Successful Decision-making: A Systematic Approach to Complex Problems

235 Pages·2005·2.26 MB·English

by  Professor Dr. Rudolf Grünig, Professor Dr. Richard Kühn (auth.)

Successful Decision-making
A Systematic Approach to Complex Problems
Rudolf Grünig
Richard Kühn
Successful
Decision-making
A Systematic Approach
to Complex Problems
Translated from German by
Anthony Clarkand Claire O’Dea
With 100 Figures
123
Professor Dr.RudolfGrünig
University ofFribourg
Chair ofManagement
Avenue de l’Europe 20
1700 Fribourg
Switzerland
E-mail:[email protected]
Professor Dr.Richard Kühn
University ofBern
Engehaldenstrasse 4
3012 Bern
Switzerland
E-mail:[email protected]
Library ofCongress Control Number:2005922551
ISBN 3-540-24307-0 Springer Berlin Heidelberg New York
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Preface
The executives of companies, non-profit organisations and govern
mental departments are regularly confronted with important decision
problems. These problems are typically highly complex and therefore
difficult to resolve.
The aim of this book is to support the management in successfully
solving complex problems. At the center of the book is a procedure
for approaching any complex decision problem. The procedure con
sists of steps which are explained in detail and illustrated with exam
ples.
This book could not have been produced without the effort and the
considerable talents of Anthony Clark and Clare O'Dea who trans
lated the text from German into English. The authors address their
great thanks to the two translators for their excellent work. Phuong
Tu Le deserves special thanks for her effort in putting together the
book by typing the manuscript and designing the figures.
January 2005
Rudolf Grunig, Richard Kuhn
Brief contents
...
Preface ................... ..............................................................v. ..
Brief contents .............................................................................v.i.i. .
Contents .....................................................................................i.x. ...
...
List of figures ...............................................................................X. III
List of insets ..............................................................................x..ix.. .
Introduction .................................................................................I... .
Part One: Decision problems and decision-making procedures ..........5
1 Decision problems ....................................................................7
2 Coal and problem-finding systems as requirements for
the discovery of decision problems ........................................1..7
3 Rational decisions .................................................................2.9..
4 Decision-making procedures .................................................4..1.
Part Two: A general heuristic decision-making procedure ................6 1
5 Overview of the decision-making procedure ...........................6. 3
6 Discovering and analysing the decision problem ....................... 81
7 Developing and evaluating options .........................................9. 9
8 Establishing the overall consequences of the options and
making the final decision ......................................................1. 23
9 A case study illustrating the application of the procedure ........ 157
Part Three: Special issues and approaches to resolving them .......... 181
10 Information procurement decisions .......................................1. 83
1 1 Collective decisions ........................................................... 197
Final remarks ............... .. ......................................................... 219
Index ......................................................................................2..2.1..
Bibliography ..............................................................................2.2..7
Con tents
Preface .......................................................................................... v
Brief contents ...............................................................................v.i.i
Contents ....................................................................................i.x. ....
...
List of figures ......................... .. ................................................X.I.II
List of insets ..............................................................................x.i.x.. .
Introduction ..................................................................................I.. .
Part One: Decision problems and decision-making procedures .......... 5
1 Decision problems ..................................................................... 7
1 . 1 The decision problem ............................ .. ......................7
1.2 Ways of solving decision problems. ................................. 7
1.3 Types of decision problem .............................................1. 1
2 Coal and problem-finding systems as requirements for
the discovery of decision problems. .....................................1.7
2.1 The functions of goal and problem-finding
systems in the discovery of decision problems .................1 7
2.2 Coal systems .................................................................. 18
2.2.1 Goal systems as combinations of single
goals ............................................................... 18
2.2.2 Approaches to classifying goal systems ................ 19
2.3 Problem-finding systems ................................................ 22
3 Rational decisions ................................................................2..9..
3.1 The sequence of events in decision-making
procedures as a framework for rational decisions .............2 9
3.2 The requirements of a rational decision process ...............3 5
3.3 Support for rational decision making from
management science ....................................................3..9
4 . Decision-making procedures ...................................................4.1
4.1 Important terms in decision-making ............................ 41
4.2 Decision-making procedure defined ...............................4. 4
4.3 The different types of decision-making procedures. ......... 45
4.3.1 The parameters of decision-making
procedures and their values .............. . ................4 5
4.3.2 Four types of decision-making procedures ........... 46
x Contents
4.3.3 A comparison of heuristic and analytic
decision-making procedures ...............................4. 8
4.3.4 Examples of the different types of
decision-making procedures ...............................5. 1
Part Two: A general heuristic decision-making procedure ................6 1
5 Overview of the decision-making procedure ............................ 63
5.1 The value of a general heuristic decision-making
procedure ............................ . ....................................6. 3
5.2 The proposed sequence of tasks ................................... 64
5.3 A brief explanation of the tasks ...................................... 67
5.4 The basis of the general heuristic decision-making
procedure ............................. .. .................................. 75
6 Discovering and analysing the decision problem .......................8 1
6.1 Discovering the decision problem ..................................8 1
6.2 Analysing the decision problem ............................. ......... 85
