Chapter 3 of the Wharton text, Bumbling Geniuses: The Power of Everyday Reasoning in Multistage Decision Making, Hoch and Kunreuth identify several techniques that researchers use for problem solving and decision making. The first is the accumulation of knowledge in which our knowledge develops and accumulates over time including the ability to gather and research information (data) over time for decision making. The second technique is decision policies to define the general operating principles of the organization including the present to future. Researchers can use math based algorithms and formulas known as dynamic programming which is a multistage process for solving multistage decision problems. Dynamic programming is a powerful tool, however not all multistage decision problems can be solved using this. The main advantage of the application of algorithms and formulas is to provide the most significant chance of success and opportunity. Many successful organizations including Boeing and Lockheed Martin use the math formulas for strategic planning and decision making for new product developments, launches and strategy. The people that do this are degreed and trained in areas such as operations research, industrial and systems engineering and business administration, math and statistics. The end result is complete forward planning "When maximizing total utility over a horizon, decision makers are assumed to look ahead to all future periods and anticipate all possible choices and outcomes" (p. 44). This is a good process to use at an organization level, however, most people do not have the knowledge, skill or ability at an individual level. In addition, most people don't plan more than one step beyond a current decision.
I am a critical
thinker for decision making because I am "actively learning and seeking
out information" (p. 48) for problem solving and decision making (optimal
learning). Optimal learning states, "Decision makers are assumed to fully
utilize past information to update both current beliefs and future
predictions" (p. 44). For example, in my position as an industrial
engineer at Boeing, I use standard research based models including DMAIC and Deming's
PDCA. DMAIC is a lean six sigma tool and process and refers to a facts and data-driven
improvement cycle used for improving, optimizing and stabilizing business
processes and designs (define, measure, analyze, improve and control). PDCA was
developed by Dr. W. Edwards Deming, considered to be the founder and father of
modern quality control. PDCA is a four-step management method used in business
for the control and continuous improvement of processes and products. To
effectively use these tools, a problem statement along with goals objectives
(and metrics) are needed for success. Data mining and simulation models are
usually included with DMAIC and PDCA. In addition, I use SEE-I process for a method
of clarification and understanding. It stands for State, Elaborate, Exemplify, and Illustrate. The decision making
process varies depending on the organization, individual, complexity and impact
of the issue.
From a critical thinking perspective, some of the dangerous common biases
and traps that could impact my decisions include: overconfidence, anchoring, groupthink,
egocentrism, sunk cost and status quo. In overconfidence, I sometimes
overestimate my skill level compared to others. Anchoring includes too much
focus on a first vale and getting bogged down in the details with it. Groupthink
focuses on consensus at the cost of potential courses of action. Egocentrism
focuses too much on my point of view compared to how others will be impacted. I
pay too much attention to historical costs and not the future. I prefer the
current way of doing thing and not enough focus on change and the future aka
status quo. So I need to focus on keeping an open mind and attitude along with
awareness of biases and paradigms that
could impact my problem solving and decision making. These can impact myopia,
i.e., nearsightedness and narrow-mindedness. In addition, heuristics which is
any approach to problem solving, learning or discovery that uses a practical
method or process for immediate goals, i.e., rule of thumb, educated guess,
intuitive judgment and common sense. References
Hoch, Stephen J., and Kunreuther, Howard C. (2001). Wharton on Making Decisions. Hoboken, New Jersey: John Wiley & Sons, Inc.
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