Sunteți pe pagina 1din 21

Module

1 The Power of
Decisions

M. Akbar Bhatti
Decision Making
• Decision-making is about deliberately opting
for one choice from two or more, proactively to
optimise a situation or outcome and not let it
happen by default.
• The process involves getting from an identified
need to a decision that addresses the need and
the real issues.
• At the same time it is necessary to minimise the
risks of the issues and the consequences of the
decision.

1–2
What are Hard Decisions?
• A decision involving characteristics when:
• The situation is uncertain - i.e. there is a greater perceived
risk
• The situation is inherently complex with many different
issues - e.g. the siting of a new airport is immensely complex,
especially in these environmentally-aware times, because of
the factors that must be taken into consideration (flight paths,
air traffic control, slots, residents, communications links, etc.)
• There are several objectives but one or more is blocked
and compromises or trade-offs are needed.
• Different perspectives can lead to different conclusions -
especially true where two or more people are involved in
making a decision; they may disagree about the assumptions,
probable outcomes or, even, the decision.
1–3
DM: The Right Approach
• A robust, consistent approach to decision-making, together with the
required supporting analysis, will:
• Deal with the complexities by providing a structure within which the issues
can be organised (human beings have real problems dealing with five or
more variables)
• Identify uncertainty and then present this in a structured and helpful
manner
• Deal with a multiplicity of objectives and trade-offs
• Analyse different perspectives and facilitate logical presentation, in order to
obtain consensus/decisions, especially where several opinions are
present
• Encourage flexibility to change as circumstances alter and which may
invalidate or fundamentally alter the appropriateness of the decision
• Provide an ‘audit trail’ demonstrating how the decision was reached, what
was considered, who was involved, etc. (very useful when things go wrong
and ‘regret’ is considered)

1–4
DM: Errors
• Research has identified a few very common errors to watch out for
when making decisions, in particular:
• Haste - not to be confused with speed. A decision is made before
the facts are available or without taking the facts into account.
Decide in haste - regret at leisure.
• Narrow perspective - often results in addressing the wrong issue
because the real issue has been pre-judged or confined within a
framework of analysis that is inappropriate.
• Over-confidence - either in the decision itself or, more commonly,
in the understanding of the issue and facts.
• Rules-of-thumb - relying on rough frameworks or shortcuts for
important decisions instead of carrying out adequate analysis.
• Filtering - screening out unpleasant findings or those that do not
support preconceived notions or the decision you want to make.
• Juggling - lack of analytical framework and, therefore, trying to
manage many variables or pieces of information in your head.
1–5
Decision Making Steps

1–6
DM : Tools & Techniques
• While the basic principles might be the same, there are dozens of different
techniques and tools that can be used when trying to make a decision.
• Decision Matrix: A decision matrix is used to evaluate all the options of a
decision. When using the matrix, create a table with all of the options in the
first column and all of the factors that affect the decision in the first row.
Users then score each option and weigh which factors are of more
importance. A final score is then tallied to reveal which option is the best.
• T-Chart: This chart is used when weighing the pros and cons of the
options. It ensures that all the positives and negatives are taken into
consideration when making a decision.
• Decision Tree: This is a graph or model that involves contemplating each
option and the outcomes of each. Statistical analysis is also conducted
with this technique.
• Multivoting: This is used when multiple people are involved in making a
decision. It helps whittle down a large list options to a smaller one to the
eventual final decision

1–7
DM : Tools & Techniques
• Pareto Analysis: This is a technique used when a large number of
decisions need to be made. This helps in prioritizing which ones should
be made first by determining which decisions will have the greatest
overall impact.
• Cost-benefit Analysis: This technique is used when weighing the
financial ramifications of each possible alternative as a way to come to
a final decision that makes the most sense from an economic
perspective.
• Conjoint Analysis: This method enables businesses to mathematically
analyse consumer or client behaviour and make decisions based on
real insights from the data.
• SWOT Analysis: SWOT stands for strengths, weaknesses,
opportunities and threats, which is exactly what this planning tool
assesses.
• PEST Analysis: An acronym for political, economic, social and
technological, PEST can improve decision-making and timing by
analysing external factors. This method considers present trends to
1–8
help predict the future ones
DM: Six Thinking Hats

