INTERPRETING AND UNDERSTANDING INFORMATION Lecture 3 Outline The

INTERPRETING AND UNDERSTANDING INFORMATION Lecture 3

Outline • The Nature of Information What Is Information? • How People Interpret Information A Model for Interpreting Information Characteristics of Information • From Information to Knowledge The Decision-Making Process Problem Finding and Solving Types of Decisions • How Do Individuals Make Decisions? Stages in the Decision-Making Process • The Influence of the Organization • A Scenario for the Not-Too-Distant Future

Information • "Information is data that has been processed into a form that is meaningful to the recipient and is of real perceived value in current or prospective decisions" (Davis and Olson, 1985)

Influences on the interpretation and use of information.

Cognitive Style Psychologists studying the thought patterns of individuals have developed the concept of cognitive style. Although there is no agreement on exactly how to describe or measure different cognitive styles , the concept is appealing since people do seem to have different ways of approaching problems. One of the simplest distinctions is between analytic and heuristic decision makers. The analytic decision maker looks at quantitative information. Engineering is a profession attractive to an analytic decision maker. The heuristic decision maker, on the other hand, is interested in broader concepts and is more intuitive. Most researchers believe that we are not analytic or heuristic in every problem but that we do have preferences and tend to approach the same type of problem with a consistent cognitive style.

Model for interpreting information.

Types of Decisions(Cont. ) Not all decisions are alike; some involve different levels of the organization and some are more important than others. Anthony (1965) suggests that there are three broad categories of decisions made in organizations, a model still widely used today.

Types of Decisions(Cont. ) • Strategic Planning In strategic planning the decision maker develops objectives and allocates resources to obtain them. Decisions in this category are characterized by long time periods and usually involve a substantial investment and effort. The development and introduction of a new product is an example of a strategic decision.

Types of Decisions(Cont. ) • Managerial Control Decisions involving managerial control concern the use of resources in the organization and often include personnel or financial problems. For example, an accountant may try to determine the reason for a difference between actual and budgeted costs.

Types of Decisions • Operational Control An operational control decision covers the day-to-day problems that affect the operation of the firm: What should be produced today in the factory? What items should be ordered for inventory?

FROM INFORMATION TO KNOWLEDGE • Knowledge is a strategic resource for many organizations. Wecan define knowledge as "information plus know-how"(Kogut and Zander, 1 992). Information alone is not enough to produce knowledge; we must also understand the best way to use information to solve a problem, contribute to a product or service, or make a similar contribution to the organization. Knowledge builds over time in the heads of employees in the form of past decisions, processes in the organization, characteristics of products, interests of customers, and similar experiences.

Types of Knowledge • It is instructive to look at different types of knowledge; Nonaka ( 1 994) distinguishes between explicit and tacit knowledge.

Explicit knowledge is represented by facts. Our formal education provides a great deal of explicit knowledge. This text is an example of an attempt to present explicit knowledge to you, knowledge about information technology and how to manage it in an organization

Tacit knowledge • Tacit knowledge is something we understand but have difficulty explaining. A good example of tacit knowledge is the ability to ride a bicycle. Many people can ride a bicycle, but it is very hard to explain in words to someone how to master this skill; our knowledge about bike riding is tacit. By internalizing explicit knowledge, we turn it into tacit knowledge. If you are able to articulate tacit knowledge, you may be able to convert it to explicit knowledge for others to use

Stages in the Decision. Making Process • • Intelligence problem finding Design Implementation

Slade's model of the decision-making process.

THE INFLUENCE OF THE ORGANIZATION • Bureaucracy Bureaucracies are characterizedby a large number of management layers. There are many rules and procedures to protect individuals; if you follow the procedures, how can you be wrong? Bureaucracies try to survive and to minimize uncertainty; members of these organizations stress job security. We would expect decisions in bureaucracies to be conservative and require modest changes to existing procedures.

• adaptive organization tries to respond quickly to its environment. The organization stresses rapid response times and does not have a large number of layers of management. A small group of decision makers analyze data and come to decisions quickly. Although there

• charismatic organization is dominated by a strong leader. This individual sets the goals of the firm and tends to make all decisions. His or her decisions are hard to predict because this kind of leader often does not reveal plans to the rest of the organization. It is safe to say that the leader is likely to make the decision that subordinates then execute.

A Scenario for the Not-Too-Distant Future Read form Page 39 to 42 for Scenario

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