Michael Comments

This paper was very influential on Jeff Bezos' decision-making process
It is a classic in the field of unstructured decision-making
It does a good job of bringing together all of the different decision-making techniques under one model

Existing Decision-Making Approaches Don't Fit The Messiness Of The World

Although there is a body of normative literature on techniques for strategic decision making, for example, strategy planning, models of the firm, cost-benefit analysis, the evidence from empirical studies of their application indicates that all too often these techniques have made little real difference in the decisional behavior of organizations (Grinyer and Norburn, 1975; Hall, 1973; Whitehead, 1967). These techniques have been unable to cope with the complexity of the processes found at the strategy level, about which little is known.

Abstract

A field study of 25 strategic decision processes, together with a review of the related empirical literature, suggests that a basic structure underlies these “unstructured” processes. This structure is described in terms of 12 elements: 3 central phases, 3 sets of supporting routines, and 6 sets of dynamic factors. This paper discusses each of these elements in turn, and then pr0poses a general model to describe the interrelationships among them. The 25 strategic decision processes studied are then shown to fall into 7 types of path configurations through the model.

25 Decision Processes

Previous Work Cited

The research on individual decision making, perhaps best represented by the Newell and Simon book Human Problem Solving (1972), relies largely on eliciting the verbalizations of decision makers’ thought processes as they try to solve simplified, fabricated problems, such as in cryptarithmetic or chess. These are then analyzed to develop simulations of their decision processes. This research indicates that, when faced with a complex, unprogrammed situation, the decision maker seeks to reduce the decision into subdecisions to which he applies general purpose, interchangeable sets of procedures or routines. In other words, the decision maker deals with unstructured situations by factoring them into familiar, structurable elements. Furthermore, the individual decision maker uses a number of problem solving shortcuts—"satisficing" instead of maximizing, not looking too far ahead, reducing a complex environment to a series of simplified conceptual "models."

Keywords Defined

Decision

Specific commitment to action (usually a commitment of resources)

Decision Process

Set of actions and dynamic factors that begins with the identification of a stimulus for action and ends with the specific commitment to action

Unstructured

Decision processes that have not been encountered in quite the same form and for which no predetermined and explicit set of ordered responses exists in the organization.

Strategic

Important, in terms of the actions taken, the resources committed, or the precedents set.

Routine

More accessible to price description and quantitive analysis

Elements Of The Strategic Decision Process

Decision Recognition Routine
Diagnosis Routine
Development Phase
Search Routine
Selection Phase
Screen Routine
Evaluation-Choice Routine
Authorization Routine

Dynamic Factors

There is not a steady, undisturbed progression from one routine to another; rather, the process is dynamic, operating in an open system where it is subjected to interferences, feedback loops, dead ends, and other factors.

Interrrupts, which are caused by environmental forces
Scheduling delays, timing delays and speedups (affected by the decision maker)
Feedback delays
Comprehension cycles
Failure recycles

General Model Of Strategic Decision-Making Process

Conclusion

In this paper We have tried to show at the same time that strategic decision processes are immensely complex and dynamic and yet that they are amenable to conceptual structuring. We believe we have been able to capture some of the flavor of their structure in our study of 25 of these processes. In making this statement, we are encouraged by the facts that one model describes much of what we observed, that the decision processes fall into distinct groupings within the model, and that the decisions of each of four of these seven groupings involved similar outcomes. We have, however, barely scratched the surface of organizational decision making. Little is known about the most important routines, notably diagnosis, design, and bargaining. Diagnosis is probably the single most important routine, since it determines in large part, however implicitly, the subsequent course of action. Yet researchers have paid almost no attention to diagnosis, preferring instead to focus on the selection routines, which often appear to be just a trimming on the overall decision process. Furthermore, while we have addressed ourselves to the question of how organizations make single strategic decisions, we have not looked at the interrelationships among such decisions over time in the same organization, in effect the process of strategy formulation. The empirical study of strategy formulation has also been neglected in the literature. Another major gap in the literature is the relationship between decision process and structure. The literature still lacks a single acceptable theory to describe how decision processes flow through organizational structures. In fact, it does not even provide a helpful typology of the kinds of decisions made in organizations, especially of those decisions that are found between the operating decisions of the bottom of the hierarchy and the strategic decisions of the top. All of these gaps in the literature seriously block us from achieving even an elementary understanding of how organizations function; all are greatly in need of empirical research.

Study: The Structure Of "Unstructured" Decision Processes