Chapter 5 Planning and Decision Making

2. MGMT3 Chuck Williams Chapter 5Planning and Decision Making Designed & Prepared byB-books, Ltd.

3. Planning Choosing a goal and developing amethod of strategy to achieve that goal Planning 1

4. Benefits of Planning Persistence Direction IntensifiedEffort Creationof Task Strategies Benefits of Planning 1.1

5. Pitfalls of Planning False Senseof Certainty Impedes Changeand Adaptation Detachmentof Planners Pitfalls of Planning 1.2

6. Set Goals DevelopCommitment DevelopEffective Action Plans TrackProgress Toward Goal Achievement MaintainFlexibility Revise existing planorBegin new planning process How to Make a Plan That Works 2

7. Specific S.M.A.R.T. • Measurable • Attainable • Realistic • Timely Setting Goals 2.1

8. Specific Steps People Resources Time Period Developing Effective Action Plans An Action Plan Lists… 2.3

9. Tracking Progress Set… Gather and provide… Performance Feedback Proximal Goals Distal Goals 2.4

10. Maintaining Flexibility • Option-based planning • keep options open by making simultaneous investments • invest more in promising options • maintains slack resources 2.5

11. Beyond the Book Planning or Doing? • Planning takes many hours and much effort, time and effort that could be spent doing something. Is time spent planning time lost? No. • If planning involves predicting where an industry is going, and these predictions are merely guesses, as some managers think, what’s to be gained from planning? • Time spent planning is time spent learning. • Learning what? • To get better and faster at predicting industry outcomes and setting standards. • Source: “Planning Not to Learn,” Fast Company, available online at http://www.fastcompany.com/resources/columnists/vgct/052404.html.

12. Planning from Top to Bottom 3

13. Strategic Plans Clarify how the company will serve customers and position itself against competitors (2-5 years) Purpose Statement An inspirational statement of anorganization’s purpose (2 sentences) Strategic Objective Overall goal that unifies efforts, stretches and challenges, and possesses a finish line and time frame. Flows from purpose. Starting at the Top 3.1

14. 5 Years 2 Years Strategic 6 months 2 years Plans Tactical 30 days Operational 6 months 0 1 2 3 4 5 6 Years Planning Time Lines

15. Tactical Plans Specify how a company will use resources, budgets, and people toaccomplish goals related to its strategic objective. ManagementbyObjectives Develop and carry out tactical plans MBO is a four-step process Bending in the Middle 3.2

16. Management by Objectives • Steps to Management by Objectives: • Discuss possible goals • Select goals that are challenging, attainable and consistent with the company’s overall goals • Jointly develop tactical plans that lead to the accomplishment of tactical goals and objectives • Meet regularly to review progress

17. Finishing at the Bottom Operational Plans Day-to-day plans for producing or delivering products and services overa period of 30 days to 6 months 3.3

18. Single-Use Plans Plans that cover unique, one-time-only events Standing Plans Plans used repeatedly to handle frequently recurring events. Three kinds are: policies, procedures,and rules and regulations. Budgets Quantitative planning to decide howto allocate money to accomplish company goals Kinds of Operational Plans 3.3

19. Decision Making The process of choosing a solution fromavailable alternatives. Rational Decision Making A systematic process of defining problems, evaluating alternatives, and choosing optimal solutions. What Is Rational Decision Making? 4

20. 1 Define the problem 2 Identify decision criteria 3 Weight the criteria 4 Generate alternative courses of action 5 Evaluate each alternative 6 Compute the optimal decision Steps to Rational Decision Making 4

21. Steps to Rational Decision Making 1 Define the problem • A problem exists when there is a gap between a desired state and an existing state • To make decisions about problems, managers must… • be aware of the gap. • be motivated to reduce the gap. • have the knowledge, skills, abilities, and resources to fix the problem. 4.1

22. Steps to Rational Decision Making 2 Identify decision criteria • Standards used to guide judgments and decisions • The more criteria a potential solution meets, the better that solution should be 4.2

