Decision Making

Before I proceed writhe the models of decision-making, we need to understand the definition of it. Decision-making is weighing up the relative attractiveness of each alternative (2). There are two types of decisions, programmed and non-programmed. The programmed are made frequently, the non-programmed are made infrequently. There are different models of decision-making but some of them are based upon highly structured idealisations about how rational decisions should made. Rational refers to the idea of consistency. In other words, if the same amount of information is presented to two different decision makers in two different places and both of them act rationally, their decisions would be the same. However, we must take into consideration that what is rational with one decision maker could be irrational with another. Essentially, decision models are classified as:

Rational model

The rational model is the model that gives the decision makers clear steps to choose the best choice.

Bounded rational model

This model is based on the decision maker accepting a solution which is good enough rather that the best.

Evolutionary model

Henry Mintzberg observed the way in which decisions are actually made. He concluded that there are many feedback loops within the rational decision making process. Decisions evolve from a complex pattern of feedback loops.
Political model

This approach acknowledges that an organization made up of many different interests. For example, the stakeholders do not necessarily share the same goals of the organization.

Garbage can model

This was first proposed by Cohen, March and Olsen in 1972. This approach views an organization as a collection of problems and solutions. Problems flow through organizations; solutions exist within organizations.


Decisions and Systems Thinking


A system is an inter-related set of elements. One executive has expressed the systems thinking this way, ‘When you trace back the stories, you will find out that all the changes came from hundreds of little things that individuals were doing differently’ (2). Effective systems thinkers do not act as individuals. We have to know that there are two types of systems, closed and open systems. We live in a very complex world and the organization should be a learning organization. Modelling is an important management activity. Modelling helps the decision makers to structure problems and enable them to reflect upon possible consequences of their decisions before taking action. Modelling can be quantitative or qualitative, but we should keep it simple and avoid mega models. The Bounded rational model would solve the limited cognitive capabilities of individuals but there are other psychological considerations that need to be taken into account. Each individual will have his or her own particular view and interpretation of reality. Therefore, different individuals will bring different perceptions to the organization.

Strategic Decision Making


The strategy is the unifying theme that gives coherence and direction to the actions and decisions of an organization. When formatting a strategy the strategic decision maker has to make an assessment for the situation using subjective and imperfect information. There are three levels of strategy: corporate, business, and functional (3). Peter Drucker argues that a company that thinks strategically is one which produces satisfied and loyal customers. Peter Drucker describes the sequence of steps involved in the decision making process (4):

1. Classifying the problem

2. Defining the problem

3. Specifying the answer to the problem

4. Deciding what is right, rather than what is acceptable, in order to meet the boundary conditions

5. Building into the decision the action to carry it out

6. Testing the validity and effectiveness of the decision against the actual course of events

The nature of the decision making process that result in strategies is explained by Henry Mintzberg. After a very helpful survey on this, he suggested that 10 schools of thought about the strategy process could be identified (2).
3.4 Prescriptive Schools (Mintzberg)


I shall attempt to give a brief about each school of thought:

The design school

Strategies are the result of conscious creative thinking based on conceptual modelling. In the design school, strategy is ‘grand strategy’. The CEO is the architect of the strategy and controls the strategy making process.

The planning school

Strategies are the result of the formal planning process led by the senior management team. Strategic decisions are an integral part of the planning process. Mintzberg’s critique this approach because it assumes that the future can be predicted, the strategic planning can be separated from operational management, and hard data analysis and techniques can produce novel strategies.

The positioning school

Strategies emerge from an analytical process that produces knowledge about the trends in the particular industry and than respond to those trends by establishing an appropriate strategy. Mintzberg’s critique is that this approach is too deterministic and the analytical frameworks constrain creative thought.

The entrepreneurial school

Strategies are the products of visionary, strong entrepreneurial leaders. As a result, the process of strategy making is a mystery.

The cognitive school

Decisions are the outcomes of semi-conscious cognitive processes. They are not as conscious and deliberate as the rational prescriptive approach suggests. Mintzberg emphasised the need to understand better, how experience informs strategic thinking.

The learning school

When strategies are implemented, the decision maker learns what works well and what does not. Strategies are adapted in the light of learning. Learning is a process of finding out what works, understanding why it works, and than developing this new knowledge into action and behaviour. This is Mintzberg’s preferred approach.



The political school

Strategies emerge from the power-plays within an organization. The dominant strategy that emerges is that aligned with the preferences of the most powerful group within the organization.

The culture school

The culture school sees strategy emerging from a collective decision-making process in which all members of the organization share a common set of values and beliefs. In this case, organizational life is idyllic and free from power politics and strife.

The environmental school

Changes in the external environment determine strategic decisions. Strategy is a passive process that responds to changes in the external environment.

The configurational school

This is a collage of many of the other schools. Any particular strategy depends upon a number of factors.

Mintzberg contrives these schools of thought and they are analytical and artificial. Their purpose is to focus thinking upon the strategic making process. Mintzberg has found that there is a great discrepancy between what they actually do and what management theory says they should do (5).