INTRODUCTION:

Decisions are at the heart of success, and at times there are critical moments when they can be difficult, perplexing, and nerve wracking. This module provides help and guidance for making efficient and effective decisions by putting to use a well-structured approach and well-focused process known as the modeling or paradigm process. The word paradigm comes from the Greek word paradeigma, meaning "model" or "pattern." A model represents a way of looking at the world, a shared set of assumptions that enable us to understand or predict behavior. Models have a powerful influence on individuals and on society because our view of the world is determined by our set of assumptions about it. To put it another way, our vision is often affected by what we believe about the world; our beliefs often determine the information that we "see."

Decision-making is about facing a question, such as "To be or not to be?" i.e., to be the one you want to be or not to be? That is a decision. Humanity has always lived in the shadow of fears. Yet almost nothing was known about fear until Freud began the study of unusual phobias. A little later, some psychologists suggested that one dread is common to all mankind: the dread of death.
Decisions, decisions and more decisions! The fear of making serious decisions is a new kind of fear, called decidophobia, proclaimed by Walter Kaufmann at Princeton University in 1973. The fear of making the wrong decisions is well known to any responsible manager. As Eleanor Roosevelt said, "You gain strength, courage, and confidence by every experience in which you really stop to look fear in the face." Wherever you see a successful business, someone once made a courageous decision. There has never yet been a person in the history of mankind who led a life of ease whose name is worth remembering.
The Latin word Decido has two meanings. It can mean to decide and also to fall off. Hence plants are called deciduous if their leaves fall off in the fall. The word fall started as "leaf fall" for autumn in the 15th century. The expression "take the plunge" suggests the relevance of both meanings. Making a wrong decision provokes the fear of falling.

In the serious decisions that mold the future of your business, freedom becomes tangible; serious decisions are objects of extreme dread. Serious business decisions that ultimately shape, guide, and direct our future are extremely fearful to business managers. These decisions involve norms, standards, and the comparison and choice of goals. Learning the structured, well-focused approach to the decision-making process lessens decidophobia. The gem of Applied Management Science is that it turns the old adage that "business managers are born, not made" into myth. If one can master management science applications, then no problem is too big nor any decision too overwhelming. The goal of management science experts is to wipe out decidophobia.

Just being worried about making serious decisions is like sitting on a rocking chair--it gives you something to do but doesn't get you anywhere. Therefore worrying about making a decision is a waste of time. Moreover, making a decision and implementing one are two different things. Here is a question for you: Five frogs are sitting on a log. Four decide to jump off. How many are left? A protracted decision is only one part of the process of choosing because it lacks the commitment to implement the decision. There is a big difference between making a decision and implementing it. The measure of success is not whether you have a tough decision to deal with, but whether it's the same decision you had before. Decide like a man of action; implement like a man of thought. It does not take much strength to decide what to do, but it requires great strength to do things.



DECISION MAKING PROCESS
Eight Steps to Decision Making

1. Recognition of a Problem
2. Define a Goal
3. Assembly of Relevant Data
4. Identification of Feasible Alternatives
5. Selection of Criterion for Judging Alternatives
6. Modeling the Interrelationships
7. Predictions of Outcomes of Alternatives
8. Choosing the Best Alternative


1. Recognition of a Problem

The starting point in any conscious attempt at rational decision-making must be the recognition that a problem exists. Only when a problem is recognized can the work toward its solution begin in a logical manner. In the early 1970's, for example, it was discovered that a number of species of ocean fish contained substantial concentrations of mercury. The decision-making process began with this recognition of a problem, and the rush was on to determine what should be done. Research into the problem revealed that fish taken from the ocean decades before, also contained similar concentrations of mercury. Thus, the problem had existed for a long time; yet, it was not until recently that the problem was recognized. In typical situations, recognition is obvious and immediate. An auto accident, an overdrawn check, a burned out motor, an exhausted supply of parts or whatever, produces the recognition of the problem. Once we are aware of the problem, we can take action to solve it as best we can.

2. Define the Goal or Objective

In a sense, every problem is a situation that prevents us from achieving previously determined goals. If a personal goal is to lead a pleasant and meaningful life, then any situation that would prevent it is viewed as a problem. Similarly, in a business situation, if a company objective is to operate profitably, then problems are those occurrences which prevent the company from achieving its previously defined profit objective. But an objective need not be a grand, overall goal of a business or an individual. It may be quite narrow and specific. "I want to pay off the loan on my car by May," or "The plant must produce 300 golf carts in the next two weeks," are more limited objectives. Thus, defining the objective is the act of exactly describing the task or goal.

3. Assembly of Relevant Data

4. Identification of Feasible Alternatives

For decision-making to take place, there must be alternative courses of action available. We can usually devise a variety of ways of achieving an objective after some thought. But there is an ever present danger that in devising alternatives, we may overlook the best alternative of all. lf this happens, we are left with the situation where the best of the identified alternatives will be selected, but the result will not be the best possible solution.* There is no way to ensure that the best alternative is among the alternatives considered. Probably, one should be certain that all conventional alternatives are enumerated, and that a serious effort is made suggest innovative solutions. Sometimes a group of people considering alternatives in an innovative atmosphere ("brainstorming') can be helpful.
Any listing of alternatives will produce both practical and impractical alternatives. It would be of little use to seriously consider an alternative that cannot be adopted. An alternative may be infeasible for a variety of reasons, such as, it violates fundamental laws of science, or it requires resources or materials that cannot be obtained, or it cannot be available in time specified in the problem objective. After elimination, only feasible alternatives remain, and these become an input for further analysis.

5. Selection Criteria for Judging Alternatives

The central task of decision-making is the choice from among alternatives. How is the choice made? Logically, one wants to choose the best alternative. This can only be done, however, if we can define what we mean by "best." There must be a criterion for judging which alternative is best. Now we recognize that best is a relative adjective. It is on one end of the

* poorest
* poorer
* poor
* good
* better
* best

Spectrum. Since we are dealing in relative terms, rather than absolute values, the selection will be the alternative that is relatively the most desirable. Consider a person found guilty of speeding by a judge and given the alternatives of a $90 fine or three days in jail. On an absolute criterion, neither alternative is desirable. On a relative basis, one would choose the better of the undesirable alternatives. In this case we would be following the old adage to "make the best of a poor situation." There must be an almost unlimited number of ways in which one may judge the results of decision-making. Several possible criteria are listed.

1. Create the least disturbance to the ecology.
2. Improve the distribution of wealth among people.
3. Use money in ways that are economically efficient.
4. Minimize the expenditure of money.
5. Ensure that the benefits to those who gain from the decision are greater than the losses of those who are harmed by the decision.*
6. Minimize the time to accomplish the goal or objective.
7. Minimize unemployment.

