over when facing obstacles. The garbage can model suggests that decisions begin with solutions, not problems.
Organizational learning is the process of seeking new ways to increase effectiveness. Explorative learning is distinguished from exploitative learning. Organizational learning has four levels: individual, group, organizational, and inter organizational. Promoting learning at each level and the effect of structure and culture are considered. Cognitive biases, which hurt decision-making and learning, include: cognitive dissonance, illusion of control, frequency, representatives, projection, ego defensiveness, and escalation of commitment. Decision-making and learning can improve by listening to dissenters, converting events into learning opportunities, and experimenting. A diverse top-management team can use devil’s advocacy, dialectic inquiry, and create a collateral structure, which is an informal management group to evaluate formal decisions.
12.1 Organizational Decision-making
Organizational decision-making occurs when problem solving includes seeking and selecting a solution to...