A decision-making framework
If you would prefer to view this interaction in a new web window, then please follow the link below:
The decision-making framework can be an excellent revision tool. Every aspect of the Business and Management course can be placed somewhere on this diagram!
Bill Gates, founder of Microsoft is a keen supporter of scientific approaches to decision making. It is not unexpected that he believes that new technologies - and Microsoft software - should be used to underpin this approach!
However, some management writers, such as Henry Mintzberg and Tom Peters, argue that over emphasis on scientific approaches and repetitive planning processes can lead firms into fixed patterns and inflexible structures. This can be dangerous in high technology industries or those subject to continuous change. Mintzberg's recent work focused on how decision makers respond to significant changes in the external environment.
The scientific decision-making model is not required for all decisions. Many decisions are simple and/or routine and do not require any detailed analysis. Managers may decide to rely on their experience of similar situations. This is likely to be the case in 'programmed' or routine decisions, which have been made many times before, such as ordering supplies like paper or raw materials.
It is possible that this is a good approach to adopt, as it does not use up unnecessary time. However, it may be that a more scientific approach to even routine decisions like these may lead to cost savings if, for instance, cheaper suppliers can be found, or alternative products sourced.
Intuition or 'gut feeling'
It may be that decisions about selling original or innovative products or services cannot be based on past experience or previous data as this does not exist. Entrepreneurs are often risk takers and are prepared to 'go into the unknown'.
Other managers are so confident in their own abilities that they will act on their own feelings about what is 'right', based upon the patterns they see and their knowledge of the markets. Certainly this approach is quicker and less expensive than scientific approaches, although the risks of failure may be higher as a result.
There are a number of techniques that may help managers make more effective decisions. These include:
- Decision trees (probability diagrams)
- The Five Whys
- The Cause and Effect diagram (Fishbone diagram)
We go on to look in more detail at these on the next few pages.