Précis of Nutt’s “Formulation Processes and Tactics Used in Organizational Decision Making”
- Written by Brent Duncan, PhD
In "The formulation processes and tactics used in organizational decision making," Paul C. Nutt (1993) reviews decision-making literature and analyzes 163 decision cases to discover the procedures managers use to frame problems and determine if different decision-making frameworks product different results. Nutt finds that "reframing" is the most successful decision formulation procedure because it encourages an open search for solutions. He also finds that objective-directed processes produce successful results and recommends integrating steps from reframing with the objective-directed methods to improve decision success. Nutt sees that decision success declines in cases where managers impose ideas and issues on decision formulation. This article summarizes Nutt's 1) theoretical framework for evaluating the types and success of decision formulation processes, 2) profiles of decision-making processes and tactics identified in the research, and 3) research conclusions.
Researchers generally agree that managers frame decisions by interpreting signals and providing direction for action. However, decision literature discloses little about how managers formulate decision process. Synthesizing the decision-making literature helps to form a "Transactional Representation of Decision Making" [Figure 1], through which researchers evaluated the steps and sequences managers use while formulating decisions and determined if the manager's decision process produced successful decisions. A decision process is the action-taking steps that start when the manager recognizes a problem and ends when the manager adopts a decision.
The theoretical framework places the decision maker at the center of the activities and stages involved with decision-making. The activity blocks are Intelligence, Choice, and Development. The stages represent information that the decision maker must gather and includes the following:
- Signals [Stage 1]
- Intentions [Stage 2]
- Concept Development [Stage 3]
- Detailing [Stage 4]
- Evaluation [Stage 5].
In the Intelligence block, the decision-maker receives signals [Stage 1] that suggest an important gap in performance that requires action.
In the Choice block, the decision maker conducts a diagnosis to make critical judgments. In the development block, the decision maker identifies how to gather information and how to develop and implement the decision.
The Development block starts with intentions [Stage 2], signaling when the decision maker defines the needs or opportunities in the performance gap, and during which a support team offers problems or objectives. In the concept development stage [Stage 3] the decision maker identifies ways to deal with the problem or meet the objectives defined in Stage 2 and considers options offered by the support team. In the detailing stage [Stage 4], the decision maker identifies decision criteria and alternative courses of action. In the evaluation stage [Stage 5], the decision maker works with the support team to analyze the alternatives against the criteria to determine the optimum course of action. During the installation stage [Stage 6], the decision maker implements the preferred option.
The transactional framework is more than the typical step model of decision-making because it recognizes 1) that the decision maker must dialogue about possibilities with a support team, and 2) the concepts necessary for understanding decision making and the steps required to make a decision. In other words, the model considers the Meta level, the local level, and the dialogue needed for successful action.
Profiling decision-making processes
To profile decision-making processes, the researchers identified how the decision maker should make the decision and how the decision maker carries out a particular decision-making process. The researchers conducted interviews with people involved with each decision, transcribed the steps, imposed the transactional framework to analyze the decision, compared each decision case against others, and collected success indicators for each example. The researchers identified and analyzed four decision-making processes: idea, issue, objective-directed, and reframing. The researchers determined the success of each process by measuring the adoption, merit, and duration of each.
Using idea formulation, the decision maker imposes a solution idea on the decision-making process. The development stage focuses on certifying the virtues of the idea, determining stakeholder reactions to the idea, and suggesting refinements to the idea. The idea changes little during the decision-making process. While such an approach limits innovation, it reduces uncertainty about the course of action. Idea processes are not very successful because they prohibit new ideas better suited than the ideas the decision-maker imposes.
Idea formulation was the most frequently observed formulation processes but produced results that were not very successful. Used in 33% of the cases, the idea formulation process provided adequate to good results, had an adoption rate of 50%, and took 12 months to implement. The research identified two tactics cases used to implement idea processes: "inferred problem" and "concept."
Inferred problem tactic
The inferred problem tactic matches problems to available ideas using the following steps: claims, performance gap, idea, analysis, and needs or opportunities inferred from the idea analysis. Using the inferred problem tactic, the decision maker offers an idea and determines problems the ideas might solve.
Used in 25% of the cases, the inferred problem tactic produced good decisions, had an adoption rate of 47%, and took 9.1 months to complete. The study suggests that the limited success of this tactic might be because the decision maker appears self-serving and manipulative by downplaying or ignoring difficulties with the idea he or she proposed.
The concept tactic imposes an idea, employing three steps: claims, performance gap, and imposing an idea. The idea drives the decision process. Used in 8.6% of the cases, the concept tactic produced both good and bad results, had an adoption rate of 57% and took 31 months to complete. This extended implementation may result from tailoring the idea to fit new applications, and because manipulative tactics produce resentment that increases opposition. In other words, self-serving and manipulative tactics may reduce decision-making success.
In the issue process, the decision maker uncovers issues and uses the issues to identify solutions using the following steps: claim, performance gap, idea, idea analysis, infer need, or opportunity. The issue is a concern or difficulty that requires the decision maker to become a problem solver who develops solutions from problem analysis. The issuing process can be useful if the decision maker effectively addresses the exact problem. However, the issue process proved to be the least productive process in the study because decision makers tended to focus on symptoms while not addressing the problems.
Used in 26% of the cases, the issue process produced adequate to good results, had an adoption rate of 39%, and took 12 months to complete. The research observed two tactics that cases used to implement issue processes: inferred solution and arena search.
