|Techniques of Decision Making|
One of the few books I still have from my Ph.D. student days is Herbert Simon's The New Science of Management Decision. A couple of others were written by my advisor and mentor. At some level, I held onto Simon's book knowing full well that I would have to come to terms with its implications for my view of the world. Added emphasis appears in red, and my reactions are enclosed in a box: (Note 137)
Programmed and Non Programmed Decisions
In discussing how executives now make decisions, and how they will make them in the future, let us distinguish two polar types of decisions. I shall call them programmed decisions and non programmed decisions, respectively. Having christened them, I hasten to add that they are not really distinct types, but a whole continuum, with highly programmed decisions at one end of that continuum and highly unprogrammed decisions at the other end. . . . I use the terms programmed and non programmed simply as labels for the black and the white of the range.
Decisions are programmed to the extent that they are repetitive and routine, to the extent that a definite procedure has been worked out for handling them so that they don't have to be treated de novo each time they occur. The obvious reason why programmed decisions tend to be repetitive, and vice versa, is that if a particular problem recurs often enough, a routine procedure will usually be worked out for solving it. Numerous examples of programmed decisions in organizations will occur to you: pricing ordinary customers' orders; determining salary payments to employees who have been ill; reordering office supplies.
Decisions are non programmed to the extent that they are novel, unstructured, and consequential. There is no cut and dried method for handling the problem because it hasn't arisen before, or because its precise nature and structure are elusive or complex, or because it is so important that it deserves a custom tailored treatment. General Eisenhower's D-Day decision is a good example of a non programmed decision. . . . Many of the components of the decisions were programmed - by standard techniques for military planning - but before these components could be designed they had to be provided with a broader framework of military and political policy.
I have borrowed the term program from the computer trade, and intend it in the sense in which it is used there. A program is a detailed prescription or strategy that governs the sequence of responses of a system to a complex task environment. Most of the programs that govern organizational response are not as detailed or as precise as computer programs. However, they all have the same intent: to permit an adaptive response of the system to the situation.
In what sense, then, can we say that the response of a system to a situation is non programmed? Surely something determines the response. That something, that collection of rules of procedure, is by definition a program. By non programmed I mean a response where the system has no specific procedures to deal with situations like the one at hand, but must fall back on whatever general capacity it has for intelligent, adaptive, problem oriented action. In addition to his specific skills and specific knowledge, man has some general problem solving capacities. . . .
This general problem solving equipment is not always effective. Men often fail to solve problems, or they reach unsatisfactory solutions. But man is seldom completely helpless in a new situation. He possesses general problem solving equipment which, however inefficient, fills some of the gaps in his special problem solving skills. And organizations, as collections of men, have some of this same general adaptive capacity. . . .
My reason for distinguishing between programmed and non programmed decisions is that different techniques are used for handling the programmed and the non programmed aspects of our decision making. The distinction, then, will be a convenient one for classifying these techniques. I shall use it for that purpose, hoping that the reader will remind himself from time to time that the world is mostly gray with only a few spots of pure black or white.
The four fold table below will provide a map of the territory I propose to cover. In the northern half of the map are some techniques related to programmed decision making, in the southern half, some techniques related to non programmed decision making. In the western half of the map I placed the classical techniques used in decision making - the kit of tools that has been used by executives and organizations from the time of the earliest recorded history up to the present generation. In the eastern half of the map I placed the new techniques of decision making - tools that have been forged largely since World War II, and that are only now coming into extensive use in management in this country. . . .
I can warn you now to what conclusion this journey is going to lead. We are in the midst of a major revolution in the art or science - whichever you prefer to call it - of management and organization. I shall try to describe the nature of this revolution and, in my final chapter, to discuss its implications.