The Challenges of Decision Making in an Environment of High Speed and Complexity - Term Paper Example

The Challenges of Decision Making in an Environment of High Speed and Complexity The e-economy is a broad field that deals entirely with all the businesses which are facilitated by the Internet, a network of computers. The business transactions are facilitated by information technology tools and devices including mobile phones or the Internet. The competitive advantages of the e-economy have encouraged several companies both - public and private - to move from the traditional system of doing business into the e-business. This part of the economy has exploited the availability of information technology to do business and is more important in decision-making (Miller, 2009). E-Commerce E- Commerce has been narrowed down to purchasing over the Internet while in the real sense, it comprises many other elements. It encompasses B2C (Business to Customer), B2B Business to Business, C2C (Customer-to-Customer), peer to peer and e-commerce transactions according to Miller (2009). In business to customer transactions, the retailers and the marketers are online and sell their products to the individual customers. B2B is the largest kind of e-commerce and involves huge lump sum of capital and both the parties are business entities rather than individual customers. As progress is evident in the information Technology m-commerce has evolved to a point in which the mobile devices are used to assist in business transactions (Miller, 2009). The rest of the types of e-commerce will not be defined in this section but only the important ones for this section. E-commerce has continued to gained popularity ever since its inception and with the continued adoption of Internet technology. Though this is the case, most people, who may be potential customers, have not yet realized the benefits of e-commerce either due ignorance or the Internet is not within their limit. Though different, e-commerce follows the basic format of trading in which the buyers and the sellers meet, agree on the price and exchange the commodity for a standard measure of value. The major difference between e-commerce and the traditional way of doing business is that in the former, transactions are carried out through networked computers or basically, the Internet. This mode of business assists the seller to reduce their costs and above all expand their business. The reduced costs are due to the partial or total elimination of the labor costs, construction costs and the need to maintain a physical stall or printing of the traditional catalogues. Additionally, the seller saves on distribution costs and above all the seller has the potential of meeting many potential customers over the Internet bearing in mind that it is global in coverage. Further, the seller can build relationship with a client which eventually, increases his or her business (Miller, 2009). Although this is the case, various stalemates hinder or rather contribute negatively to the growth and development of this sector of business. These drawbacks include: the hesitation of many customers to purchase commodities over the Internet. For instance, furniture businesses selling their commodities online have experienced rejection by most customers because most customers want to test the comfort of the furniture before purchasing them. The consideration by many that shopping is a social experience also works against the system of purchasing items in a computer. Apart from the above demerits of e-commerce, the seller faces more challenges on the decisions to make for the business due to the speed involved and the complexity of e-commerce. The following sections of this paper will discuss in more detail some of these challenges. Challenges of Decision Making in E-Commerce Various deadlocks involved in decision making in any e-commerce exist. Today it is possible to access a seemingly limitless amount of data almost instantaneously. However, along with the need to wade through the daily media blitz comes the need to convert information into decisions and then into action at the "speed of thought." In this high-speed unforgiving environment, decision success or failure often falls straight to the bottom line (Wessel, 2010, par 2). First, the understanding that e-commerce is fast makes the buyers paranoid and they want the deliverance of services faster than it would be while using the traditional way of purchase. The fact is that many electronic mails and phone calls need to be made in order for the customer to receive his or her orders. The purchasing decision relies greatly on the trust of the seller to the buyers and the fear to lose money has been a major wary for the customers. Although purchasing through the Internet is an uphill task, returning such a product for an exchange is a troublesome transaction for it is time-consuming mostly affecting the buyer more than the seller. Purchasing decisions have in the past been influenced by the knowledge of the sellers by the customers. Furthermore, online shoppers tend to rely on early adopters before they decide to make a purchase. It is therefore evident that social influence otherwise known as conformity greatly influences the purchasing decision of the buyer. Coming up with systems that will bring the customers together in an attempt to market the products seems necessary gain trust among the customers. However, many sellers have not realized this and deciding to come up with such a resource is a tricky affair. Decision making, therefore, becomes difficult when the seller is not sure of what the buyers specifically need to be motivated to engage in the transaction. Brian and Enrica (2006) describe an interactive model design that can be used for effective decision making to include awareness, understanding, purpose, choices, and the actions to be taken. Because there is no physical contact between the buyers and the seller, it is therefore hard for both parties to know the exact product being advertised. Creating awareness in such an environment becomes impossible due to the complexity of the interaction. The question that many buyers always asked is if the products they see over the Internet are the same products they will be purchasing. The use of photos cannot whatsoever replace the need for an interrogative forum between the buyer and the seller. For a buyer to make an informed decision on a certain item, they need to know the purpose for which they are purchasing the product. While the buyer may need clarification on the usability of a product, the service for clarification is evidently absent. The right decisions on the model, colors, sizes and brands remain a problem for the parties involved in e-commerce. According to the AIDA model, certain elements must be achieved for effective communication to be reached. First, the form in which the product is presented must generate attention to the buyers and more so, it must be a product of interest to