DECIDING HOW TO DECIDE Developments In Business Simulation & Experiential Exercises, Volume 23, 1996 DECIDING HOW TO DECIDE David M. Hopkins, University of Denver ABSTRACT This exercise is designed to help students better understand how the choice of the appropriate decision rule determines the alternative which is selected. There is no “good” or “right” decision until there is agreement on the basis, or rule, for making the decision. The facts or data do not speak for themselves. The decision-makers can take the same input information and arrive at very different choices depending on the decision rule which they are explicitly or implicitly using. Thus, in-group decision-making situations, it is important that the group decide in advance what decision rule they will utilize in reaching their decision. They must decide how they will decide’ LITERATURE As McKenna (1980) noted, determining the appropriate decision rule(s) is a part of the strategic stage which attempts to answer Dewey’s question, “Which is the best alternative?” It is part of Simon’s “design phase,” and in the rational model it is a prerequisite to evaluating alternatives. Thus, there is no best alternative until all decision-makers agree on what “best” means. McKenna (1980: 7) concludes correctly that, “Choosing an alternative, according to the established criteria, is relatively simple if the criterion or criteria have been agreed upon, or if the criteria are not conflicting.” Determining the decision rules or criteria should be accomplished before discussing, and perhaps before identifying, the alternatives available. “Lacking commonly accepted, unbiased procedures, decision making becomes a shoving contest among those with differing points of view. The individuals with the most power prevail,” according to Kepner & Tregoe (1981 :83). THE SITUATION The Seikcor Corporation has decided to launch a new product and it has set aside $5 million dollars for the best internal proposal as to what that product should be, and for developing it for market. Requests for proposal (RFP’s) have been requested which can utilize the entire $5 million for launching their proposed new product. An internal committee of four people has been assembled to review each of the five proposals which were received. The Committee has discussed the criteria which they feel are most relevant in evaluating the proposals, and then each committee member has read each proposal and determined the relative merit of each. Judy has suggested that they each indicate their preferred proposal and then select the one favored by the most committee members. Fred feels that this approach fails to consider other worthy proposals and suggests as an alternative that each committee member select their favorite three proposals, and that the Committee then select the proposal which is mentioned most often as being one of the top three. Linda suggested that they rank order all five proposals and assign weights to each rank (rank 1 = 5; rank 2 = 4 rank 5 = 1). They should then simply add the weighted scores and select the proposal with the highest total weighted score. Finally, Sam suggests that none of the previous approaches adequately distinguishes the strength of each person’s preference for the various proposals. He feels that each committee member be given 100 points, which they can then distribute across the five proposals so as to reflect the strength of their preference for each. Each of the above outcomes is summarized in a separate table; however, only the table for the last proposal is shown below, though the others can be deduced from it, and it is labeled “Table 1 “. Since each of their approaches leads to a different result, someone suggested that they divide the award equally among all proposals. Someone else countered that they should simply select a proposal at random since they seem to be very equally evaluated. And finally another member proposed that the Chair of the Committee (who is Fred) make the choice since the Committee does not seem to have a clear-cut preference. THE DECISION Students are asked to assume that they are members of the Review Committee, and to specify which rule for selecting the winning proposal they would favor? They are also asked to study each decision-making approach and to indicate their preferences by rank ordering the various alternatives listed on a ballot, which I give to them. 167 Developments In Business Simulation & Experiential Exercises, Volume 23, 1996 TABLE 1 A DISTRIBUTED SOLUTION COMMITTEE MEMBERS JUDY FRED LINDA SAM TOTAL RANK PROPOSALS A 75 10 0 22 107 2 B 0 30 0 20 50 4 C 25 50 0 19 94 3 D 0 5 100 18 123 1 E 0 5 0 21 26 5 Finally, they are asked to explain the reasons for their particular preference, and to suggest another approach for making the decision if they feel there is a better alternative. CLASSROOM USE When I use the exercise in class, I first have students individually select what they feel to be the most appropriate decision rule. Then I put student’s in-groups to discuss the reasoning behind their individual preferences, and ask them to arrive at a group decision, as if they were themselves members of the review panel. The exercise is useful in the discussion of several topics (e.g., nominal vs. ordinal vs. interval/ratio data; group decision making issues such as “group think,” “risky shift,” and hierarchy). Cultural value systems also impact the decision making process according to Aldag & Stearns (1991). The exercise is particularly useful in exploring the