The purpose of this assignment is to discuss and analyse the reasons for and the backgroung behind the incresing speed of decision making as organisations find themeselves in an increasingly competitive environment.
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'The pace of decision making continues to increase as organisations find themeselves in an increasingly competitive environment.' INTRODUCTION The purpose of this assignment is to discuss and analyse the reasons for and the backgroung behind the icresing speed of decision making as organisations find themeselves in an increasingly competitive environment. In the first half of the essay I wpuld like to discuss the theoretical backgroung, than support them with examples and finally to draw conclusion. DISCUSSION Decision speed has been found to be a vital factor in influencing firm performance in high velocity environments1. This finding -inductively derived in the study by Bourgeois and Eisenhardt- was deductively tested and quantitatively supported by Judge/Miller who argued: "The conclusion that (decision) speed and performance are associated is certainly in keeping with the experiences of a growing number of corporations that are relying on organizational speed to improve their financial performance. For example, Bower and Hout argued that organizations that make fast decisions 'are like World War II fighter pilots- they win by making faster decisions which preempt the opposition's moves." According to Judge/Miller it is due to the increasingly global markets and shortened product life cycles that the attention given to speed of the strategic decisionmaking process is growing. Stalk from the Boston Consulting Group and Thomas state that: "the ways leading companies manage time represent the most powerful new sources of competitive advantage." ...read more.
(2) Timing and number of alternatives: The greater the number of alternatives considered simultaneously, the greater the speed of the strategic decision process. But multiple alternatives are likely to slow the strategic decision process. So 'multiple alternatives' as comprehensiveness, which includes being "exhaustive or inclusive in the generation and evaluation of alternatives." In addition a similar conclusion5 can be reached that multiple alternatives accelerate cognitive processing and hence, decision-making speed. Other justifications for this positive correlation include perceiving multiple alternatives as a form of fallback position. If one alternative fails, executives can quickly shift to a new one Additionally, having simultaneous alternatives reduces the 'escalation of commitment' to any one option6. This implies that decision makers who pursue multiple options have a lower psychological stake in any one alternative and thus, can quickly shift between options if they receive negative information on any alternative. (3) Power and the role of counselors: The greater the use of experienced counselors, the greater the speed of the strategic decision process. The fact that political factors influence the pace of decisions has initially been pointed out that resistance by influential people was a leading cause of delay in making strategic decisions. Alternatively, when few executives are involved, a decision process can be rapid. For example autocratic decision-making in situations in which speed is essential. According to this perspective, centralized power quickens decisionmaking. ...read more.
These people were called counselors by Eisenhardt. Slow teams either had no counselor or had a less experienced executive in the counselor role. Speed, fragments, and decision integration The final critical difference lies in what she calls the web of relationships among the decisions. Fast teams attempted to integrate strategic decisions with one another and with tactical plans. Slower teams did not try to connect or integrate these strategic decisions. Decision integration helps executives to analyze the viability of an alternative more quickly. It helps them cope with the ambiguity of high stakes decision making. The development of concrete ties with other major decisions and decision details may alleviate the anxiety that can plague executives as they face high-stakes decisions. CONCLUSION How does strategic decision speed link to performance? Faster decision making is associated with better performance. Eisenhardt hypothesizes that slow decision makers learn less. Executives learn by making decisions, but if they make few decisions, as slow decision makers do, they learn very little. The teams making fast decisions engage in behaviours to cope with this anxiety & build confidence. One tactic is to rely on the counsel of experienced executives. Another tactic is to tie together strategic decisions and concerete operating plans. Fourth, the findings link fast decision making with effective performance. These findings suggest a configuration of cognitiv e, political, and emotional processes that are associated with rapid closure on major decisions. ...read more.
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