The selection of the criterion for choosing the best alternative may not be easy. If one were to apply the seven criteria above to some situation in which there were a number of alternatives, it seems likely that the different criteria would result in different decisions. It may be impossible for example, to minimize unemployment without at the same time increasing the expenditure of money. The disagreement between management and labor in collective bargaining concerning wages and conditions of employment reflect a disagreement over the criterion for selecting the best alternative. Management's idea of the best alternative, based on its criterion~ is seldom the best alternative, using organized labor's criterion.


6. Modeling the Interrelationships

At some point in the decision-making process the various elements must be brought together. The objective, the relevant data, the feasible alternatives and the selection criterion must be merged. The relationships may be obscure and complex, as in trying to measure the impact of a domestic decision on world peace. They may be impossible to define on paper in any meaningful way. On the other hand, if one were considering borrowing money to pay for an automobile, for example, there is a readily defined mathematical relationship between the following variables: amount of the loan, loan interest rate, duration of the loan, and monthly payment. The construction of the interrelationships between the decision-making elements is frequently called model building or construction of the model. To an engineer, modeling may be of two forms: a scaled physical representation of the real thing or system; or a mathematical equation, or set of equations, that describe the desired interrelationships. In a laboratory there may be a physical model, but in decision-making the model is mathematical. In modeling it is usual to represent only that part of the real system that is important to the problem at hand.



7. Prediction of the Outcome for Each Alternative

A model is used to predict the outcome for each of the feasible alternatives. As was suggested earlier, each alternative produces a variety of outcomes. Selecting a motorcycle, rather than a bicycle, for example, may make the fuel supplier happy, the neighbors unhappy, the environment more polluted, and one's savings account smaller. But to avoid unnecessary complications we assume that decision-making is based on a single criterion for measuring the relative attractiveness of the various alternatives. The other outcomes or consequences are ignored and this single criterion* is used to judge the alternatives. Using the model, the magnitude of the selected criterion is computed and recorded for each alternative.


8. Choice of the Best Alternative

When the prior elements of the rational decision-making process have been completed, the final step is choosing the best alternative. If the other elements of decision-making have been carefully done, the choice of the best alternative is simply accomplished by selecting the alternative which best meets the chosen criterion.


DECISION MAKING MODELS


1. The Rational Model

The rational model proposes that managers use a rational sequence when making decisions: identifying the problem, identifying the objective, generating alternative, evaluating the alternatives, making a choice, and implementing and evaluating the solutions. According to this model, managers are completely objective and possess complete information to make a decision. Despite criticism for being unrealistic, the rational model is instructive because it analytically breaks down the decision-making process and serves as a conceptual anchor for newer models.

2. Simon's Normative Model

This model attempts to identify the process that managers actually use when making decisions. The process is guided by a decision makers bounded rationality. Bounded rationality represents the notion that decision makers are bounded or restricted by a variety of constraints when making decisions. These constraints include any personal or environmental characteristics that reduce rational decision making. Examples are the limited capacity of the human mind, problem complexity and uncertainty, amount and timeliness of information at hand, criticality of the decision, and time demands. Consider how these constraints affected ethical decision making at Syntex Corporation.
Back in 1985, Syntex Corp. figured it was onto something big: a new ulcer drug that promised to relieve the misery of millionsand earn the company big profits. In its annual report Syntex showed capsules of the drug spilling forth as shining examples of research. It pictured the drug's inventor, Gabriel Garay, at work in his lab. Critics are charging that the company, after investing millions in the drug's development, played down and even suppressed potentially serious safety problems that could hinder its approval.
Mr. Garay says it was he who sounded alarms internally over enprostil, warning it could cause dangerous blood clots and actually prompt new ulcers. Even when an outside researcher agreed there were potential dangers, Syntex executives dismissed the findings as preliminary. Mr. Garay says Syntex then forced him out.

Although decision makers at Syntex may have desired the best solution to problems identified by Mr. Garay, bounded rationality precluded its identification. How then do managers make decisions?
As opposed to the rational model, Simon's normative model suggests that decision making is characterized by (1) limited information processing, (2) the use of rules of thumb or shortcuts, and (3) satisficing. Each of these characteristics is now explored.

Limited Information Processing

Managers are limited by how much information they process because of bounded rationality. This results in the tendency to acquire manageable rather than optimal amounts of information. In turn, this practice makes it difficult for managers to identify all possible alternative solutions. In the long run, the constraints of bounded rationality cause decision makers to fail to evaluate all potential alternatives.

Use of Rules of Thumb or Shortcut

Decision makers use rules of thumb or shortcuts to reduce information-processing demands. Since these shortcuts represent knowledge gained from past experience, they help decision makers evaluate current problems. For example, recruiters may tend to hire applicants receiving degrees from the same university attended by other successful employees. In this case, the school attended criterion is used to facilitate complex information processing associated with employment interviews. Unfortunately, these shortcuts can result in biased decisions.

Satisficing

People satisfice because they do not have the time, information, or ability to handle the complexity associated with following a rational process. This is not necessarily undesirable. Satisficing consists of choosing a solution that meets some minimum qualifications, one that is good enough. Satisficing resolves problems by producing solutions that are satisfactory, as opposed to optimal.

3. The Garbage Can Model

As true of Simon's normative model, this approach grew from the rational models inability to explain how decisions are actually made. It assumes that decision making does not follow an orderly series of steps. In fact, organizational decision making is said to be such a sloppy and haphazard process that the garbage can label is appropriate. This contrasts sharply with the rational model, which proposed that decision makers follow a sequential series of steps beginning with a problem end ending with a solution. According to the garbage can model, decisions result from a complex interaction between four independent streams of events: problems, solutions, participants, and choice looking for problems, issues, and feelings looking for decision situations in which they might be aired, solutions looking for issues to which they might be the answer, and decision makers looking for work. The garbage can model attempts to explain how they interact, this section highlights managerial implications of the garbage can model.

Streams of Events

The four streams of events problems, solutions, participants and choice of opportunities represent independent entities that flow into and out of organizational decision situations. Because decisions are a function of the interaction among these independent events, the stages of problem identification and problem solution may be unrelated. For instance, a solution may be proposed for a problem that does not exist. This can be observed when students recommend that a test be curved, even though the average test score is a comparatively high 85 percent. On the other hand, some problems are never solved. Each of the four events in the garbage can model deserves a closer look.