Inferred solution tactics
The inferred solution uses problem analysis to extract a solution, using the following steps: claims, performance gaps, statement of needs or opportunities, analysis of needs or opportunities, and seeking a solution that deals with the needs or opportunities. Used in 19% of the cases, the inferred solution process produced adequate to good results, had an adoption rate of 45%, and took 11.2 months to carry out.
Arena search tactics
The arena search identifies where to search for solutions using the following steps: claims, performance gap, and arena of search. Used in 7.4% of the cases, the arena search produced satisfactory results, had an adoption rate of 25%, and took 11.9 months to complete.
Ranking as the second most successful decision formulation in the survey, the objective-directed process uses objectives to guide decision activities. The decision maker states intentions but does not suggest a solution. This leaves freedom to explore innovative methods to meet the objectives but can increase the cost of decision-making. Used in 29% of the cases, the objective-directed process produced good results, had an adoption rate of 60%, and took 8.5 months to complete. The research observed two tactics that cases used to implement objective-directed processes: specific objectives tactics and general objectives tactics.
The specific objectives tactic states particular targets for the decision objectives, using the following steps: claims, performance gap, identify needs or opportunities, state objectives with specific targets, and conduct an open search for options. Used in 20% of the cases, the specific objectives tactic produced very good outcomes, had an adoption rate of 62% and took five months to complete.
General objectives tactic
The general objectives tactic creates general targets using the same steps as the specific-objectives tactic. Used by 9.2% of the cases, the general objectives tactic produced good decisions, had an adoption rate of 53%, and took 14.5 months to complete. The better decisions provided by the specific-objectives tactic support Edwin Locke's research that specific objectives improve results. Specific objectives shorten the decision process and produce solutions that will last longer. The lack of specificity with general objectives takes longer because the process fosters conflict.
Using reframing processes, decision makers justify the need to act by demonstrating a call for action that focuses on solutions or problems, using the following steps: claim, performance gap, demonstrate feasible solutions, reframe with new norms suggested by the solutions, suggest ideas, analyze, and infer needs. The most successful formulation process, reframing was used in only 12% of the cases, but produced good to outstanding results, was adopted in 79% of the cases, and took on average 8.5 months to carry out. The research observed two tactics used to implement reframing processes: solution intervention tactics, and problem intervention tactics.
Solution intervention tactics
The solution intervention tactic demonstrates the need for action by inferring solutions with the following steps:
- Identify performance gaps
- Demonstrate the solution
- Reframe with new norms that the solution suggests
- Propose ideas
- Analyze ideas
- Infer needs from idea analysis
Used in only 2.4% of the cases, solution intervention was the least used tactic in the study but returned some of the most successful results--ranging from good to exceptional--with an adoption rate of 75%, and taking an average of 9.5 months to complete. The success of the solution intervention tactic may be due to how the decision maker diplomatically demonstrates the need for action, rather than imposing ideas on the decision.
Problem intervention tactics
The problem intervention tactic demonstrates the need for action by inferring solutions, using the following steps:
- State claims
- Identify performance gap
- Demonstrate the need to act
- Reframe with new norms
- Specify needs, problem-solving, and derive ideas.
Used in 9.2% of the cases, the problem intervention tactic produced results that were good to exceptional, had an 80% adoption rate, and took only 7.5 months to complete. The decision makers who use problem intervention tactics explore new practices by demonstrating why action is necessary. Key people shed preconceptions, helping to promote more creative solutions.
By encouraging a free search for solutions, reframing is the most successful decision formulation procedure. Objective-directed processes also produce successful results. Decision success declines when decision makers impose ideas or issues on the decision formulation process. The findings offer advice to help decision makers improve the success of decision formulation processes, suggest ideas that can help scholars extend decision-making theory, and disclose limitations of the research.
Advice for decision makers
The results suggest the following advice to help managers improve decision-making practice:
- Managers use the most successful tactics least and the least successful tactics most. Improve decision-making practice by using reframing or objectives to formulate decisions and stop imposing issues and ideas on the decision formulation process.
- Implying solutions can narrow options. Improve decision success by using objectives to provide a useful direction to successful decisions.
- Problem-solving is prone to failure because people responsible for the problem react defensively.
- Demonstrating the need to act seems to be the crucial step that distinguishes reframing from less successful decision formulation procedures. Integrating the demonstration and norming steps from reframing into the specific objectives might further enhance success.
Extending decision-making theory
The results suggest the following approaches for extending decision-making theory:
- Reframing seems to work because it follows the same process used in learning and development while imposing ideas stops learning and encourages stereotyped responses. By opening decision formulation to new possibilities, managers can help stakeholders to recognize the value of new ideas better suited to solving the problem.
- The classification framework and the method of profiling decisions allow researchers to identify specific concepts and procedures that other researchers can use to study decision-making.
- Imposing ideas on a decision process may provide clarity of purpose but leads to failure. This is because managers solve the wrong problem when they limit ideas. Taking steps to justify the need to act, using solution intervention or problem intervention tactics, and managing the politics of the situation improves the prospect of decision success by 300%.
Limitations of research
Following are limitations of the study:
- Only 16% of the studied cases were private sector organizations; the results may not accurately reflect decision making in the private sector.
- Allowing the contact person to select the case increased the likelihood that the research studied successful cases while excluding examples of the failed decision process. In other words, the adoption rate of 70% reflected in the cases seems overstated.
- Considering environmental variables was beyond the scope of the research. Key variables not included were problem type, context, urgency, resources, type of decision, politics, and level of management involved in the case.
Nutt, P. C. (1993). "The formulation process and tactics used in organizational decision making." Organization Science, Volume 4, No. 2, May 1993, pp 226 -251, 26p.