cultural preferences for different decision rules, e.g., authoritative versus participatory processes. Students from more group-oriented cultures seem to have a preference for “selecting the proposal that is most mentioned as one of the top three proposals by members of the committee.” This apparently comes closest to a consensus-based decision. Those from high power distance cultures have a greater preference for centralized decisions by the chair of the committee. Where there is an aversion to risk taking, higher order information may be preferred; and where the individual is more highly valued, a distributed decision rule may gain favor. IMPORTANCE Post hoc controversies over decisions can often be avoided if groups can reach agreement, a priori, on the rules and procedures they will adhere to in making the decision. Can you imagine the difficulty of selecting the 1 2 teams for post season play in the NFL, if there were not prior agreement on the elaborate and detailed tiebreaker rules. In contrast, the recent debate between the executive and legislative branches over a balanced budget, seems to be complicated by the lack of agreement over the proper decision rules -- whose figures, what time period, etc. Once the decision rules are agreed to, the choice of the proper alternative is often a given. REFERENCES Aldag, R.J. & Stearns, T.M.(1 991). Management, 2nd Ed. Cincinnati, OH: Southwestern. Kepner, C.H. & Tregoe, B.B. (1981) The New Rational Manager. Princeton, NJ: Princeton Research Press. McKenna, C.K. (1980) Quantitative Methods for Public Decision-Making New York, NY: McGraw-Hill 168 Table of Contents Volume 23, 1996 Modeling Advertising Effectiveness Simulation as an Aid to Learning: How Does Participation Influence the Process? Administering Business Simulations in Transitioning Economies: The Introduction of Simulation Gaming to Estonia Business Simulation Games: Current Usage Levels. A Ten Year Update The Relationship Between Interpersonal and Task Cohesiveness and Performance in a Business Simulation Game The Design of an ITS-Based Simulation: A New Epistemology for Learning Correlates of Learning in Simulations How Do We Know where we're going if we don't know where we have been: A Review of Business Simulation Research Making Cash Flow Come Alive and Sensible in the Classroom Enhancing Simulation Learning through Objectives and Decision Support Systems An Analysis of Deliberate and Emergent Strategies Relative to Porter's Generic Differentiator and Cost Leader: A Bias and Variance Modeling Approach Introducing Ethical Dilemmas into Computer-Based Simulation Exercises to Teach Business Ethics CEO Strategic Locus of Control Effects on Game Performance and Playing Behavior The Relational Database As a Link between Operations and Cost Accounting Goal Setting over Time in Simulations Computerized Business Simulations: A Workshop Exploring the Tutor's Role, Task & Needs Strategic Analysis of the Product Portfolio with the COMPLETE PPA Package: A Strategic Market Planning Tool Draft Standards and Registration Procedure for Assessment Instruments Perspectives on a New Generation of Business Games An Economic Multiple Regression Case In Experiential Learning Changing Institutional Norms and Behavior, Not Culture: Experiential Learning Comes to Myanmar Strategic Management and the Case Method: Survey and Evaluation Individual Differences in Internet Attitude and Use Long Live the Plan - or Should It? Examining the Impact of Detailed Strategic Plans on Organizational Performance Do Your Students Really Read the Manual? A Computerized Contextual Tool As A Surrogate for the Traditional Student Manual Pilot Analyses of Self-Peer Evaluations in an Experiential-Exercise Human Resources Management Course Leader Behavior Feedback: A Learning Exercise Dilemma-Dilemma: An Exercise for Teaching Significance Of Communication Computer Mediated Conferencing: Technology and Classroom Learning Multimedia in the Workplace: Who is really using it and where is it Headed? Using Experiential Exercises for Collecting Research Data: Integrating Teaching and Research Interactive Distance Learning as a Tool in a College's Theory and Practice The President's Decision: An Experiential Exercise in Decision Making Integrating Computer Literacy Skills in the Undergraduate Curriculum: The Advanced Accounting Experiment Imperatives for the Transfer of Experience-Based Training Deciding How to Decide The Internet as a Pedagogical Tool Internet Scavenger Hunt Two Management Exercises Based on Committee Work Multimedia in the Year 2000: How Will It Affect Our Lives? Bootstrap Benefit Segmentation: Finally A Way to Teach Benefit Segmentation without Primary Data or Those Fancy Statistical Methods Multimedia and Learning: Is There A Connection? A Changing Business Policy Collaborative Learning Through Real-Life Assignments in Accounting Classes The Necessity Of Incorporating Local Cultural Aspects Into International Business Experiential Exercises Utilizing Cultural and International Landmark Constructs to Assess Business Student's International Awareness Legal Issues related to the Use of Application Blanks: An Experiential Exercise The Family in the Classroom: An Experiential Exercise for Teaching Issues Related To Expatriate Assignments Using Internet Resources to Enhance Teaching of Information Systems Courses: A Demonstration Proposal Chalkboards to Chipboards for Teachers and Consultants How Do We Measure The Learning In Experiential Learning and How Do We Best Simulate It?