the buyers and therefore the potential groups to maximize the number of buyers for that product. The complexity of the user interface must be relevant for the target group in consideration. The AIDA model continues to highlight that receiving a significant number of potential clients is a positive move for the growth of business but major questions still limit the usability of this part of e-commerce. While the seller may be addressing the need for the customer to receive the right information, giving the customer support may still be outlandish. On the other hand, while the buyer may be searching for a certain product or services, the seller may be addressing the need to foster the desire for the potential client to purchase. In all, both the seller and the buyer are struggling to make decisions to sell and to buy respectively but not hitting the right target. Although it is possible to find unlimited amount of data over the Internet, converting the information into decision and then into action at the speed of thought decision success falls back to the bottom line. According to Kepner Tregoe Incorporated, in a recent survey on decision making in the environment of speed and complexity, management is always trying to work hard toward achieving high sales, they are doing so at the expense of decision-making (Brian & Enrica, 2006). One of the major contributors of poor decision making in this industry is the inadequate sharing of information and the failure to involve the right people in decision-making. The survey comprised of 819 employees, more than 400 managers and 337 workers across the United States. Some of the findings of this survey include: 1. More decisions are to be made in less time – more workers are required to make decisions in a relatively short time. More than seventy percent of the interviewees mentioned that they may be called anytime to make decisions while the amount of time to decide has decreased; more decisions are to be reached. This is further confirmed by Wessel (2010, par 6): Both managers and workers are being called upon to make an increasing number of decisions in the same or less time. Sixty-five percent of workers and 77 percent of managers say that they are being called upon to make more decisions in any given workday. At the same time, most also agree that the amount of time they have to make these decisions has either decreased on stayed the same. 2. Missing of opportunities – though there is need to make speedy decisions, most workers and managers believe that they are not in a position to make decisions in time. 3. Losing battle – when the question of if their organizations were making the decisions faster in such environments of speed and complexity, they mentioned that they were moving slowly as compared to the required speed. 4. Human barriers on decision-making – most workers and managers cited that most political organizations and the public is a stumbling block toward achievement of major decision-making. The need for multiple approvals appeared to be one of the major stalemates that contribute to such delays in decision-making. The changing priorities of mankind and preferences also contribute to the slow decision making in the industry and finally the need for the people to agree upfront on what the decision is expected to accomplish. 5. Changes on the sources of information – real and virtual sources were mainly highlighted as the main sources from which the workers and managers find the information for decision-making. Increased use of e-mail has led to a convenient way of communication and increase in the quantity of information. As this may be the case, the workers and the managers have much information to consider when making certain decision over a short time and this becomes almost impossible. Lack of a guideline in decision making – this is commonly referred to as decision-making amnesia. Due to the ruthless change and the complexity of the sector, it therefore is difficult to come up with a system that will ensure a constant way of making decisions without sabotaging the needs of addressing different issues at different times (Laudon, 2007). 6. Other specific factors that contribute to the poor decision making in the e – economy sector exist. However, in as much as these factors may not be applicable, they contribute largely on the decision-making in the industry. Among them is the lack of a vision decision making. Vision helps to define the playing field and the scope of any decision making process. Lack of visionary decision guarantees that the employees work against or away from the initial intention of the decision and that the kind of relationship the company is aiming to build with the customers is not achieved. For instance, when Oracle announced the intention to enter the e-business, the transformation involved the change of the value chain, involving the entire business and the customers. Everything that made the business a success had to be changed so as to suit the needs of the dramatic changes. The then chairperson of the organization mentioned that people need to understand the strategy behind the changes so that in the event of the decision-making, they are made in support of the strategy. This lacks in most e-businesses across the globe (Didier, 2007). Another deadlock that the industry is facing is the ruthless prioritization that the industry hands out in the event of decision-making. The need to prioritize speed over quality cannot be sacrificed by any manager (David, 2009).As mentioned earlier, in e-economy; the major issue that needs to be addressed first is the technical expertise of the population. Even though the e-economy has grown globally, the major segment of the population has not yet experienced its effect due to lack of knowledge or resources mostly in the third world countries. Though this is the case in the ideal world, in the real-worldthis requires that certain trade-offs be made for succeed to be reported. Such decisions may interrupt the whole idea of entering the e-business and even worse lead to disastrous results. The choice between these decisions measures the organizations capability to make viable and workable decisions in such a complex industry (Nissanoff, 2006). A ruthless decision that ignores various important elements may be reached to work in the aim of making decisions that ensure running of the business in this industry. While addressing this issue, the vice president of Corning Optical Fiber stated that, they are faced with the problem of speed versus speed decision-making dilemma. To address this issue finally, the business should always assess the business priority of the decision. This prioritization helps to determine if a business can tolerate any trade off in the speed-quality equation (David, 2006) Lack of a Decision Enabling Culture The pattern of norms, attitudes, values and beliefs that influence the character of performance and the behavior of humankind in any organization are shaped mainly by