The management process, not interpreted in a classical sense, is concerned with deciding to do or not to do something, after planning, considering alternatives, monitoring performance, collaborating with others and/or achieving ends with the help of others; it is the process of taking decisions in social systems in the face of problems which may not be self-generated (Checkland, 1993).
It is clear that management is a social science, because it deals with people. In the natural sciences, we try to find a law that can explain a natural phenomenon. However, in social science, it is difficult to make predictive laws, since people behave autonomously according to their values and beliefs. People are purposeful, and whether they follows a norm or not, will depend on their own interest. Therefore, management problems will always involve many interacting different views about the world, and they will often conflict with each other.
When we interact with real-world situations we make judgments about them: are they good or bad, acceptable or unacceptable, permanent or transient? Now, to make any judgment we have to appeal to some criteria or standards, these being the characteristics which define good of bad etc. for us. For example, an etc-warrior would judge any economic activity good only if it met the environmentalists criteria for good, namely environmentally friendly and sustainable. A capitalist would see an economic activity as good if it were profitable (Checkland, 2006). As humans, we always give meaning to anything we encounter. We often have ideas about improving something in the real world we think as problematical. However, problem situations in real life are very complex, because conditions are never static and situations also contain multiple interacting perceptions of reality. Also, problems in real life do not come to us as structured ones, that can be divided into several components as culture, politics, finance, marketing, human resource, and operations problems, rather than they are emergent properties of the interacting components. Decision-making in real life should consider this fact and develop the methodology relevant to it.
However, decision-making is often considered only as choosing the best alternative from several existing alternatives. However, this is unsatisfactory. In order to make a decision, a person in the first place must define what the problems are, and after those problems are clear, the next step is to take the optimal alternative. Accordingly, besides and indeed prior to considering alternative choices, a manager must be able to define problems systematically. In daily life, managers are people who are responsible for making decisions. Their primary task in taking a decision is more emphasizing what to do rather than how to do it. A manager must be able to understand problems using his/her intuition intuition (a holistic/systemic/synthetic process) and decide ‘what to do’. Research interest in decision-making now focuses on real life situations, involving intuition and taking into consideration the many parties who interact with each other. In such situations, parties behave in a unique behavior, based on internal factors such as culture, experience, motivation, and interest. Furthermore these situations may involve conflict and negotiation besides the optimization of problem solving. This kind of research is very useful for Indonesian managers because Indonesia is a unique multicultural country. Situations often involve many conflicting parties and are very dynamic, so that it is difficult for managers in Indonesia to begin with a blueprint of what to do.
Body of Knowledge
- Normative Decision Making Theories (Theory of Choice, Utility Theory Expected and Subjective Expected)
- Behavioral decision making theories (Cognitive Psychology, Learning, Emotion, Heuristics)
- Systems Modeling for Policy Development (System Dynamics, Agent-based Simulation, Social Network Analysis, Discrete Event Simulation)
- Conflict Resolution & Negotiation (Rational Negotiation, Game Theory, Behavioral Game Theory, Drama Theory, Graph Method for Conflict Resolution, Group Formation)
- Operations Research (Mathematical Modeling, Linear Programming, Optimization)
- Statistic and Quantitative Analysis (Multivariate Analysis, Time-series Analysis)
- Service Science (Service System, Value Co-creation)
1. Strategic Decision Making
In real situations you dont act in a vacuum. Instead, you are surrounded by active decision makers whose choices interact with yours. This interaction has an important effect on your thinking and actions. The idea of strategic decision making can be explained by comparing kicking a soccer ball and kicking a dog that growls menacingly and seems ready to attack. Strategic decision making is represented by kicking a dog that growls menacingly and seems ready to attack rather than kicking a soccer ball, as follows:
- Soccer: the result can be predicted from calculating factors such as the force and angle of the kick, wind direction and speed, weight of the ball, and soon.
- Dog: The kicker interacts with, and receives feedback from, another living thing. The result depends not only on the initiator, but also on the animal, which might bite, flee, crouch submissively, or even ignore the kick.
The objective of this research is to develop and apply methodologies in order to make better decision in an interactive situation. Research areas in this field are:
a. Negotiation Analysis
The objective of this research is to study the dynamics of negotiation based on interaction among participants, who have different interests and actions based on their emotion and personal calculations. The research questions are:
- How may negotiations result in collaboration? What scenarios of a negotiation process in a management problem will produce collaboration? This research produces several alternatives to parties in conflict to achieve feasible collaboration.
- What is the role of emotion and culture in negotiation? There are positive and negative emotions in negotiation, and parties highly influenced by their cultural preferences tend to use negative or positive emotional responses to a situation. When do we use positive or negative emotions effectively?
b. Participative approach in Decision-making
In plural situations such as in Indonesia, it is necessary to produce a concept that accommodates different views. The objective of this action research is to obtain the participation of involve parties in an intervention to improve the situation. Managers are constantly dealing with the different views of participants, each of whom has different ideas about what to do. The research questions are:
- What is the appropriate style of participative decision-making in contemporary Indonesia?
- How can we devise proposals accommodating different views in solving management problems in Indonesia?
2. Problem Structuring Methodologies
Managers frequently face a complex situations, which are dynamic and involve different world views. In dealing with complex situations, managers need other approaches than the purely analytic. A problematic situation may have many different facets requiring a variety of different methodological approaches. Thus a synthesis or systemic approach rather than simply a linear or analytical one is to be preferred. Consequently managers need to understand emergent properties of interacting issues. This research will study how managers who use a combination of analytical and intuitive skills their intuition are better able to understand the complexity of the daily problems they face. The research questions to be addressed are:
In what situations will intuitive decision making be fruitful?
Is there any guidance which can be given to managers in relation to thinking intuitively in the decision-making process?
3. Agent-based Simulation in Social Systems Science
Management problems often involve interactive situations, that are situations when many parties are related and depend on each other. In such situations, results will depend on the action taken by each party. Consequently, interaction is a non-linear phenomenon, because it is of a bottom-up character, depending on the interests and behavior of every party. The uncertainty arising from not knowing how an agents actions will be received and responded to by another agent and what the outcome of action and reaction will be means that predictions cannot be made on the basis of one individual act. Agent-based simulation is one approach to understanding such situations.
Agent-based simulation combines two existing scientific approaches, i.e., inductive and deductive. In the deductive approach, in the first phase there is a theorem and one predicts consequences from it mathematically. On the other hand, inductive approach comes from looking at individual data and drawing a common conclusion from them. An agent-based approach uses a deductive approach based on assumptions about agents behavior, but in predicting the consequence does not apply mathematics because the result are non-linear. An inductive approach is used by agent-based simulations for drawing conclusion from simulation results.
The advantage of using agent based simulation compared with other mathematical and statistical approaches is that it can be used for complex situations, bottom-up and interactive situations, when mathematic model cannot be used. And if compared with a statistical approach, it can be used for simulating every possibility in relation to the agents behavior, and it is not obliged to have historical data about problems that occur.
Chairperson: Prof. Dr. Utomo Sarjono Putro, M.Eng
Arfenia Nita, ST., MMgt (Fin)
Khrisna Ariyanto, ST., MT., M.Eng., Ph.D
Prof. Dr. Ir. Kuntoro Mangkusubroto, MSIE., MSCE.
Lidia Mayangsari, S.Si., MSM., M.Eng
Manahan Siallagan, S.Si, MT, M.Sc, Dr. Eng