INDIVIDUAL AND GROUP DECISION MAKING

Individual Decision Making

Individuals in organizations make decisions. That is, they make choices from among two or more alternatives. Top managers, for instance, determine their organization's goals, what products or services to offer, how best to organize corporate headquarters, or where to locate a new manufacturing plant. Middle- and lower-level managers determine production schedules, select new employees, and decide how pay raises are to be allocated. Of course, making decisions is not the sole province of managers. Non-managerial employees also make decisions that affect their jobs and the organizations they work for. The more obvious of these decisions might include whether to come to work or not on any given day, how much effort to put forward once at work, and whether to comply with a request made by the boss. Additionally, an increasing number of organizations in recent years have been empowering their non-managerial employees with job-related decision-making authority that historically was reserved for managers alone. Individual decision making, therefore, is an important part or organizational behavior.
So every individual in every organization regularly engages in decision making: that is, they make choices from among two or more alternatives. Undoubtedly, many of these choices are almost reflex actions, undertaken with little conscious thought. The boss asks you to complete a certain report by the end of the day and you comply, assuming the request is reasonable. In such instances, choices are still being made though they don't require much contemplation. But when individuals confront new or important decisions, they can be expected to reason them out thoughtfully. Alternatives will be developed. Pros and cons will be weighed. The result is that what people do on their jobs is influenced by their decision processes.

Group Decision Making

We know that, today, many decisions in organizations are made by groups or committees. The communicative interaction in a group decision can either increase or decrease the quality of the decision over that made by an individual alone. We now look into the advantages and disadvantages of group decisions in contrast to individual decisions.

Advantages

Individual and group decisions each have their own set of strengths. Neither is ideal for all situations. The following list identifies the major advantages that groups offer over individuals in the making of decisions:

1. More complete information and knowledge. Two hands are better than one. There is more information in a group than typically resides with one individual. So groups can provide more diverse input into the decision.

2. Increased diversity of views. In addition to more input, groups can bring heterogeneity to the decision process. This opens up the opportunity for more approaches and alternatives to be considered.

3. Increases acceptance of a solution. Many decisions fail after the final choice has been made because people do not accept the solution. However, if people who will be affected by a decision and who will be instrumental in implementing it are able to participate in the decision itself, they will be more likely to accept it and encourage others to accept it. Participation in the process increases the commitment and motivation of those who will carry out the decision. Since members are reluctant to fight or undermine a decision they helped to develop, group decisions increase acceptance of the final solution and facilitate its implementation.

4. Increases legitimacy. Most societies foster democratic methods. The group decision-making process is consistent with democratic ideals and, therefore, may be perceived as more legitimate in democratic societies than decisions made by a single person. When an individual decision maker fails to consult with others before making a decision, the fact that the decision maker has complete power can create the perception that the decision was made autocratically and arbitrarily.

Disadvantages

Of course, group decisions are not without drawbacks. The following lists the major disadvantages to group decision-making:

1. Time consuming. It takes time to assemble a group. The interaction that takes place once the group is in place is frequently inefficient. The result is that groups take more time to reach a solution than would be the case if an individual were making the decision.

2. Pressures to conform. There are social pressures in groups. The desire by group members to be accepted and considered as an asset to the group can result in squashing any overt disagreement, thus encouraging conformity among viewpoints.

3. Ambiguous responsibility. Group members share responsibility, but who is actually responsible for the final outcome? In an individual decision, it is clear who is responsible. In a group decision, the responsibility of any single member is watered down and less clearly defined.
4. Domination by the few. Group discussion can be dominated by one or a few members. If this dominant coalition is composed of low-and medium-ability members, the group's overall effectiveness will suffer.

Groupthink and Groupshift

Two by-products of group decision-making have received a considerable amount of attention by researchers. These two phenomena have the potential to affect the groups ability to appraise alternatives objectively and arrive at quality decision solutions.

The first phenomenon, called groupthink, is related to norms. IT describes situations in which group pressures for conformity deter the group from critically appraising unusual, minority, or unpopular views. Groupthink is a disease that attacks many groups and can dramatically hinder their performance. The second phenomenon we review is called groupshift. It indicates that in discussing a given set of alternatives and arriving at a solution, group members tend to exaggerate the initial positions they hold. In some situations, caution dominates, and there is a conservative shift. More often, however, the evidence indicates that groups tend toward a risky shift.

Groupthink

Groupthink is an agreement-at-any-cost mentality that results in ineffective group decision making. It occurs when groups are highly cohesive, have highly directive leaders, are insulated so they have no clear ways to get objective information, and, because they lack outside information, have little hope that a better solution might be found than the one proposed by the leader or other influential group members. These conditions foster the illusion that the group is invulnerable, right, and more moral than outsiders. They also encourage the development of self-appointed mind guards who bring pressure on dissenters. In such situations, decisions, often important decisions, are made without consideration of alternative frames or alternative options. It is difficult to imagine conditions more conducive to poor decision making and wrong decisions.

Recent research indicates that groupthink may also result when group members have preconceived ideas about how a problem should be solved. Under these conditions the team may not examine a full range of decision alternatives or they may discount or avoid information that threatens the team's preconceived choice.
Irving Janice, who coined the term groupthink, focused his research on high-level governmental policy groups faced with difficult problems in complex and dynamic environments. The groupthink phenomenon has been used to explain numerous group decisions that have resulted in serious fiascoes. Of course, group decision making is quite common in all types of organizations, so it is possible that groupthink exists in private-sector organizations as well as in those in the public sector.

Groupshift

In comparing group decisions with the individual decisions of members within the group, evidence suggests that there are differences. In some cases, the group decisions are more conservative than the individual decisions. More often, the shift is toward greater risk.

What appears to happen in groups is that the discussion leads to a significant shift in the positions of members toward a more extreme positioning the direction toward which they were already leaning before the discussion. So conservative types become more cautious and the more aggressive types take on more risk. The group discussion tends to exaggerate the initial position of the group.
The groupshift can be viewed as actually a special case of groupthink. The decision of the group reflects the dominant decision making norm that develops during the group's discussion. Whether the shift in the group's decision is toward greater caution or more risk depends on the dominant prediscussion norm.
The greater occurrence of the shift toward the risk has generated several explanations for the phenomenon. It has been argued, for instance, that the discussion creates familiarization among the members. As they become more comfortable with each other, they also become more bold and daring. Another argument is that our society values risk, we admire individuals who are willing to take risks, and group discussion motivates members to show they are at least as willing as their peers to take risks. The most plausible explanation of the shift toward risk, however, seems to be that the group diffuses responsibility. Groups decision free any single member from accountability for the group's final choice. Greater risk can be taken because even if the decision fails, no one member can be held wholly responsible.


RISK MANAGEMAENT

Risk management is a structured approach to managing uncertainty through, risk assessment, developing strategies to manage it, and mitigation of risk using managerial resources.
The strategies include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk.
Some traditional risk managements are focused on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death and lawsuits). Financial risk management, on the other hand, focuses on risks that can be managed using traded financial instruments.
Objective of risk management is to reduce different risks related to a preselected domain to the level accepted by society. It may refer to numerous types of threats caused by environment, technology, humans, organizations and politics. On the other hand it involves all means available for humans, or in particular, for a risk management entity (person, staff, organization).

