Selecting an Alternative in Decision Making
Three Approaches When selecting from among alternatives, managers can use three basic approaches: (1) experience. (2) Experimentation, and (3) research and analysis (Figure 6-1). 1. Experience Reliance on past experience probably plays a larger part than it deserves in derision making. Experienced managers usually believe, often without realizing it, that the things they have successfully accomplished and the mistakes they have made furnish almost infallible guides to the future.
This attitude is likely to be more pronounced the more experience a manager has had and the higher he or she has risen in an organization. To some extent, experience is the best teacher. The very fact that managers have reached their position appears to justify their past decisions. Moreover, the process of thinking problems through, making decisions, and seeing programs succeed or fail does make for a degree of good judgment (at times bordering on intuition).
Many people, however, do not learn from their errors, and there are managers who seem never to gain the seasoned judgment required by the modern enterprise. Relying on past experience as a guide for future action can be dangerous. In the first place, most people do not recognize the underlying reasons for their mistakes or failures. In the second place, the lessons of experience may be entirely inapplicable to new problems. Good decisions must be evaluated against future events, while experience belongs to the past.
On the other hand, if a person carefully analyzes experience, rather than blindly following it, and if he or she distills from experience the fundamental reasons for success or failure, then experience can be useful as a basis for decision analysis. A successful program, a well-managed company, a profitable product promotion, or any other decision that turns out well may furnish useful data for such distillation. Just as scientists do not hesitate to build upon the research of others and would be foolish indeed merely to duplicate it, managers can learn much from others. 2. Experimentation
An obvious way to decide among alternatives is to try one of them and see what happens. Experimentation is often used in scientific inquiry. People often argue that it should be employed more often in managing and that the only way a manager can make sure some plans are right— especially in view of the intangible factors—is to try the various alternatives and see which is best. The experimental technique is likely to be the most expensive of all techniques, especially if a program requires heavy expenditures of capital and personnel and if the firm cannot afford to vigorously attempt several alternatives.
Besides, after an experiment has been tried, there may still be doubt about what it proved, since the future may not duplicate the present. This technique, therefore, should be used only after considering other alternatives. On the other hand, there are many decisions that cannot be made until the best Course of action can be ascertained by experiment. Even reflections on experience or the most careful research may not assure managers of correct decisions. This is nowhere better illustrated than in the planning of a new airplane.
An airplane manufacturer may draw from personal experience and that of other plane manufacturers and new plane users. Engineers and economists may make extensive studies of stress, vibration, fuel consumption, speed, space allocation, and other factors, But all these studies do not answer every question about the flight characteristics and economics of a successful plane; therefore, some experimentation is almost always involved in the process of selecting the right course to follow.
Ordinarily, a first-production, or prototype, airplane is constructed and tested; and on the basis of these tests, production airplanes are made according to a somewhat revised design. Experimentation is used in other ways. A firm may test a new product in a certain market before expanding its sale nationwide. Organizational techniques are often tried in a branch office or plant before being applied over an entire company. A candidate for a management job may be tested in the job during the incumbent’s vacation. 3. Research and Analysis
One of the most effective techniques for selecting from alternatives when major decisions are involved is research and analysis. This approach means solving a problem by first comprehending it. It thus involves a search for relationships among the more critical of the variables, constraints, and premises that bear upon the goal sought. It is the pencil-and-paper (Or, better, the computer-and-printout) approach to decision making. Solving a planning problem requires breaking it into its component parts and studying the various quantitative and qualitative factors.
Study and analysis is likely to he far cheaper than experimentation. The hours of time and reams of paper used for analyses usually cost much less than trying the various alternatives. In manufacturing airplanes, for example, if careful research did not precede the building and testing of the prototype airplane and its parts, the resulting costs would he enormous. A major step in the research-and-analysis approach is to develop a model simulating the problem.
Thus, architects often make models of buildings in the form of extensive blueprints or three-dimensional renditions. Engineers test models of airplane is wings and missiles in a wind tunnel. But the most useful simulation is likely to be a representation of the variables in a problem situation by mathematical terms and ‘relationships. Conceptualizing a problem is a: major step toward its solution. The physical sciences have long relied on mathematical models to in this, and it is encouraging to see this method being applied to managerial decision making.