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Welcome
MGT602 Business Decision AnalyticsAssessment overview
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• Your Learning Facilitator
– Owen Seamons
– [email protected]
Introductions
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• Evaluate and use a range of decision
making tools
• Identify own decision-making styles and
contrast with other styles
• Determine levels of rationality and
intuition in own decisions
• Compare, contrast, critically evaluate
sources of data, information and
knowledge
• Identify key influences on decisionmaking in differing contexts
LEARNING OBJECTIVES
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Introduction to the Subject
• In this dynamic era businesspeople need
strong judgement and decision-making skills
• This era is one in which we are spoilt for
information, and can become overloaded
• How do we make sure our decisions are the
right ones?
• How to filter out irrelevant details and focus
on what is important?
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Introduction to the Subject
• The learning outcomes in this subject are:
– Select and evaluate the usefulness of a range of
decision-making tools and reflect on your decisionmaking styles and contrast with other styles and
determine the respective levels of rationality and
intuition
– Evaluate the benefits, weaknesses and complexities
inherent in group decision-making and examine a
range of effective group decision-making techniques
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Introduction to the Subject
• The learning outcomes in this subject are:
– Examine decision-making systems and techniques
to engage organisational intelligence and analyse
how these can enhance entrepreneurial outcomes
– Compare, contrast and critically evaluate sources
of data as influencers for decision-making in a
range of business contexts
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Key Subject Resources
• Modules
– Module resources
– Learning Activities
– Weekly theory video
– Weekly group meeting on Collaborate Ultra
• Discussion forum
• My Class Messages
• Announcements
• Studiosity
• Bookings
• Attendance Recording
• Assessments – Groups
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Assessment schedule

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Assessment One
1. Identify your decision preferences and
2. Determine ways of bringing flexibility to your decision style.
3. Construct a personal diary listing of daily decisions dealt with
over an extended period; reflect on those decisions
4. Complete the Intuition, Logic, Balance instrument
5. Map out a development plan leading to greater flexibility in own
information processing and decision making.
6. See assessment topics on Blackboard in Assessment section
DUE WEEK FOUR
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Assessment Two & Three
Assessment 2
1. Group assessment
2. 3000 words – analyse data sets
3. Due week 8
4. See assessment topics on Blackboard in Assessment section
Assessment 3
1. Individual assessment
2. 2000 words – reflection on subject’s key themes
3. Due week 11
4. See assessment topics on Blackboard in Assessment section
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Materials
• The only materials provided are those on
Blackboard
• There is no textbook for this subject
• Students will need to learn to use the library
and to contribute to discussions in class and
on the Blackboard discussion forum
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How to Do Well in this Subject
• Attend classes, having pre-read materials
• Be ready to
– Contribute to rigorous class discussion
– Challenge your assumptions and beliefs
• Ensure you know what is expected of you
– University policies are available at
http://www.torrens.edu.au/about/policies
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Any Questions
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Models and Tools for Decision-making
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Welcome to MGT 602 Module One
Module One Covers:
• Data, information and knowledge – what’s
the difference?
• Changes to the external environment and
implications for business decision making.
• Individual information processing
preferences
• How can you make high quality, wise
decisions, quickly?
• Are your decisions ethical and consistent
in treatment of business assets,
stakeholders, and the wider community?
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Introduction
• The opening video is an exercise in never
believing what you are told – question
everything!
• In fact, your job as an MBA student is to think
critically; this subject will help you do just that
• https://www.youtube.com/watch?v=cHbQdS2
sY0c **
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Introduction
• In our ever-changing environment, business
decisions must be made quickly but also with
accurate and dependable data and processes
• This means understanding your values and
biases and how they will lead you to certain
conclusions…reflection helps to change them
• Data comes hard and fast, and we have to
know what to do with it in advance
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Data vs Information
• Is data information?
• If not, what is the difference?
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Change is the Managers’ New Constant
• External environment moving in direction of greater
complexity
• Disruptive influences constantly challenging managers’ skills,
abilities and knowledge to deal with change
• Large amounts of data are available but can be difficult to
deal with due to high volume, complexity and ambiguity
• What is expected of managers in the 21st Century?