Risk avoidance

Includes not performing an activity that could carry risk. An example would be not buying a property or business in order to not take on the liability that comes with it. Another would be not flying in order to not take the risk that the airplane were to be hijacked. Avoidance may seem the answer to all risks, but avoiding risks also means losing out on the potential gain that accepting (retaining) the risk may have allowed. Not entering a business to avoid the risk of loss also avoids the possibility of earning profits.

Risk reduction

Involves methods that reduce the severity of the loss or the likelihood of the loss from occurring. Examples include sprinklers designed to put out a fire to reduce the risk of loss by fire. This method may cause a greater loss by water damage and therefore may not be suitable. Halon fire suppression systems may mitigate that risk, but the cost may be prohibitive as a strategy.
Modern software development methodologies reduce risk by developing and delivering software incrementally. Early methodologies suffered from the fact that they only delivered software in the final phase of development; any problems encountered in earlier phases meant costly rework and often jeopardized the whole project. By developing in iterations, software projects can limit effort wasted to a single iteration.
Outsourcing could be an example of risk reduction if the outsourcer can demonstrate higher capability at managing or reducing risks. [1] In this case companies outsource only some of their departmental needs. For example, a company may outsource only its software development, the manufacturing of hard goods, or customer support needs to another company, while handling the business management itself. This way, the company can concentrate more on business development without having to worry as much about the manufacturing process, managing the development team, or finding a physical location for a call center.

Risk retention

Involves accepting the loss when it occurs. True self insurance falls in this category. Risk retention is a viable strategy for small risks where the cost of insuring against the risk would be greater over time than the total losses sustained. All risks that are not avoided or transferred are retained by default. This includes risks that are so large or catastrophic that they either cannot be insured against or the premiums would be infeasible. War is an example since most property and risks are not insured against war, so the loss attributed by war is retained by the insured. Also any amounts of potential loss (risk) over the amount insured is retained risk. This may also be acceptable if the chance of a very large loss is small or if the cost to insure for greater coverage amounts is so great it would hinder the goals of the organization too much.

Risk transfer

Means causing another party to accept the risk, typically by contract or by hedging. Insurance is one type of risk transfer that uses contracts. Other times it may involve contract language that transfers a risk to another party without the payment of an insurance premium. Liability among construction or other contractors is very often transferred this way. On the other hand, taking offsetting positions in derivatives is typically how firms use hedging to financially manage risk.
Some ways of managing risk fall into multiple categories. Risk retention pools are technically retaining the risk for the group, but spreading it over the whole group involves transfer among individual members of the group. This is different from traditional insurance, in that no premium is exchanged between members of the group up front, but instead losses are assessed to all members of the group.

DECISION MAKING TOOLS

The techniques in this module will help you to make the best decisions possible with the information you have available. With these tools you will be able to map out the likely consequences of decisions, work out the importance of individual factors, and choose the best course of action to take.

Tools to be discussed are:

*Pareto Analysis. Selecting the most important changes to make.
*Paired Comparison Analysis. Evaluating the relative importance of different options.
*Grid Analysis. Selecting between good options.
*Decision Trees. Choosing between options by projecting likely outcomes.
*PMI. Weighing the pros and cons of a decision.
*Force Field Analysis. Analyzing the pressures for and against change.
*Six Thinking Hats. Looking at a decision from all points of view.
*Cost/Benefit Analysis. Seeing whether a change is worth making.


Pareto Analysis - Choosing the Most Important Changes to Make


Pareto analysis is a very simple technique that helps you to choose the most effective changes to make.
It uses the Pareto principle - the idea that by doing 20% of work you can generate 80% of the advantage of doing the entire job. Pareto analysis is a formal technique for finding the changes that will give the biggest benefits. It is useful where many possible courses of action are competing for your attention.

How to use tool:

To start using the tool, write out a list of the changes you could make. If you have a long list, group it into related changes.
Then score the items or groups. The scoring method you use depends on the sort of problem you are trying to solve. For example, if you are trying to improve profitability, you would score options on the basis of the profit each group might generate. If you are trying to improve customer satisfaction, you might score on the basis of the number of complaints eliminated by each change.
The first change to tackle is the one that has the highest score. This one will give you the biggest benefit if you solve it.
The options with the lowest scores will probably not even be worth bothering with - solving these problems may cost you more than the solutions are worth.

Example:
A manager has taken over a failing service center. He commissions research to find out why customers think that service is poor.

He gets the following comments back from the customers:
1.Phones are only answered after many rings.
2.Staff seem distracted and under pressure.
3.Engineers do not appear to be well organized. They need second visits to bring extra parts. This means that customers have to take more holidays to be there a second time.
4.They do not know what time they will arrive. This means that customers may have to be in all day for an engineer to visit.
5.Staff members do not always seem to know what they are doing.
6.Sometimes when staff members arrive, the customer finds that the problem could have been solved over the phone.

The manager groups these problems together. He then scores each group by the number of complaints, and orders the list:
*Lack of staff training: items 5 and 6: 51 complaints
*Too few staff: items 1, 2 and 4: 21 complaints
*Poor organization and preparation: item 3: 2 complaints

By doing the Pareto analysis above, the manager can better see that the vast majority of problems (69%) can be solved by improving staff skills.
Once this is done, it may be worth looking at increasing the number of staff members. Alternatively, as staff members become more able to solve problems over the phone, maybe the need for new staff members may decline.
It looks as if comments on poor organization and preparation may be rare, and could be caused by problems beyond the manager's control.
By carrying out a Pareto Analysis, the manager is able to focus on training as an issue, rather than spreading effort over training, taking on new staff members, and possibly installing a new computer system.

Key points:

Pareto Analysis is a simple technique that helps you to identify the most important problem to solve.
To use it:
*List the problems you face, or the options you have available
*Group options where they are facets of the same larger problem
*Apply an appropriate score to each group
*Work on the group with the highest score
Pareto analysis not only shows you the most important problem to solve, it also gives you a score showing how severe the problem is.

Paired Comparison Analysis - Working Out the Relative Importance of Different Options

Paired Comparison Analysis helps you to work out the importance of a number of options relative to each other. It is particularly useful where you do not have objective data to base this on.
This makes it easy to choose the most important problem to solve, or select the solution that will give you the greatest advantage. Paired Comparison Analysis helps you to set priorities where there are conflicting demands on your resources.
It is also an ideal tool for comparing "apples with oranges" - completely different options such as whether to invest in marketing, a new IT system or a new piece of machinery. These decisions are usually much harder than comparing three possible new IT systems, for example.

