Approaches to decision making can be quite diverse, ranging from classical, rationalistic, decision making processes to a less structured, intuitive, decision making style.
Rational decision making processes consist of a sequence of steps designed to rationally develop a desired solution.Intuitive decision making is almost the opposite, being more instinctive, subjective and subconscious in nature.
One of the principle assumptions of the rational decision making process is that human beings make rational decisions. However, this is not always the case! There are usually wide ranging factors which determine our decisions, many of which are not rational. This is especially so when we remember that management is about dealing with people. In addition, many situations require decisions to be made with incomplete and/or insufficent information. Often management requires quick decision making, or judgements made under pressure.
It is in this context that a more intuitive approach often develops. All except the most mechanistic of rational decisions must include some element of subjective judgement. Our decisions are based on judgements which are affected by a range of factors including our experiences, values, attitudes, and emotions. Judgement heuristic decision making uses simple rules and approximate short cuts to help us arrive at decisions. Drawing particularly on our experiences and attitudes, it does this by helping us to cut through the excessive information that can overload and delay decisions.
Whilst useful in helping us to simplify complex situations, we must also remember that the subjective nature of heuristic decision making must also introduce elements of bias. This can be illustrated in the different types of judgement heuristics. For example:
It’s interesting to relate this theory to the work of successful manager and author, Jack Welch. Hailed as “manager of the century” by Fortune, Welch describes his approach to decision making in this quote:
“Sometimes making a decision is hard not because it is unpopular, but because it comes from your gut and defies a ‘technical’ rationale. Much has been written about the mystery of gut, but it’s really just pattern recognition, isn’t it. You’ve seen something so many times you just know what’s going on this time. The facts may be incomplete or the data limited, but the situation feels very, very familiar to you.”
Welch captures the essence of intuition and decision making. In contrast to rational decision making, intuitive decisions are less structured and involve feelings and perceptions rather than analysis and facts. Welch’s approach summarizes other theoretical elements of intuition and decision making. These include:
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