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Decision Making and Technology

I. Decision Making and Technology (Intro)

Decision making can be interpreted as an informed thought process of making a logical choice among alternative courses of actions or inactions based on forecasting each outcome.

The process of making an effective decision requires the availability of resources and time. These
barriers can be reduced with the help of technology.

Different types of technology
1. Decision Support Systems (DSS)- A computerized information system that supports business and organizational decision-making activities through gathering company data by means of being an interactive software-based system. For example:
a) DSS will "help decision makers compile useful information from raw data, documents,
personal knowledge, and/or business models to identify and solve problems and make decisions."[1]
2. Internet, Radio,Television
Whether it is the use of the internet, radio, or television as a resource to obtain quick information, individuals usually involve personal biases in using these technologies in making everyday decisions. It enables us to choose what channels or websites to find trustworthy information, in which is favored more amongst alternative choices.
3. iPad, Blackberry
In the use of an iPad or Blackberry, traveling business decision makers can even run an entire
business away from the office with the access to the internet, email, and a phone.

In its simplest of forms, decisions can be made by answering with a "Yes" or a "No" in either taking or
not taking any course of action. For example:

II. Techniques

1. Everyday techniques
  • Pros and Cons: argument for or against a particular issue by listing its advantages and disadvantages. Many people use this technique regularly in daily life to ensure they have given the issue thorough consideration to give an informed decision.
  • Satisficing: choose the first acceptable option found. This strategy is often attempted to meet the criteria of adequacy, instead of finding an optimal solution.
  • Following orders/advice: acquiesce to a person who has authority or expertise.
  • Simple prioritization: evaluate all alternatives on multiple criteria before deciding to pick one.
  • Random or coincidence method: flipping a coin, roll a dice, and so forth.
  • Divination: prayer, astrology, rituals and other forms of divination. [3]

2. Data-driven decision making (DDCM)

Information overload is both a challenge and an opportunity for businesses. In this era, good information is the prime asset since having the right data leads to smarter decisions, greater growth and better productivity for companies. DDCM is defined as a process of making decision by collecting data and use it efficiently in making crucial decisions. The central distinction is that DDCM revolves around data and analysis instead of experience and intuition. The growing need of businesses to analyze and manage data created fast-growing industries such as “analytics” and “business intelligence”.

Mr. Brynjolfsson, an economist at Massachusetts Institute of Technology, and his colleagues have recently conducted a research on the impact of DDCM on firm performance. They found out that those adopted DDCM had a 5 to 6 percent increase in productivity, which is often decisive in most industries. [4]


3. Enterprise Decision Management (EDM)

Making the right decisions at every level is critical for a company’s success. Organizations and executives often focus on the strategic decisions and neglect the operational ones because each single front line decision seems to lack impact. Nevertheless, operational decision making has proven to be very important since it has cumulative huge impact on all aspects of organizations.

EDM is a management discipline which takes advantage of a wide range of technologies to automate and manage operational decisions that create values in businesses. Companies adopting EDM make those decisions in accordance with their business rules, analyze data to improve the decisions, then analyze them to ensure ongoing improvement, and finally embed these decisions in processes.

The technologies for EDM include:
  • Business Process Management Systems (BPMS)
  • Service-Oriented Architectures (SOA)
  • Event Processing (CEP)
  • Database Management System (DBMS) [6]


III. Decision-Making Steps and Stages

1. Classical Model of Decision Making
The Classical Model of Decision Making uses rationality to choose the best possible outcome. The first part involves deciding if the question is relevant to the situation. Next, unique and rational answers should be created as well as listing the alternatives. Each alternative must have consequences which are then ranked according to most desireable solution. The last part of the Classical Model of Decision Making is making the decision that is most useful to the problem.[8]

2. Bounded Rationality of Decision Making
Behavioral Rationality Model of Decision Making is based on how people act in the real world. This takes into account the fact that people lack some of the proper information, time and resources needed in order to make the perfect decision. For the Bounded Rationality of Decision Making Model, each new step builds from the last, allowing one simple idea to form into a well developed, rational idea. The first step is to determine the most relevant information by narrowing down the ideas that need to be to be researched. While both the Classical Model of Decision Making and the Bounded Rationality of Decision Making include determining the alternatives, the Bounded Rationality Model focuses on the consequences at each new step. All of the criteria is ranked and scored based on the least consequential outcomes. Decisions are always made from facts rather than emotions.[9]

3. Ways technology can speed up consumer purchase decisions
  • Decision Support Tool
    • Help to reveal additional information that aids in faster decision making.
  • Enabler
    • Gives opportunity to come to a final decision and reach a conclusion
    • The internet is accessable to anyone and research on any topic can be performed.
  • Accelerator
    • Technology such as the internet has allowed communication to become increasingly more convienent. We are able to send mail and create discussion boards without the decision makers having to be at the same location.
The buyer decision-process
The buyer decision-process

IV. Decision Support System

A decision maker is able to use a Decision Support System (DSS) to find the needed information to create a reasonable conclusion. Because of DSS, users do not have to debate about topics that have been previously researched and decided on. Data and models provided on the internet are very beneficial to users when searching for a decision. Time is important when deciding on a topic, especially in the work place, where deadlines are crucial to success.[11]