How to use tool:

To use the technique, you will be needing a worksheet. You can use this to compare each option with each other option, one-by-one. For each comparison, you will decide which of the two options is most important, and then assign a score to show how much more important it is.

Follow these steps to use the technique:

1. List the options you will compare. Assign a letter to each option.
2. Mark the options as row and column headings on the worksheet.
3. Within the cells compare the option in the row with the one in the column. For each cell, decide which of the two options is more important. Write down the letter of the more important option in the cell, and score the difference in importance from 0 (no difference) to 3 (major difference).
4. Finally, consolidate the results by adding up the total of all the values for each of the options. You may want to convert these values into a percentage of the total score.

Example:

As a simple example, an entrepreneur is looking at ways in which she can expand her business. She has limited resources, but also has the options she lists below:
*Expand into overseas markets
*Expand in home markets
*Improve customer service
*Improve quality

Grid Analysis - Making a Choice Where Many Factors must be Balanced

Grid Analysis (also known as Decision Matrix analysis, Pugh Matrix analysis or MAUT which stands for Multi-Attribute Utility Theory) is a useful technique to use for making a decision. Decision matrices are most effective where you have a number of good alternatives and many factors to take into account.

How to use tool:

The first step is to list your options and then the factors that are important for making the decision. Then use a worksheet. Lay the options out on the worksheet table, with options as the row labels, and factors as the column headings.
Next, work out the relative importance of the factors in your decision. Show these as numbers. We will use these to weight your preferences by the importance of the factor. These values may be obvious. If they are not, then use a technique such as Paired Comparison Analysis to estimate them.
The next step is to work your way across your table, scoring each option for each of the important factors in your decision. Score each option from 0 (poor) to 3 (very good). Note that you do not have to have a different score for each option - if none of them are good for a particular factor in your decision, then all options should score 0.

Now multiply each of your scores by the values for your relative importance. This will give them the correct overall weight in your decision.
Finally add up these weighted scores for your options. The option that scores the highest wins!

Example:

A windsurfing enthusiast is about to replace his car. He needs one that not only carries a board and sails, but also that will be good for business travel. He has always loved open-topped sports cars. No car he can find is good for all three things.

His options are:
*A four wheel drive (4x4), hard topped vehicle
*A comfortable 'family car'
*An estate car
*A sports car
Criteria that he wants to consider are:
Cost
*Ability to carry a sail board at normal driving speed
*Ability to store sails and equipment securely
*Comfort over long distances
*Fun!
*Nice look and build quality to car


Key points:

Grid Analysis helps you to decide between several options, while taking many different factors into account.
To use the tool, lay out your options as rows on a table. Set up the columns to show your factors. Allocate weights to show the importance of each of these factors. Score each choice for each factor using numbers from 0 (poor) to 3 (very good). Multiply each score by the weight of the factor, to show its contribution to the overall selection. Finally add up the total scores for each option. Select the highest scoring option.
Grid Analysis is the simplest form of Multiple Criteria Decision Analysis (MCDA), also known as Multiple Criteria Decision Aid or Multiple Criteria Decision Management (MCDM). Sophisticated MCDA is involves highly complex modeling of different potential scenarios and advanced mathematics.


Decision Tree Analysis - Choosing Between Options by Projecting Likely Outcomes

Decision Trees are excellent tools for helping you to choose between several courses of action. They provide a highly effective structure within which you can lay out options and investigate the possible outcomes of choosing those options. They also help you to form a balanced picture of the risks and rewards associated with each possible course of action.

How to use tool:

You start a Decision Tree with a decision that you need to make. Draw a small square to represent this towards the left of a large piece of paper.

From this box draw out lines towards the right for each possible solution, and write that solution along the line. Keep the lines apart as far as possible so that you can expand your thoughts.
At the end of each line, consider the results. If the result of taking that decision is uncertain, draw a small circle. If the result is another decision that you need to make, draw another square. Squares represent decisions, and circles represent uncertain outcomes. Write the decision or factor above the square or circle. If you have completed the solution at the end of the line, just leave it blank.
Starting from the new decision squares on your diagram, draw out lines representing the options that you could select. From the circles draw lines representing possible outcomes. Again make a brief note on the line saying what it means. Keep on doing this until you have drawn out as many of the possible outcomes and decisions as you can see leading on from the original decisions.
An example of the sort of thing you will end up with is shown in Fig. 1:
Once you have done this, review your tree diagram. Challenge each square and circle to see if there are any solutions or outcomes you have not considered. If there are, draw them in. If necessary, redraft your tree if parts of it are too congested or untidy. You should now have a good understanding of the range of possible outcomes of your decisions.

PMI - Weighing the Pros and Cons of a Decision

PMI stands for 'Plus/Minus/Interesting'. It is a valuable improvement to the 'weighing pros and cons' technique used for centuries.
PMI is an important Decision Making tool: the mind tools used so far in this section have focused on selecting a course of action from a range of options. Before you move straight to action on this course of action, it is important to check that it is going to improve the situation (it may actually be best to do nothing!) PMI is a useful tool for doing this.

How to use tool:

To use PMI, download our free worksheet. In the column underneath 'Plus', write down all the positive results of taking the action. Underneath 'Minus' write down all the negative effects. In the 'Interesting' column write down the implications and possible outcomes of taking the action, whether positive, negative, or uncertain.
By this stage it may already be obvious whether or not you should implement the decision. If it is not, consider each of the points you have written down and assign a positive or negative score to it appropriately. The scores you assign may be quite subjective.
Once you have done this, add up the score. A strongly positive score shows that an action should be taken, a strongly negative score that it should be avoided.

Force Field Analysis - Understanding the Pressures For and Against Change

Force Field Analysis is a useful technique for looking at all the forces for and against a decision. In effect, it is a specialized method of weighing pros and cons.
By carrying out the analysis you can plan to strengthen the forces supporting a decision, and reduce the impact of opposition to it.

How to Use the Tool:

To carry out a force field analysis, first download our free worksheet and then use it to follow these steps:
*Describe your plan or proposal for change in the middle.
*List all forces for change in one column, and all forces against change in another column.

Key points:

Force Field Analysis is a useful technique for looking at all the forces for and against a plan. It helps you to weigh the importance of these factors and decide whether a plan is worth implementing.
Where you have decided to carry out a plan, Force Field Analysis helps you identify changes that you could make to improve it.

