Mini-course 1 Decision Analysis (Dr. Mariya Sodenkamp) / Class 2 / Paderborn_ITB_L2_ 2015_04_17 Students
.pdf
Agenda
Decision Making in Complex Systems: Paradigms &
Challenges
Decision Process
Measurement
Pareto Op@mality (most probably next @me)
(Advanced) IT in Business | © Sodenkamp |
Folie 2 |
|
Car A |
Car B |
Car C |
Price |
$15,300 |
$13,600 |
$11,500 |
Comfort |
Luxury |
Deluxe |
Standard |
Horse-power |
280 |
220 |
200 |
Fuel |
12 |
10 |
8 |
consump3on |
|
|
|
(Advanced) IT in Business | © Sodenkamp |
Folie 3 |
Examples of decision problems (cont‘d)
Investment
Akquisi@on
Marke@ng
Service or product development Produc@on
Human resource management Transporta@on Reorganiza@on etc.
Prac@cally, for making such decisions, managers mix the analy@cal and intui@ve problem solving approaches.
(Advanced) IT in Business | © Sodenkamp |
Folie 4 |
Defini3ons of decision making
– Decision making is a process of human ac@vity aimed at selec@on of the best alterna@ve ac@on.
– Decision making is choosing between alterna@ve courses of ac@on using cogni@ve processes – memory, thinking, evalua@on.
– Decision making is the study of iden@fying and choosing alterna@ves based on the values and preferences of the decision maker. Making a decision implies that there are alterna@ve choices to be considered, and in such a case we want not only to iden@fy as many of these alterna@ves as possible but to choose the one that best fits with our goals, objec@ves, desires, mo@ves, and so on..
|
|
|
Harris, R.(1998) Introduc2on to Decision Making, |
|
|
|
|
|
|
|
. |
Folie 5 |
||
(Advanced) IT in Business | © Sodenkamp |
||||
Areas of Decision Theory
(Advanced) IT in Business | © Sodenkamp |
Folie 6 |
Current state of corporate decision making
w Only 37% of decision makers say they have a clear understanding of what their organiza@on is trying to achieve.
w Only 1 in 5 are enthusias@c about their team’s and organiza@on’s goals.
w Only 1 in 5 say they have a clear line of site between their tasks and their organiza@on’s goals.
SOURCE: Harris Poll of 23,000 respondents
(Advanced) IT in Business | © Sodenkamp
At least 50% of all decisions end in failure
These results come from a database of 163 business decisions compiled over 16 years
The database includes decisions by managers at private firms, government agencies, and non-profit organiza@ons. In each case, Nu` asked a topranking o cial of the organiza@on to suggest a decision involving the organiza@on and to name two execu@ves who were familiar with the decision and responsible for carrying it out.
The decisions could involve anything -- from purchasing equipment to renova@ng space to deciding which products or services to sell.
Nu` conducted in-depth interviews with the two o cials selected, asking each to spell out the sequence of steps that were taken to carry out the decision-making e ort.
Acer the interviews, Nu` provided a wri`en summary of the decisionmaking process to each of the o cials involved so they could check it for
accuracy. Source: Why Decisions Fail - Author Paul Nutt - Publisher; Berret & Koehler 2002. 20 year study of over 400 business decisions from Public, Private and Not-For Profit organizations in the United States, Canada & Europe.
(Advanced) IT in Business | © Sodenkamp
At least 50% of all decisions end in failure
36% of all decisions made were never implemented (“ini@al failure”). A „par@al failure“ occurred when only some part of the decision was adopted.
50% of decisions implemented are discon@nued acer 2 years (“ul@mate failure”).
Nu` then has expanded his database to 376 decisions, each involving a separate organiza@on. Although he has not finished analyzing the new data, preliminary results suggest the general picture is the same -- 40% of the decisions in the expanded database resulted in ini@al failures.
66% of decisions are based on failure prone methods.
Decisions using high par@cipa@on succeed 80% of the @me but occurs only 20% of the @me.
At least 50% of all decisions end in failure
|
The most |
par@cipa@on |
|
of those who |
lowest |
|
failure rate |
23% of |
|
decisions. |
|
|
In contrast, |
managers |
|
simply issue |
-- was the |
|
least |
a failure |
|
rate of 64%. |
|
Nu` said he |
tac@cs, |
but don't feel |
. |
"Most of the |
but |
uncommonly |
fast answers |
and fail to |
almost |
every |
|
Read more at