• Each virtual thinking hat is a different colour, representing a


different way of looking at the problem, situation, or decision.
De Bono’s six thinking hats are as follows:
• White Hat: Looks at the data and information available
• Red Hat: Uses intuition, gut reaction, and emotion
• Black hat: Acts as the devil’s advocate, using caution and
defensive thinking
• Yellow Hat: Approaches with optimism and positive thinking
• Green Hat: Develops creative solutions in a free-wheeling way
• Blue Hat: Manages the overall process, helps the other hats
avoid switching views, and includes outside stakeholders in the
discussion
• Purple Hat: Include the ethical implications of the issue.
1–9
Decision Making: Six Thinking Hats

1–10
Decision Quality
• Our life trajectories are driven by our decisions: the
schools we attend, the careers we pursue, the work
projects we take on, the investments we make, the
people we hire, and the friends and acquaintances with
whom we keep company.
• Small and large, trivial and transformative, decisions
shape our lives and organisations for better or worse.
• Our brains are actually not wired to make good decisions
naturally, especially when decision situations are unique
and consequences uncertain.
• We are wired to “satisfice,” to settle for good enough—
and there is a big gap between satisficing and making
the best choices we can make.
1–11
Decision Quality

• Humans have many biases and dysfunctional habits that


cause our decisions to fall far short of decision quality.
• To name a few: we rely on advocacy, fail to consider
alternatives, neglect uncertainty, oversimplify, jump to
conclusions, seek confirming evidence to bolster our
position, dismiss disconfirming evidence, confuse
agreement with achieving a quality decision, and the list
goes on.
• When businesses use DQ to make quality decisions, the
resulting best strategy is frequently twice as valuable as
the good-enough strategy that would have been chosen
otherwise.

1–12
Decision Quality

1–13
Decision Quality

1–14
DQ: A Framework for Better Decisions
• Decision Quality provides the defining framework for a
good decision. It is an extension of Decision Analysis
(DA)—a set of concepts and tools that produce clarity
about the best choice in an uncertain and dynamic
environment. DQ not only uses DA to get to the “right”
answer, but also engages the most important parties in the
decision process to achieve alignment and commitment to
action.
• A Decision Frame is the group's circumscribed view of a
decision problem. It incorporates only that which is
necessary to take a decision with clarity of action.
Evaluation teams create the decision frame; however, it will
be finalised by a decision board or key decision makers.
Typically decision frames evolve over time.
1–15
DQ: A Framework for Better Decisions
• DQ Chain
• All high-quality decisions meet six requirements:
• Setting the right frame;
• Considering alternatives;
• Gathering meaningful
data;
• Clarifying values and
tradeoffs;
• Using logical reasoning;
• And Committing to action.

1–16
DQ: A Framework for Better Decisions

1–17
Decision Skills Can Be Learned
• Yes!
• Among business and public sector leaders—people
responsible for making the big, consequential choices—few
receive formal training in decision making.
• Business students are instructed in accounting, finance,
statistics, marketing, and management, but few MBA
programmes offer rigorous courses in decision making.
• There is an assumption that smart people will pick up good
decision-making skills on the job or through case studies, but
learning on the job, through trial and error, can be a long and
painful process, punctuated by costly mistakes.
• Even learning from other people’s mistakes does not measure
up to the benefits of explicit training in the art and science of
decision making.
1–18
Decisions versus Outcomes

• Because we have to make decisions in the face


of uncertainty, we have to distinguish between
good decisions and good outcomes.
• Decisions must be judged according to what the
decision maker considers when making the
decision, not on the basis of what happens
afterward.
• We must be able to determine the quality of a
decision at the time we make it, not by judging
its outcome. Hindsight is too late.

1–19
Toyota Zero Defects Decision
• When Toyota made the decision to put quality first, the move was
not as obvious as it might seem today. The company was struggling.
When it started shipping its first cars to the American market in the
late 1950s, they were met with derision for their shoddy quality. In
the midst of this crisis, president Taizo Ishida decided to do one of
the hardest things for any company—especially a Japanese one—to
do. Toyota adopted the ideas of an outsider—in this case the quality
guru W. Edwards Deming—and turned its entire organization upside
down in order to improve itself. Today the company’s quality system,
known as the Toyota Way, has been adopted by manufacturers and,
yes, even service firms around the world. The Toyota Way, for
example, helped the company design cars faster than its
competitors, proving that the process was just as important for “brain
work” as it was “back work.” Executing this process, however, is a
lot harder than it looks, and even Toyota in recent years has
struggled with quality problems. By reapplying the Toyota Way with
renewed vigour, the carmaker is now getting back on track.
1–20
DQ: What is a Good Decision?

1–21

S-ar putea să vă placă și