the senior management. This is influenced greatly by the successive management and modified daily by the priorities and actions by every individual in the organization. The lack of culture to foster the decision making in the digital age decision making and the failure to identify the various attributes that need to be considered for success in this environment contributes greatly to poor decisions. These attributes incorporate speed as a corporate virtue, the willingness to take risks and the passion of sharing information and above all the delegation of making the vital decisions. The myopic decision leaders in these organizations fail to identify the complexity of the business and the speed at which the results are to be achieved. For success to be obtained in this environment, a large segment of the management need to their responsibility in decision making. Several layers of approval exist in most e-businesses today. These must be eliminated speed the decision-making in this sector because as mentioned previously, speed is of the essence. The removal of these layers of approval is difficult thus making the whole process of decision making a dreadful. According to Anthony Ioirio, the vice president of Citigroup Global Technology stated that people who are not allowed to make decisions should be included in decision making (Neogi, 2008). Problem of Redefining of Decision Ownership With the development and the growth of the e-business industry, major sectors have failed to identify the various people that should be mandated with the responsibility of decision-making. The major issue that always comes up is the identification of the persons with relevant information on the customer needs and the preferences. Due to this deadlock, most managers presume the role of decision-making without regard to if they have the vital information for growth of the business. Another problem on decision-making definition is the problem of implementation. The person dealing with such a decision must act fast upon coming up with the decision to beat time limit in the information technology industry. While most organizations may understand this to mean distributing the decision-making responsibility to all the employees, it is necessary to look at the performance environment in which the decision-making plays out. Roger Nail, the vice president of AES, a leading globe independent power producer said that managers and leaders ought to guide their employees as opposed to making decisions for them. Nail in this respect suggests that the absolute power to decide on weighty issues facing the business should be left to the employees (Brian, 2006). Humanized Networks With the replacement of human resources in this the digital age it becomes tricky to establish between the human resource and the digital resource on whose information to use in decision-making. This is a challenge that must be addressed urgently since the need for speed is inevitable while tactful decisions that the digital resource may not provide for may be vital to solve a problem. Excess use of the digital technology in the industry may overlook or pin down the human resources. Although the digital resource is important and accurate in decision making, human resources in the e-business remains the most important resource. The discrimination between the two important resources in the e-economy is vital for ensuring that the right decisions are made while effectively using both resources. Debbie Maurice, the vice president of education in Novell, said in an interview that while she makes eighty percent of her decisions remotely, she is forced to personally visit the customers personally in an attempt to understand his or her needs than rely on the Internet to do all for her. The decision to take such an initiative remains to be done by the major segment of the e-business world (Brian, 2006). Connectivity through Process It is through a process that a decision can be successfully reached. Development steps needs to be taken in an attempt to reach the main decision that makes e-businesses a profitable business. Any process channels decision making in any organization. When all parties in a certain process agree on a given idea, a decision can be formulated easily and toward a common goal. For example, Intel decided to shorten its product development cycle; it achieved this by developing a product life cycle. The key points or milestones are highlighted and clearly marked. This helps the stakeholders in any decision making process to point out the weaknesses and make changes to it (Aldrich, 2008). Use of Information Technology in Decision Making As mentioned above, it is evident that information technology assists in decision making in the harsh environment. Management information system is a system that has gained popularity among the stakeholders using the information technology as a milestone toward achieving functional decision-making. It can therefore be defined as planned system of carrying out data collection and analysis to come up with information required to assist in management. Particularly, this system is used in the development of internal controls within an organization. Among the systems developed to assist in the decision making include: expert systems, decision support system, and executive information systems. Aldrich (2008) concludes that, “These systems help the users not only in the management level but also in simple activities like the deciding on when to outsource or when to produce the products internally”. References Aldrich M. (2008)The archive of the Inventor’s Story, Brighton, University of Brighton Publishers. Brian, S. and Enrica, C. (2006) Challenges and Achievements in E-Business and E-Work. A journal on E-commerce, retrieved from: http://www.heinz.cmu.edu/research/83full.pdf David, K. (2009) Decision Making in the Digital Age. Berlin, Springer Berlin Publisher pp 653. David, A. John, W. (2006) Decision Making In The Digital Age Retrieved from: http://www.scs.leeds.ac.uk/ukais/Newsletters/vol3no4.html#Definition Didier G. Robert F. Alastair, R. (September, 2007) E Business Means Business: A journal on management of E-Business. Lancaster, Lancaster University Press Vol 39 pp 59 Goran, P. and Maria, M. (2005) Virtual Enterprise Integration: Technological And Organizational Perspectives, Hershey, Idea Group Publishing. Kenneth, C. Laudon, C. and Guercio, T. (2007) E-Commerce: Business, Technology, Society (3rd ed) Boston, Addison Wesley Publisher. Miller, R. (2009). The Legal Issues on E-Commerce Today, London, Thomson Learning Publisher. Neogi, P. and Leduc, A. (2008) Internet Connectivity and e-Business Adoption in Canada 6th International Conference on Electronic Commerce Research, Dallas, Government Press. Nissanoff, D. (2006). Change in the way we buy, sell and make transactions, London, The Penguin Press. Wessel D. K. (2010) Decision Making in the Digital Age http://www.information-management.com/issues/20011201/4404-1.html Read More