Six Thinking Hats Looking at a Decision From All Points of View

'Six Thinking Hats' is a powerful technique that helps you look at important decisions from a number of different perspectives. It helps you make better decisions by forcing you to move outside your habitual ways of thinking. As such, it helps you understand the full complexity of the decision, and spot issues and opportunities to which you might otherwise be blind.
This tool was created by Edward de Bono in his book '6 Thinking Hats'.
Many successful people think from a very rational, positive viewpoint. This is part of the reason that they are successful. Often, though, they may fail to look at a problem from an emotional, intuitive, creative or negative viewpoint. This can mean that they underestimate resistance to plans, fail to make creative leaps and do not make essential contingency plans.
Similarly, pessimists may be excessively defensive, and more emotional people may fail to look at decisions calmly and rationally.
If you look at a problem with the 'Six Thinking Hats' technique, then you will solve it using all approaches. Your decisions and plans will mix ambition, skill in execution, sensitivity, creativity and good contingency planning.

How to Use the Tool:

You can use the Six Thinking Hats technique in meetings or on your own. In meetings it has the benefit of blocking the confrontations that happen when people with different thinking styles discuss the same problem.

Each 'Thinking Hat' is a different style of thinking. These are explained below:
*White Hat: With this thinking hat you focus on the data available. Look at the information you have, and see what you can learn from it. Look for gaps in your knowledge, and either try to fill them or take account of them. This is where you analyze past trends, and try to extrapolate from historical data.

*Red Hat: 'Wearing' the red hat, you look at problems using intuition, gut reaction, and emotion. Also try to think how other people will react emotionally. Try to understand the responses of people who do not fully know your reasoning.

*Black Hat: Using black hat thinking, look at all the bad points of the decision. Look at it cautiously and defensively. Try to see why it might not work. This is important because it highlights the weak points in a plan. It allows you to eliminate them, alter them, or prepare contingency plans to counter them.

Black Hat thinking helps to make your plans 'tougher' and more resilient. It can also help you to spot fatal flaws and risks before you embark on a course of action. Black Hat thinking is one of the real benefits of this technique, as many successful people get so used to thinking positively that often they cannot see problems in advance. This leaves them under-prepared for difficulties.

*Yellow Hat: The yellow hat helps you to think positively. It is the optimistic viewpoint that helps you to see all the benefits of the decision and the value in it. Yellow Hat thinking helps you to keep going when everything looks gloomy and difficult.

*Green Hat: The Green Hat stands for creativity. This is where you can develop creative solutions to a problem. It is a freewheeling way of thinking, in which there is little criticism of ideas. A whole range of creativity tools can help you here.

*Blue Hat: The Blue Hat stands for process control. This is the hat worn by people chairing meetings. When running into difficulties because ideas are running dry, they may direct activity into Green Hat thinking. When contingency plans are needed, they will ask for Black Hat thinking, etc.
A variant of this technique is to look at problems from the point of view of different professionals (e.g. doctors, architects, sales directors, etc.) or different customers.


Example:

The directors of a property company are looking at whether they should construct a new office building. The economy is doing well, and the amount of vacant office space is reducing sharply. As part of their decision they decide to use the 6 Thinking Hats technique during a planning meeting.

Looking at the problem with the White Hat, they analyze the data they have. They examine the trend in vacant office space, which shows a sharp reduction. They anticipate that by the time the office block would be completed, that there will be a severe shortage of office space. Current government projections show steady economic growth for at least the construction period.
With Red Hat thinking, some of the directors think the proposed building looks quite ugly. While it would be highly cost-effective, they worry that people would not like to work in it.
When they think with the Black Hat, they worry that government projections may be wrong. The economy may be about to enter a 'cyclical downturn', in which case the office building may be empty for a long time.
If the building is not attractive, then companies will choose to work in another better-looking building at the same rent.
With the Yellow Hat, however, if the economy holds up and their projections are correct, the company stands to make a great deal of money.
If they are lucky, maybe they could sell the building before the next downturn, or rent to tenants on long-term leases that will last through any recession.
With Green Hat thinking they consider whether they should change the design to make the building more pleasant. Perhaps they could build prestige offices that people would want to rent in any economic climate. Alternatively, maybe they should invest the money in the short term to buy up property at a low cost when a recession comes.
The Blue Hat has been used by the meeting's Chair to move between the different thinking styles. He or she may have needed to keep other members of the team from switching styles, or from criticizing other peoples' points.

Key points:

Six Thinking Hats is a good technique for looking at the effects of a decision from a number of different points of view.

It allows necessary emotion and skepticism to be brought into what would otherwise be purely rational decisions. It opens up the opportunity for creativity within Decision Making. The technique also helps, for example, persistently pessimistic people to be positive and creative.
Plans developed using the '6 Thinking Hats' technique will be sounder and more resilient than would otherwise be the case. It may also help you to avoid public relations mistakes, and spot good reasons not to follow a course of action before you have committed to it.

Cost/Benefit Analysis – Evaluating Quantitatively Whether to Follow a Course of Action

You may have been intensely creative in generating solutions to a problem, and rigorous in your selection of the best one available. However, this solution may still not be worth implementing, as you may invest a lot of time and money in solving a problem that is not worthy of this effort.

Cost Benefit Analysis or CBA is a relatively simple and widely used technique for deciding whether to make a change. As its name suggests, you simply add up the value of the benefits of a course of action, and subtract the costs associated with it.
Costs are either one-off, or may be ongoing. Benefits are most often received over time. We build this effect of time into our analysis by calculating a payback period. This is the time it takes for the benefits of a change to repay its costs. Many companies look for payback over a specified period of time e.g. three years.

How to use tool:

In its simple form, cost-benefit analysis is carried out using only financial costs and financial benefits. For example, a simple cost benefit ration for a road scheme would measure the cost of building the road, and subtract this from the economic benefit of improving transport links. It would not measure either the cost of environmental damage or the benefit of quicker and easier travel to work.
A more sophisticated approach to building a cost benefit models is to try to put a financial value on intangible costs and benefits. This can be highly subjective - is, for example, a historic water meadow worth $25,000, or is it worth $500,000 because if its environmental importance? What is the value of stress-free travel to work in the morning?
These are all questions that people have to answer, and answers that people have to defend.
The version of the cost benefit approach we explain here is necessarily simple. Where large sums of money are involved (for example, in financial market transactions), project evaluation can become an extremely complex and sophisticated art.

Key points:

Cost/Benefit Analysis is a powerful, widely used and relatively easy tool for deciding whether to make a change.
To use the tool, firstly work out how much the change will cost to make. Then calculate the benefit you will from it.
Where costs or benefits are paid or received over time, work out the time it will take for the benefits to repay the costs.
Cost/Benefit Analysis can be carried out using only financial costs and financial benefits. You may, however, decide to include intangible items within the analysis. As you must estimate a value for these, this inevitably brings an element of subjectivity into the process.
*Larger projects are evaluated using formal finance/capital budgeting, which takes into account many of the complexities involved with financial Decision Making. This is a complex area and is beyond the scope of this site, however books on capital budgeting are shown on the side bar

ETHICAL DECISION MAKING

This document is designed as an introduction to thinking ethically. We all have an image of our better selves-of how we are when we act ethically or are "at our best." We probably also have an image of what an ethical community, an ethical business, an ethical government, or an ethical society should be. Ethics really has to do with all these levels-acting ethically as individuals, creating ethical organizations and governments, and making our society as a whole ethical in the way it treats everyone.

What is Ethics?

Simply stated, ethics refers to standards of behavior that tell us how human beings ought to act in the many situations in which they find themselves-as friends, parents, children, citizens, businesspeople, teachers, professionals, and so on.

It is helpful to identify what ethics is NOT:
*Ethics is not the same as feelings. Feelings provide important information for our ethical choices. Some people have highly developed habits that make them feel bad when they do something wrong, but many people feel good even though they are doing something wrong. And often our feelings will tell us it is uncomfortable to do the right thing if it is hard.

*Ethics is not religion. Many people are not religious, but ethics applies to everyone. Most religions do advocate high ethical standards but sometimes do not address all the types of problems we face.

*Ethics is not following the law. A good system of law does incorporate many ethical standards, but law can deviate from what is ethical. Law can become ethically corrupt, as some totalitarian regimes have made it. Law can be a function of power alone and designed to serve the interests of narrow groups. Law may have a difficult time designing or enforcing standards in some important areas, and may be slow to address new problems.

*Some cultures are quite ethical, but others become corrupt -or blind to certain ethical concerns (as the United States was to slavery before the Civil War). "When in Rome, do as the Romans do" is not a satisfactory ethical standard.

*Ethics is not science. Social and natural science can provide important data to help us make better ethical choices. But science alone does not tell us what we ought to do. Science may provide an explanation for what humans are like. But ethics provides reasons for how humans ought to act. And just because something is scientifically or technologically possible, it may not be ethical to do it.

Why Identifying Ethical Standards is Hard

1.There are two fundamental problems in identifying the ethical standards we are to follow: On what do we base our ethical standards?

2.How do those standards get applied to specific situations we face?
If our ethics are not based on feelings, religion, law, accepted social practice, or science, what are they based on? Many philosophers and ethicists have helped us answer this critical question. They have suggested at least five different sources of ethical standards we should use.

Five Sources of Ethical Standards

The Utilitarian Approach

Some ethicists emphasize that the ethical action is the one that provides the most good or does the least harm, or, to put it another way, produces the greatest balance of good over harm. The ethical corporate action, then, is the one that produces the greatest good and does the least harm for all who are affected-customers, employees, shareholders, the community, and the environment. Ethical warfare balances the good achieved in ending terrorism with the harm done to all parties through death, injuries, and destruction. The utilitarian approach deals with consequences; it tries both to increase the good done and to reduce the harm done.

The Rights Approach

Other philosophers and ethicists suggest that the ethical action is the one that best protects and respects the moral rights of those affected. This approach starts from the belief that humans have a dignity based on their human nature per se or on their ability to choose freely what they do with their lives. On the basis of such dignity, they have a right to be treated as ends and not merely as means to other ends. The list of moral rights -including the rights to make one's own choices about what kind of life to lead, to be told the truth, not to be injured, to a degree of privacy, and so on-is widely debated; some now argue that non-humans have rights, too. Also, it is often said that rights imply duties-in particular, the duty to respect others' rights.

The Fairness or Justice Approach

Aristotle and other Greek philosophers have contributed the idea that all equals should be treated equally. Today we use this idea to say that ethical actions treat all human beings equally-or if unequally, then fairly based on some standard that is defensible. We pay people more based on their harder work or the greater amount that they contribute to an organization, and say that is fair. But there is a debate over CEO salaries that are hundreds of times larger than the pay of others; many ask whether the huge disparity is based on a defensible standard or whether it is the result of an imbalance of power and hence is unfair.

The Common Good (Caring) Approach

The Greek philosophers have also contributed the notion that life in community is a good in itself and our actions should contribute to that life. This approach suggests that the interlocking relationships of society are the basis of ethical reasoning and that respect and compassion for all others-especially the vulnerable-are requirements of such reasoning. This approach also calls attention to the common conditions that are important to the welfare of everyone. This may be a system of laws, effective police and fire departments, health care, a public educational system, or even public recreational areas.

The Virtue Approach

A very ancient approach to ethics is that ethical actions ought to be consistent with certain ideal virtues that provide for the full development of our humanity. These virtues are dispositions and habits that enable us to act according to the highest potential of our character and on behalf of values like truth and beauty. Honesty, courage, compassion, generosity, tolerance, love, fidelity, integrity, fairness, self-control, and prudence are all examples of virtues. Virtue ethics asks of any action, "What kind of person will I become if I do this?" or "Is this action consistent with my acting at my best?"

Putting the Approaches Together

Each of the approaches helps us determine what standards of behavior can be considered ethical. There are still problems to be solved, however.
The first problem is that we may not agree on the content of some of these specific approaches. We may not all agree to the same set of human and civil rights.
We may not agree on what constitutes the common good. We may not even agree on what is a good and what is a harm.
The second problem is that the different approaches may not all answer the question "What is ethical?" in the same way. Nonetheless, each approach gives us important information with which to determine what is ethical in a particular circumstance. And much more often than not, the different approaches do lead to similar answers.

Making Decisions

Making good ethical decisions requires a trained sensitivity to ethical issues and a practiced method for exploring the ethical aspects of a decision and weighing the considerations that should impact our choice of a course of action. Having a method for ethical decision making is absolutely essential. When practiced regularly, the method becomes so familiar that we work through it automatically without consulting the specific steps.
The more novel and difficult the ethical choice we face, the more we need to rely on discussion and dialogue with others about the dilemma. Only by careful exploration of the problem, aided by the insights and different perspectives of others, can we make good ethical choices in such situations.
We have found the following framework for ethical decision making a useful method for exploring ethical dilemmas and identifying ethical courses of action.

Assessing Ethical Decisions

What distinguishes ethical from unethical decisions is often subjective and subject to differences of opinion. So how can we decide whether a particular decision is ethical? Below is a three-step model for applying ethical judgments to situations that may arise during the course of business activities:

1.Gather the relevant factual information.
2.Analyze the facts to determine the most appropriate moral values.
3.Make an ethical judgment based on the rightness or wrongness of the proposed activity or policy.

Unfortunately, the process does not always work as smoothly as the scheme suggests. What if the facts are not clear-cut? What if there are no agreed-upon moral values? Nevertheless, a judgment and a decision must be made. Experts point out that, otherwise, trust is impossible. And trust is indispensable in any business transaction.
In order to assess more fully the ethics of specific behavior, we need a more complex perspective. Consider a common dilemma faced by managers with expense accounts. Companies routinely provide managers with accounts to cover work-related expenses hotel bills, meals, taxis when they are traveling on company business or entertaining clients for business purposes. They expect employees to claim only work-related expenses. For example, if a manager takes a client to dinner and spends P1,000, submitting a P1,000 reimbursement receipt for that dinner is accurate and appropriate. But suppose that our manager has a P1,000 dinner the next night with a good friend for purely social purposes. Submitting that receipt for reimbursement would be unethical, but some managers rationalize that it is okay to submit a receipt for dinner with a friend. Perhaps they will tell themselves that they are underpaid and just
recovering income due to them. Ethical standards also come into play in a case like this. Consider the five sources of such standards that were discussed earlier. Below is an expanded version that incorporates the consideration of these ethical standards.


CREATIVITY

One thing is certain regarding the definition of creativity--it is much easier to identify creative acts than it is to define the term itself. We readily recognize creative acts, and we often use adjectives like novel, insightful, clever, unique, different, or imaginative. But coming up with a coherent and useful definition of the term creativity is not easy.
Many different scholars have attempted to define creativity. All definitions include some aspects of novelty (originality, freshness). But there is also an element of effectiveness that must be met. Slinging buckets of mud at customers as they arrive at a used-car lot is indeed a novel greeting but may not be very effective in selling cars. But offering coupons for a cosmetic mud pack, an evening at the local mud-wrestling arena, or a therapeutic and relaxing mud bath might be very effective as well as novel. And what about creating a television advertisement in which the car lot's owner offers customers the opportunity to dunk him in a mud bath set up at the lot specifically for this purpose?
For our purposes in this module, we are particularly concerned with the development of creative alternatives in decision problems. To be sure, creativity arises in many different situations; a novel and elegant proof of a mathematical theorem, an artist's creativity in painting or music and a storyteller's clever retelling of an old tale are a few examples. When we think of creativity in decision making, though, we will be looking for new alternatives with elements that achieve fundamental objectives in ways previously unseen. Thus, a creative alternative has both elements of novelty and effectiveness, where effectiveness is thought of in terms of satisfying objectives of a decision maker, a group of individuals, or even the diverse objectives held by different stakeholders in a negotiation.

Theories of Creativity

Why do creative thoughts seem to come more readily to some people than to others? Or in certain kinds of situations? Many scholars have tried to understand the creative process, and in this section we review some of the psychological bases of creativity.
Perhaps the most basic approach relates creativity to Maslow's concept of self-actualization. For example, an expert describes self-actualization as, among other things, being able to perceive reality accurately and compare culture objectively, having a degree of genuine spontaneity, and being able to look at things in a fresh, naïve, and simple way. The same expert claims that these and other qualities help people, even those without special talent, to act creatively, and he reviews some recent psychological evidence to support this proposition. This is good news for many of us. Self-actualization, happy lives, and creativity all seem to go hand in hand and to some extent can be developed by anyone. One need not have the special talent of an Einstein, Mozart, or Alexander the Great to reap the creative rewards that follow from self-actualization.

Others have attempted to delve more deeply into the process of creative thoughts itself. Psychoanalytic theories generally maintain that creative productivity is the result of preconscious mental activity. These theories suggest that our brain is processing information at a level that is not accessible to our conscious thoughts. Behavioristic theories argue that our behavior, including creative behavior, is simply a conglomerate of responses to environmental stimuli. Appropriate rewards (stimuli) can lead to more creative behavior.

A cognitive approach suggest that creativity stems from a capacity for making unusual and new mental associations of concepts. A researcher proposed that creative thought is just one manifestation of a general process by which people acquire new knowledge and thereby learn about the world. This process includes as the first step the production of variations, a result of mentally associating elements of a problem in new ways. People who are more creative are better at generating a wider range of variations as they think about the problems they face. Having a broader range of life experiences and working in the right kind of environment can facilitate the production of variations. Finally, some people simply are better at recognizing and seizing appropriate creative solutions as they arise; the ability to come up with creative solutions is not very helpful if one ignores those solutions later.
Phases of the Creative Process

Preparation

In this first stage, the individual learns about the problem. This includes understanding the elements of the problem and how they relate to each other. It may include looking at the problem from different perspectives or asking other people what they know or think about the problem. Spending effort understanding fundamental objectives, decisions that must be made (along with the immediately available set of alternatives), uncertainties inherent in the situation, and how these elements relate to each other prepares the decision maker for creative identification of new alternatives.

Incubation

In the second stage, the prepared decision maker explores, directly or indirectly, a multitude of different paths towards new alternatives. We might also use the terms production or generation of alternatives. The decision maker may do many things that seem to have a low chance of generating a new alternative, such as eliminating assumptions or adopting an entirely different perspective. Apparently playful activities may evoke the idea of the decision maker playing with the decision.
One explanation of unconscious incubation as a valid element of the creative process has been suggested by researchers in artificial intelligence. The explanation is based on a blackboard model of memory in the human brain. When the brain is in the process of doing other things when a problem is incubating parts of the blackboard are erased and new items put up. Every so often, the new information just happens to be pertinent to the original problem, and the juxtaposition of the new and old information suggests a creative solution; in other words, the process of coming up with a new and unusual association can result simply from the way the brain works. An attractive feature of this theory is that it explains why incubation works only a small percentage of the time. Too bad it works so infrequently!

Illumination

This is the instant of becoming aware of a new candidate solution to a problem, that flash of insight when all the pieces come together, either spontaneously (Aha!) or as the result of careful study and work. Illumination is sometimes said to be a separate stage, but you can see that illumination is better characterized as the culmination of the incubation stage.

Verification

In the final step the decision maker must verify that the candidate solution does in fact have merit. (How many times have you thought you had the answer to a difficult problem, only to realize later sometimes moments, sometimes much later that your dream solution turned out to be just that: an impossible dream?) The verification stage requires the careful thinker to turn back to the hard logic of the problem at hand to evaluate the quality of the candidate solution. In our decision-making context, this means looking very carefully at a newly invented alternative in terms of whether it satisfies the constraints of the problem and how well it performs relative to the fundamental objectives.
Although there are many ways to think about the creative thought process, the cognitive approach described above, including the stages of creativity, can help us to frame the following discussion. We turn now to ways in which our creativity can be hindered, and we follow with suggestions about how to reduce or eliminate such blocks and thereby increase our creativity.


Blocks to Creativity

With a clear understanding of the creative process, we are now in a position to discuss ways in which that process can be derailed, albeit inadvertently. This section describes three kinds of creativity blocks, All of these blocks interfere with the creativity process by hindering the generation and recognition of new and unusual solutions to a problem or alternatives in a decision situation.