The Problem Solving Process

Understanding The Problem Solving Process

An increased emphasis is being placed on the importance of sound managerial decision-making.  These are decisions that are based on a good understanding of the situation and can be shown to have to be rationale on the basis of the information available. It this way it is the task of effective research to provide relevant, accurate, reliable, valid, and current information in order to make sound decisions.  By doing this properly the chances of an incorrect or poor decision are reduced.

Good decision making starts with correctly understanding the problem.  This either means that previous experience will be adequate (beware here, as it is rare that 2 situations are the same or that changes have not altered the actual context) or it usually means some form of research is needed.

A decision is an allocation of resources. It can be likened to writing a chequeand delivering it to the payee. It is irrevocable, except that a new decision may reverse it.

In the same way that a check is signed by the account owner, a decision is made by the decision maker. The decision maker is one who has authority over the resources being allocated. Presumably, he (or she) makes the decision in order to further some objective, which is what he hopes to achieve by allocating the resources.

 Key distinction: decision vs. objective

 Example: To accelerate an R&D program is an objective, not a decision. To allocate the funds in an effort to accelerate the program is a decision.

Why it’s important: The decision might not succeed in achieving the objective. One might spend the funds and yet, for any number of reasons, achieve no acceleration at all.

The decision maker will make decisions consistent with his values, which are those things that are important to him, especially those that are relevant to this decision. A common value is economic, according to which the decision maker will attempt to increase his wealth. Others might be personal, such as happiness or security, or social, such as fairness.

The decision maker might set a goal for his decision, which is a specific degree of satisfaction of a given objective. For example, the objective of the decision might be to increase wealth, and the goal might be to make a million dollars.

A decision maker might employ decision analysis, which is a structured way of thinking about how the action taken in the current decision would lead to a result. In doing this, one distinguishes three features of the situation: the decision to be made, the chance and unknown events which can affect the result, and the result itself.

Decision analysis then constructs models, logical and perhaps even mathematical representations of the relationships within and between these three features of the decision situation. The models then allow the decision maker to estimate the possible implications of each course of action that he might take, so that he can better understand the relationship between his actions and his objectives.


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