Technology is a crucial aspect of decision making. A decision can be made much more rapidly because of the many different techniques to utilize. From online searching to the mass media, technology gives decision makers the resources to make the best possible decisions.[12]

6 Frameworks for Decision Support Systems
  1. Communication-driven: helps groups of people to work together to come to a decision
  2. Data-driven: sets of data on certain topics are able to be changed after testing and finding results
  3. Document-driven: puts together information to allow users to understand and interpret
  4. Knowledge-driven: helps eliminate problems by using facts and previously established rules
  5. Model-driven: allows users to evaluate models and numbers with pertinent information on a specific topic

Benefits of Decision Support Systems
The Decision Support System has many advantages. The DSS helps save time when technology is used. This can also lead to using more relevant information and making more intelligent decisions. When everyone in a group is able to do their own relevant research, the collaboration between group members is much more effective. By using a DSS, the competition among different organizations increases because of the easily accessible, constantly changing information. Often times, costs decrease while satisfaction increases, leading to overall higher employee morale.[13]

V. Personal biases and their interactions with technology

There are multiple personal biases that come into play in an individual's decision making process on a daily basis. A personal bias could be summarized as giving a settled and often prejudice outlook to a situation.

Examples of personal biases we have covered in this course are:
  1. Overconfidence Bias
  2. Hindsight Bias
  3. Anchoring
  4. Framing Bias
  5. Escalation of commitment
  6. Groupthink (team decision making bias)

How technology plays apart on decision making based on these biases
Media- Media outlets are a great source for people, such as someone campaigning for a political position, to voice their opinions to a large number of listeners.Here are some examples media outlets to form personal biases:
  1. Internet- The internet is probably to most popular and widely used form of information sharing between people. In fact, the internet has been increasingly replacing the newspapers and magazines with online subscription instead of hard copies at reduced prices. However, there have been debates if this is a good thing. An article written by Cass R. Sustein back in 2001, states that the new media of the internet could keep dividing people on political issues. Because of the internet personalization capabilities on websites, people could set it up where only topics of their interests would be shown upon viewing that site which in turn forms personal biases that would be used upon decision-making. Sustein believed, "Instead of a public square, we could end up with a collection of information cocoons."(16)
  2. Television and Radio - The television and radio is another form of technology used by people in their decision making process. TV and radio is similar to the internet in giving people the ability to filter out any unwanted information by being able to change the channel to another station. Video Games - Despite what most people would tend to believe, a CBS news article found that researches suggest that, "they have established for the first time a connection between playing first-person shooter games and making fast and accurate decision."(2010,15) Researchers conducted an experiment by assembling two test groups that would go through a series of decision making ability and reaction time. One test group played video games for several hours a day on the days leading up to the experiment while the other test group did not. According to the study, the ones that played video games had better scores than the ones who did not play. Here is clip of a teacher who believes video games help children learn and making more accurate decision:
    Virtual simulation video game like programs are actually used in a lot of fields to help that profession with their decision making. One example would be that surgeons have been using simulation style programs to help future and current doctors practice their craft and learn from mistakes to make better decision in the operating room in order to save someone's life.Here is a video of virtual simulation of an open heart surgery.

VI. Post decision analysis

Theory: Post-decision Dissonance

1. Outcome
The main idea of post decision analysis is "was it successful". Did our decision positively affect the organization and how do we determine if the decision was a successful one.

Decisions are always being made. However, how do you know when the best decision was made? Using technology to collect feedback can help analyze post-decisions. As technology continues to develop and increase, so will the amount of information on decisions made. Anytime major decisions are made they are publicized immediately. Even smaller decisions are made public when people post about them on their blogs or Facebook. To asses whether the right choice was made one can use social media, their smart phone, a database, etc. These are all forms of technology that are used on a daily basis, which can also be used to track feedback after a decision was made.
  • Challenge: Using the internet to analyze whether a decision was successful or not.
-Many “Likes”
-Nobody “Likes”
-Many Retweets
-Positive Trends
-Nobody Retweets
-Negative Trends
-High ratings and positive reviews
-Low ratings and negative reviews
Survey Monkey
-People are satisfied and happy
-People are disappointed and angry
Smartphone apps
-High ratings
-Low ratings
SAP and Oracle
- Reports yield positive feedback
-Reports indicate improvement needed
A group decision support system is an interactive, computer-based system that facilitates group decision making by providing tools to facilitate communication, encourage brainstorming, and manage shared information.[14] A number of commercial decision support products are available, including Meetingworks, TeamWorks, and ThinkTank.
2. Satisfaction with the decision
post decision dissonance means to regard the possibility that our decision is wrong (brehm,1956). an example would be how often have you bought something only later to worry if you got a good bargain on it or not. people tend to feel better if they see the item that they bought at higher price for what they bought it for. the same goes the other way if you find the item that you bought later for a lower price you will as if you got cheated out of a good deal. the tends to effect purchases that have bigger value to it like a car or a house.
example:a good example of this is when you buy a used car. whenever you go to a dealer to look for used cars you have an idea in your head how much a certain car should be priced but when you actually see the prices of used car you realize the dealership prices are usually much higher and so you sometimes
that you priced the car wrong in your head and so that confuses you whenever you negotiate the price. you end up paying a higher price and then after you've had the car for a month or so you begin to worry if you payed the right price, or how much you should have really spent and then comparing prices with friends or neighbors.
Solution:research is always the biggest aid in this case, with the help of the internet being able to find the right price has become even easier. there are many websites that help with searching, in the case with the car a good website to use is Kelly blue book,
http://www.kbb.com/, it gives you detail in how much each car should be price depending on a lot of factors. there are many other websites that can tell how many other different products should be priced at such as amazon, which they also have a mobile app for smartphones in which you can scan the item barcode at a store and you can check the price that you would have got online so that you can make other comparisons.