6.2.1 General considerations for problem
analysis and naming ......................................8. 5
6.2.2 Establishing the decision situation ........................8 7
6.2.3 Determining the causes of the problem ...............9 1
6.2.4 Naming the decision problem or the sub-
problems .......................................................... 94
6.2.5 Determining the problem structure ...................... 96
7 Developing and evaluating options .........................................9. 9
7.1 Developing options ....................................................9..9
7.1 . 1 General considerations for developing
options ............................................................9..9.
7.1.2 Techniques for the development of options ....... 103
7.2 Defining the decision criteria ......................... . .......... 105
7.3 Examining how to determine the consequences
and if necessary drawing up possible scenarios .............. 109
7.4 The configuration of the decision problem as
result of steps 3, 4 and 5 ............................................1..1 6
7.5 Determining the consequences of the options ...............1 18
8 Establishing the overall consequences of the options and
making the final decision .....................................................1..2 3
8.1 General considerations ................................................1. 23
8.2 Overview of the decision maxims and their
applicability ...............................................................1..2. 7
Contents xi
8.3 Decision maxims for overcoming polyvalence. ............... 131
8.3.1 Utility value maxim .........................................1..3 1
8.3.2 The maxim of the quasi-univalent decision ........ 137
8.4 Decision maxims for overcoming risk ............................ 138
8.4.1 Expectation value maxim ..................................1 38
8.4.2 Utility expectation value .................................... 139
8.4.3 Problems with the application of the
decision maxims for overcoming risk ................ 146
8.5 Decision maxims for overcoming uncertainty ................ 146
8.6 Using decision maxims in combination to
overcome polyvalence and risk or polyvalence and
uncertainty ................................................................... 150
8.7 Evaluation of the decision maxims ................................ 154
9 A case study illustrating the application of the procedure ........ 157
9.1 The situation .............................................................1..5. 7
9.2 Discovering and analysing the problem .........................1 59
9.2.1 Discovering the problem ..................................1 59
9.2.2 Analysing the problem .................................. 160
9.2.3 Summary of analysis and naming the
problem .........................................................1..6. 7
9.3 Developing and evaluating options ..............................1. 69
9.3.1 Developing options .............................. ......... 169
9.3.2 Evaluating options ...........................................1. 73
9.4 Making the decision ..............................................1..7 6
Part Three: Special issues and approaches to resolving them .......... 181
10 Information procurement decisions ......................................1..8 3
10.1 Information procurement as a decision at the
meta-level .................................................................1.8..3
10.2 Recommendations for decisions on information
procurement ..........................................................1.8. 4
11 Collective decisions. ............................................................. 197
11. 1 Collective decisions and their growing importance
in companies .............................................................1..9. 7
11.2 Group goal systems and group decision behaviour ........ 199
11. 2 .1 Croup goal systems ......................................... 199
11.2.2 Group decision behaviour ................................2.0 0
11.3 Rules for making collective decisions ............................2. 05
xii Contents
11.3.1 Differing individual orders of preference as
starting point ...................................................2.0 5
11.3.2 Requirements for forming a collective
order of preference .........................................2..0 6
113 .3 Classic rules for the formation of a
collective order of preference or for
determining the option preferred by the
collective ........................................................ 209
11.3.4 More complex procedures for the
formation of the collective order of
preference ....................................................2..1. 1
Final remarks ..............................................................................2..1 9
Index ..... ..................... ....................................................2. 21
...............................................................................
Bibliography 227
List of figures
Figure 1 .I: The different types of decision research and
their dependencies ................................................9.
Figure 1.2: The parameters of decision problems and
associated values ........ ........ .... . ... ... . . . . . . . ...... . . . . . . .... ... 12
Figure 1.3: Types of decision problem and connections
between them ... .... . . . . .. . . . . . . . .. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 13
Figure 2.1 : Example of a goal system .......................................2. 1
Figure 2.2: Parfitt and Collins' four indicators for a
product group .......................................................2..4
Figure 2.3: Bigler's strategic cause indicators for the
monitoring of its university teaching materials ..... .. . . . 26
Figure 2.4: The advantages and disadvantages of the
different types of problem-finding systems
and problem indicators ............................................2 7
Figure 3.1: Years of use and financial effects of the three
options .............................................................. 32
Figure 3.2: The net present value calculations for options
B and C ........................... . ....................... 33
Figure 3.3: Descriptive model of the decision process ................. 36
Figure 4.1 : Product range options for a producer of plant
pots ............................... . ............................ 42
Figure 4.2: Central terms in decision methodology and
relationships between them ...................................4..4
Figure 4.3: The parameters of decision-making
procedures and associated values ................... . ..... .... 47
Figure 4.4: Four types of decision-making procedures. ...............4 7
Figure 4.5: Comparison of heuristic and analytic decision-
making procedures .................................................4. 9
Figure 4.6: The three requirements for using an analytic
procedure.. .. . . . . . . . .. . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 5 1
Figure 4.7: Development of a corporate strategy .......................5 3
Figure 4.8: General Electrics and McKinsey portfolio for
the Baer Group ............... . ............................... 54
Figure 4.9: Data for determining optimal sales and
- .
production programmes ........................................5. 5
Figure 4.10: Graphic procedure for optimal sales and
production programmes ........................................ 56