23. Steps to Rational Decision Making 3 Weight the criteria • Absolute comparisons • each criterion is compared to a standard or ranked on its own merits • Relative comparisons • each criterion is compared directly to every other criterion 4.3

24. Steps to Rational Decision Making Absolute Weighting of Decision Criteria for a Car Purchase 4.3

25. Steps to Rational Decision Making Relative Comparison of Home Characteristics 4.3

26. Steps to Rational Decision Making 4 Generate alternative courses of action • The idea is to generate as many alternatives as possible 4.4

27. Steps to Rational Decision Making 5 Evaluate each alternative • This step can take much longer and be more expensive than other steps in the process 4.5

28. Steps to Rational Decision Making 6 Compute the optimal decision • Multiply the rating for each criterion by the weight for that criterion • Sum the scores for each alternative course of action 4.6

29. Maximize Satisfice Limits to Rational Decision Making 4.7

30. Using Groups to Improve Decision Making StructuredConflict NominalGroupTechnique Delphi Technique ElectronicBrainstorming 5

31. Disadvantages • Susceptible to groupthink and to considering a limited number of solutions • Takes considerable time • One or two people can dominate group discussion • Members don’t feel personally accountable for decisions and actions Group Decision Making 5.1

32. Groupthink is likely to occur when… • the group is insulated from others with different perspectives. • the group leader expresses a strong preference for a particular decision. • there is no established procedure for defining problems and exploring alternatives. • group members have similar backgrounds. Groupthink 5.1

33. Structured Conflict C-Type Conflict Cognitive conflictDisagreement that focuses onproblem- and issue-related differences of opinion A-Type Conflict Affective conflict Disagreement that focuses onindividuals or personal issues 5.2

34. Steps to Establish a Devil’s Advocacy Program • Generate a potential solution • Assign a devil’s advocate to criticize and question • Present the critique of the solution to key decision makers • Gather additional information • Decide whether to use, change, or not usethe originally proposed solution Devil’s Advocacy 5.2

35. Beyond the Book Steps to Establish a Dialectical Inquiry Process • Generate a potential solution • Identify the assumptions underlying thepotential solution • Generate a conflicting counterproposal basedon opposite assumptions • Have advocates of each position present theirarguments and engage in a debate in front ofdecision makers • Decide whether to use, change, or not usethe originally proposed solution Dialectical Inquiry

36. Steps to Establish Nominal Group Technique • During a quiet time, group members write down as many problems and solutions as possible. • Each member shares one idea at a time. • Ideas are posted on flipcharts until all ideas are shared. • Group discusses advantages/disadvantages. • Ideas are ranked during a second quiet time. • Members read rankings aloud, and the idea with thehighest average rank is selected. Nominal Group Technique 5.3

37. Steps to Establish Delphi Technique • Assemble a panel of experts. • Create a questionnaire of open-ended questions. • Summarize the responses and feed back to the panel until the members reach agreement. • Create a brief report and send to the panel members for agreement/disagreement. • Continue the feedback process until panel reaches agreement. Delphi Technique 5.4

38. Beyond the Book Member 4 JoinsGroup Shares thoughts, ideas, recommendations Members 1, 2, & 3 Share previous thoughts, ideas, recommendations Discussion is Held and Tentative Group Decision is Made Step 3 Member 3 JoinsGroup Shares thoughts, ideas, recommendations Members 1 & 2 Share previous thoughts, ideas, recommendations Discussion is Held and Tentative Group Decision is Made Step 2 Member 1 Shares thoughts, ideas, recommendations Member 2 Shares thoughts, ideas, recommendations Discussion is Held and Tentative Group Decision is Made Step 1 Stepladder Technique

39. Four Rules of Brainstorming • The more ideas, the better. • All ideas are acceptable, no matter how wild or crazy. • Other group members’ ideas should be usedto come up with even more ideas. • Criticism or evaluation of ideas is not allowed. Brainstorming 5.5