ChoosingChoosing

Basic Decision Making Model

1. Recognize a problem or dm situation

2. Frame the problem/decision (objectives, constraints, factors, priorities)

3. Generate alternatives

4. Evaluate & choose

5. Implement & evaluate results (iterate)

6. Stabilize & learn from

ChoosingChoosing

Important to have a good frame first, including objectives and constraints

Good to have a rich range of creative Good to have a rich range of creative alternativesalternatives

Very important to minimize judgmental biases & mental locks, both in generating alternatives & in evaluating them

Choosing (cont.)Choosing (cont.)

Central focus on how well does an alternative satisfy the objective(s) and other decision criteria

Always have constraints, including:– Cognitive limitations– Incomplete or inaccurate information– Uncertainties in outcomes & future events– Time & cost constraints

Aim for a good decision, not a perfect one– Meets objectives (full CRIP)– Doesn’t create new problems– Within time and other constraints– Consistent with values

Be wary of certainty

Use good critical thinking & creativity

Separate facts from assumptions & inferences

Recognize & reduce biases & blocks/locks

Need to consider practicality, implementability, stakeholders

Can be as simple as identifying pluses & minuses, then assessing (not just adding)

Sometimes, “satisficing” is OK

Sometimes, models and computer aids are appropriate

Sometimes, intuitive decisions work (but beware of “fire, ready, aim” DM)

Some of Many Methods to DecideSome of Many Methods to Decide

Gut feel, emotions, intuition

Two-column pros & cons list

Ben Franklin’s two-column list

Decision matrix– Brief statements– 3-level qualitative ratings– Expanded qualitative ratings

Decision matrix with variable criteria weights

Decision tree

Managing Factors Affecting Managing Factors Affecting

Decision Making & CreativityDecision Making & Creativity

Some Factors Influencing Decisions

Type of decision

Urgency, pressure, constraints

Attributes of environment

– Uncertainty, risk

– Complexity, ambiguity

– Conflict

Decision-maker characteristics

– Wants (biological factors) vs. "Shoulds" (values)

– Judgmental biases

Selective perception

Impression effects

Framing effects

Escalation of commitment

Categorization effects

– Creativity

– Mental blocks

Who else is involved

EthicsEthics

VisualizationVisualization

VisualizationVisualizationSelf-fulfilling propheciesSelf-fulfilling prophecies

Pygmalion effect, plus or minusPygmalion effect, plus or minus

We tend to create negative imagesWe tend to create negative images

Replace with intentional, positive imagesReplace with intentional, positive images

Can help in many ways, e.g.:Can help in many ways, e.g.:– Public speakingPublic speaking– Stress reductionStress reduction

– Various aspects of decision makingVarious aspects of decision making– Difficult interpersonal interactionsDifficult interpersonal interactions– Health…Health…

Argue for your limitations and, sure Argue for your limitations and, sure enough, they’re yours.enough, they’re yours.

Richard BachRichard Bach

The greatest discovery of my generation is The greatest discovery of my generation is that human beings, by changing the inner that human beings, by changing the inner attitudes of their minds, can change the attitudes of their minds, can change the outer aspects of their lives.outer aspects of their lives.

William JamesWilliam James

Visualization ExerciseVisualization Exercise

Identify a specific future situation in which Identify a specific future situation in which you want to perform effectivelyyou want to perform effectively

Get very comfortable and relaxedGet very comfortable and relaxed

Visualize moving yourself through space and Visualize moving yourself through space and time to be in that future situationtime to be in that future situation

With you in that situation performing With you in that situation performing effectively and the situation playing out effectively and the situation playing out positivelypositively– Experience itExperience it, not observe or think about it, not observe or think about it– With input to all senses: sight, hear, smell, feel, tasteWith input to all senses: sight, hear, smell, feel, taste

Next TimeNext Time

Introduction plus first two of the ten mental Introduction plus first two of the ten mental locks in the von Oech booklocks in the von Oech book

As you read each chapter:As you read each chapter:

– Do at least some of the exercisesDo at least some of the exercises

– Think about the questions and suggestionsThink about the questions and suggestions

– Identify and highlight things you find importantIdentify and highlight things you find important

– Think of possible applications for youThink of possible applications for you

Engage with the readingsEngage with the readings

What seems important here, what do I like, What seems important here, what do I like, agree with, find useful? Why?agree with, find useful? Why?

– Highlight, make margin notesHighlight, make margin notes

How might I apply one or more concepts in my How might I apply one or more concepts in my life – now and in the future?life – now and in the future?

Are there things I disagree with and/or would Are there things I disagree with and/or would modify or expand on? Why? How?modify or expand on? Why? How?

It is important to create your own study notes or It is important to create your own study notes or concept mapconcept map

Judgmental BiasesJudgmental Biases

Selective perceptionSelective perception

Impression effectsImpression effects

Framing & presentation effectsFraming & presentation effects

Escalation of commitmentEscalation of commitment

Categorization effectsCategorization effects

Judgmental Biases -1

Selective perception

– What we expect

– What we want to be

– Alignment

– Advocacy vs. inquiry

– Good questions at end of Notes 4.1

Judgmental Biases -2

Impression effects

– Halo effects

– Primacy and recency effects

Is primacy or recency more powerful?

Choose primacy (present first) if decision is to be at least a few days after both presentations

Choose recency (present last) if there is to be a gap between presentations of the two sides & decision follows shortly after the last presentation

Moot if presentations of two sides & the decision are together (although individual listeners can vary in their ways of taking in information)

Judgmental Biases - 3

Framing and presentation effectsFraming and presentation effects

– Selecting & emphasizing certain aspects, while excluding or minimizing others

– Reread web piece on framing

– Recall framing exercises and case

– Can include anchoring

Some helps to reduce judgmental biases Some helps to reduce judgmental biases from ffrom framing effects:

– Frame problems in terms of objectives

– Don't automatically accept a first frame (others’ or yours)

– Play devil's advocate

– Consider events both before & after what readily comes to mind

– Consider multiple possibilities

– Reframe in multiple ways

Isn’t It FunnyIsn’t It Funny

When the other fellow takes a long time to When the other fellow takes a long time to do something, he’s slow, but when I take a do something, he’s slow, but when I take a long time to do something, I’m thorough.long time to do something, I’m thorough.

When the other fellow doesn’t do it, he’s When the other fellow doesn’t do it, he’s too lazy, but when I don’t do it, I’m too too lazy, but when I don’t do it, I’m too busy.busy.

Judgmental Biases - 4

Escalation of commitment

– Examples: gambling, Iraq war, USA and Russia arms race, employee I hired

– Some reasons we continue and escalate:

Avoid acknowledging that initial decision was a mistake

Avoid loss of "face" & political influence

More intense when we feel personally responsible for initial decision

Escalation of Commitment:

Some suggestions:

– Set limits in advance and stick to them

– Share personal responsibility for original decision

– Do not include unrecoverable past costs in evaluating future costs

Judgmental Biases - 5

Categorization– Representativeness

Stereotyping

Perceive info as typical of category

– Misperceive random event as a pattern– Single vs multiple events– Regression to the mean– Availability bias

Suggestion: distinguish data from inferences, assumptions, and conclusions

Judgmental BiasesJudgmental Biases

Selective perceptionSelective perception

Impression effectsImpression effects

Framing & presentation effectsFraming & presentation effects

Escalation of commitmentEscalation of commitment

Categorization effectsCategorization effects

Suggestions to Reduce All Five Judgmental Biases

Consider different perspectives

Consider multiple alternatives

Strive for objectivity

Use inquiry

Use others to help

Separate facts from assumptions, Separate facts from assumptions, inferences, & attributionsinferences, & attributions

Examine implicit assumptions

ImplementationImplementation

Implementation

Vital, often neglected

Need to know where you are going

– “If you don’t know where you’re going, you might wind up somewhere else!”

But you have to work with the situation as your implementation proceeds

– “Plans get you into things, but you got to work your way out.”

Any implementation plan needs to answer:

– What?

– How?

– Who?

– When?

– Where?

– