MGT504 - Organization Theory and Design - Lecture Handout 33

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DECISION MAKING IN TODAY’S ENVIRONMENT

Seen a problem before and may not know to respond. Clear – cut decision criteria do not exist. Alternatives are fuzzy. There is uncertainty about whether a proposed solution will solve the problem. Typically, few alternatives can be developed for a non-programmed decision, so a single solution is custom – tailored to the problem.

Many non-programmed decisions involve strategic planning, because uncertainty is great and decisions are complex, for example, when he first began his job as CEO FO Continental Airlines, Gordon M. Bethune decided to ground forty – one planes, cut more than 4,200 jobs, and abolish cut –rate fares as part of his strategy to make the ailing airline profitable again. Bethune and other top managers had to analyze complex problems, evaluate alternatives, and make a choice about how to pull Continental out of its Slump. These and other decisions have proved to be right on target, as Continental has enjoyed renewed profitability and a vastly improved service record.

Particularly complex non- programmed decisions have been referred to as “wicked” decision, because simply defining the problem can turn into a major task. Wicked problems are associated with manager conflicts over objectives and alternatives, rapidly changing circumstances, and unclear linkages among decision elements, Managers dealing with a wicked decision may hit on a solution that merely proves they failed to correctly define the problem to begin with.

Today’s managers and organizations are dealing with a higher percentage of non- programmed decisions because of the rapidly changing business environment. As outlined today’s has increased both the number and complexity of decisions that have to be made and created a need for new decision – making processes. Managers in rapidly changing internet – based companies, or e – corporations, for example, often have to make quick decisions based on very limited information. “If your instinct is to wait, ponder, and perfect, then you’re dead [in an internet business],” says Ruthann Quindlen, a partner with institutional Venture Partners, Jay Walker, founder and vice – president of Priceline.com, believes mangers in e-corporations, have to focus not on today’s problems but on the next generation of problems. For example, Walker and other top managers made the decision to invest resources to hire Rick Braddock, former president of Citicorp, for his skills at managing a billion-dollar company even though Priceline.com was doing only a few million dollar company even though Priceline.com was doing only a few million dollars worth of business at the time. Another example is globalization. The trend toward moving production to low –wage countries has manager all over corporate America struggling with ethical decisions concerning working conditions in the Third World and the loss of manufacturing jobs in small American Communities. In one Tennessee community where the unemployment rate is 18 percent, six hundred workers recently lost their jobs because most garment manufacturing is now sent overseas.

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