VII. Cognitive Styles and Technology

  • Cognitive style, or thinking style, is defined as a way people perceive and remember information. Using certain technologies today, especially in education, where cognitive styles get the most research, we are able to better adapt and inform on more appropriate uses.
Cognitive Styles
Field Dependence/Independence
  • Persons who tend to adhere to an existing, externally imposed framework when presented with information are classified as field dependent while field independent persons tend to restructure the information into a framework that seems more appropriate.[15]
Educational/Vocational Choice and Impa
  • The pursuit of a person's education and/or vocational choice has a profound impact on their ability and acceptance of technology. A reasonable person will choose a discipline they are interested in and the level of technology they are willing to accept will depend on the sophistication of the program.
Computer Aided Learning and Testing
  • Computer aided testing and computer aided learning is a viable alternative to traditional teaching and testing methods. While most students still prefer the ability to look over previous answers and material, which they can do with traditional teaching and testing but not always in a structured computer aided test. With that ability students rated the tests as equivalent when they are given the choice of reading and altering previous answers on a computer aided test the same way they could on a written test.[16]

VIII. Technologies Impact on Business Decision Makers

New York Times as an example...

From an operations manager getting an e-mail or text message on his Blackberry to an executive looking over statements on his iPad, technology has made an incredible impact on the way managers make decisions.

Simplicity and readily available information have helped create an environment that allows for decisions to be more timely and well informed. Though not all decisions can be made with all the facts and figures the technology that has been made for businesses has certainly helped.

A downside to this is perhaps the large amount of reliance placed in the hands of technology, thus making a decision almost impossible if the technology fails. Technology is great but basics and fundamentals of managerial decision making in a business environment should not be overlooked. With the proper experience and education in both the fundamental concepts of decision making and the timely and productive use of technology an individual in an organization will be able to make sound decisions.[17]

IX. Decision Making and Technology (Conclusion)

In daily life, outside of the office individuals use everyday techniques like pros and cons, or satisficing to consider making quick or well informed decisions. Decision makers use cognitive styles dealing with conscious or unconscious thought processes depending on the situation. Conscious thinking when making important, well informed decisions, and unconscious thinking when using your intuition and experience from daily and past routines in making a less informed decision.

However,in the real world, most of our decisions are made unconsciously in our minds because the process used to make a well informed decision takes too much time. Sometimes unconscious decisions work well when faced with "large amounts of data, complex problem solving, and complex decision situations." [18]

While in the office, managers face crucial decisions based on limited information or sometimes heavily detailed information, in which requires more than a simple "Yes" or a "No" in making an efficient decision. Knowingly aware that once a decision is made its outcomes can damage or blossom a leaders reputation, and it can also affect their coworkers. Leaders can avoid embarrassment or making mistakes by applying technology in their decision making process to overcome such barriers.

Decision processes like the Data-driven decision making (DDCM) which involves collecting data and using it efficiently in making a well informed decision, instead of relying on experience and intuition to make the tougher decisions because overtime the world and its people constantly change. When the world changes so will technology. In this era, leaders can be resourceful by using technologies like the Internet, Blackberry, and Decision Support System (DSS) to stay on the competitive edge because these devices are used to organize information overloads and simplifying data to help in forecasting the right course of action. By understanding the different ways to improve on your next minor or major decison, here are a few suggestions to go by as a developing leader.

Suggestions for Managers
  1. Staying innovative and adapting to new technologies will always give a manager a competitive edge in making faster and efficient decisions before someones else beats you to the punch.
  2. Avoid letting your personal biasness and emotions rule your reflective judgments, or your decisions will be blindly made.
  3. The key to an effective decision is not just making it, but also understanding how you will carry out its executions in order to guarantee a successful outcome.This is a sure way to impress your superiors by demonstrating leadership in being a decision maker who also takes responsibility in supporting your decisions.


Created by:
Andre Powell- Intro and Conclusion
Viet Anh Trinh Ngoc- Everyday techniques
Jake Fogel- Steps and Stages, Decision Support System
Christopher Fleming- Biases
Mostafa Barri- Post decision analysis
Stephen Scamihorn- Cognitive styles, Impact on Business Decision Makers
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  15. ^ http://scholar.lib.vt.edu/ejournals/JOTS/Winter-Spring-1997/PDF/4-Hansen-article.pdf
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