Operate in changing environments while making
decisions quickly, which are of high quality, and hold
positive implications for stakeholders, the community.
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Effective, Successful Managers Should
Understand
• The need for educated decision making that, despite
constraints of time, cost and complexity of information
handling is quick, of high quality and well considered.
• How to make good use of key theories from finance,
economics and psychology in providing a solid platform from
which they can make, fast, high quality, wise decisions.
• The need for smart interpretation of relations between
complex, ambiguous data sets, making sense of information
patterns in forming knowledge and using that knowledge to
act wisely in meeting the best interests of stakeholders.
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From Data To Wisdom: Some Terms
• Data (pl): Facts, can exist in any form; limited meaning in,
and of themselves
• Information: Sense-making from relationships between
processed data
• Knowledge: Patterns of collected data and information that
are useful and meaningful.
• Wisdom: Ability to make good decisions based on principles
of knowledge, experience and insights.
• For example: Consider temperature and probability of rain
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Data to Wisdom: The Transition
TO DO: View and Discuss :
https://www.youtube.com/watch?v=sIjSY0
5JE9Q **
Data, Information Knowledge in 3 Minutes
or Less
https://www.youtube.com/watch?v=mUgE
gkV16Bw
Discuss the implications Flowing from this
video
Read and Discuss: Bellinger, Castro & Mills
(2004). Systems thinking, Data,
Information , Knowledge and Wisdom
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Knowledge and Wisdom at Work
• Knowledge in use.
• When is a pattern noise?
• And when is it a refrigerator? (Bellinger et al., 2004).
• Wisdom in use
• Wisdom and Knowledge rightly applied
• Due to complexity, higher volumes of data,
managers must change approach to data handling in forming
judgements, and decision-making.
Read: https://www.psychologytoday.com/us/blog/sciencechoice/201605/10-ideas-wise-decision-making
Discuss the relevance of wisdom when decision-making
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Models of Decision Making
• The Rational Model
• – Consists of a structured four-step sequence:
– identifying the problem
– generating alternative solutions
– selecting a solution
– implementing and evaluating the solution
– https://youtu.be/3aC3sUlEsr8 *
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Other Famous Decision Models
• https://youtu.be/UkZkHBo_y_k
Herbert Simon
Daniel Kahneman
Amos Tversky
https://youtu.be/3IjIVD-KYF4 **
Heuristics and Biases
Limited resourcing, Rules of
Thumb, Satisficing
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Models of Decision Making
• Simon’s Normative Model
• – Based on premise that decision making is not
rational
– Decision making is characterized by
• Limited information processing
• Use of rules of thumb or shortcuts
• Satisficing
– decide on and pursue a course of action that will satisfy the
minimum requirements necessary to achieve a particular goal.
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Assets of Group Decision Making
• Groups can accumulate more knowledge and facts
• Groups have a broader perspective and consider
more alternative solutions
• Individuals who participate in decisions are more
satisfied with the decision and are more likely to
support it.
• Group decision making processes serve an important
communication function as well as a useful political
function
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Liabilities of Group Decision Making
• Groups often work more slowly than individuals.
• Groups decisions involve considerable compromise
that may lead to less than optimal decisions.
• Groups are often dominated by one individual or a
small clique, thereby negating many of the virtues of
group processes.
• Overreliance on group decision making can inhibit
management’s ability to act quickly and decisively
when necessary
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Individual vs. Group Decision Making
• In establishing objectives, groups are probably
superior to individuals because of the greater
amount of knowledge available to groups.
• In identifying alternatives, the individual efforts of
group members encourage a broad search in various
functional areas of the organization.
• In evaluating alternatives, the collective judgement
of the group, with its wider range of viewpoints,
seems superior to that of the individual decision
maker.
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Individual vs. Group Decision Making
• In choosing an alternative, group interaction
and the achievement of consensus usually
result in the acceptance of more risk than
would be accepted by an individual decision
maker.
• Implementing a decision, whether or not it
was made by a group, is usually accomplished
by individual managers.
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Relevant Quotes on the Human Psyche
• Only two things are infinite: the universe and human stupidity, and I’m not
sure about the former. Albert Einstein
• Anchoring
• He who comes first, eats first. (Now familiar as ‘first come, first served.’)
• Eike von Repkow
• Escalation of commitment (sunk cost)
• A man who has committed a mistake and doesn’t correct it is committing
another mistake. Confucius
• Bounded awareness
• Most human beings have an almost infinite capacity for taking things for
granted. Aldous Huxley
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Relevant Quotes on the Human Psyche
• Framing (reference point)
• Humanity has advanced, when it has advanced, not because it has been
sober, responsible, and cautious, but because it has been playful,
rebellious, and immature. Tom Robbins
• Risk seeking and aversion
• The human mind treats a new idea the same way the body treats a
strange protein; it rejects it. P. B. Medawar
• Status quo
• Bureaucracy defends the status quo long past the time when the quo has
lost its status. Laurence J. Peter
• Procrastination
• There is a time when we must firmly choose the course we will follow, or
the relentless drift of events will make the decision. Franklin D. Roosevelt
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Confirmation Bias
https://www.youtube.com/watch?v=6xMaR8au-YU *
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Confirmation bias
• The tendency to interpret new evidence as
confirmation of one’s existing beliefs or
theories.
– Example?
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Heuristics
• First, what are heuristics?
– An heuristic is a rule of thumb, a shortcut to making a
decision
• What are the main types of heuristic?
– Availability
– Representativeness
– Base-rate
• Base rate neglect happens when we ignore the basis of
probabilities
• https://youtu.be/nSFHFfevfms **
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Heuristics
• The availability heuristic occurs with
availability of information (all birds fly?)
• The power of framing effect – what motivates
people, the pleasure of gain or the pain of
loss?
• The framing effect is an example of cognitive bias, in
which people react to a particular choice in different
ways depending on how it is presented; e.g. as a loss or
as a gain. People tend to avoid risk when a positive
frame is presented but seek risks when a negative
frame is presented.
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Heuristics
• Sunk cost fallacy – that people will not forsake
a decision you are already invested in
• The Misconception: You make rational decisions based
on the future value of objects, investments and
experiences. The Truth: Your decisions are tainted by
the emotional investments you accumulate, and the
more you invest in something the harder it becomes to
abandon it
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Article: Before You Make That Big Decision…
• Anchoring
• Confirmation Bias
• What is System One thinking?
• What is System Two thinking?
• Before You Make That Big Decision…
– Daniel Kahneman, Dan Lovallo, Olivier Sibony
– June 2011 Harvard Business Review
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Anchoring
• Anchoring or focalism is a cognitive bias that
describes the common human tendency to
rely too heavily on the first piece of
information offered (the “anchor”) when
making decisions.
• During decision making, anchoring occurs
when individuals use an initial piece of
information to make subsequent judgments.
– Example?
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System One Thinking
• Produces the fast, intuitive reactions and
instantaneous decisions that govern most of
our lives
– see that an object is at a greater distance than another
– complete the phrase “war and …”
– solve 2+2=?
– read a text on a billboard
– connect the description ‘quiet and structured person with an eye for
details’ to a specific job
• Daniel Kahneman (25 October 2011). Thinking, Fast and Slow. Macmillan.
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System Two Thinking
• Is the deliberate type of thinking involved in focus,
deliberation, reasoning or analysis – such as
calculating a complex math problem, exercising selfcontrol, or performing a demanding physical task.
– brace yourself before the start of a sprint
– point your attention towards someone at a loud party
– dig into your memory to recognize a sound
– sustain a higher than normal walking rate
– determine the appropriateness of a behavior in a social setting
– give someone your phone number
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Readings for next week
• Dangerous biases can creep into every
strategic choice. Here’s how to find them—
before they lead you astray. by Daniel
Kahneman, Dan Lovallo, and Olivier Sibony
• Decision By Objectives (How to convince
others that you are right) by Ernest Forman
• Developing Expertise in Management Decision
Making by Carter L. Franklin,
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• How to read an academic
article, assuming you used
the library to find it:
– Read the abstract
– Decide whether the paper is
relevant and if so, read on
– Read the introduction and
conclusion
– Decide whether to read on
Skill Check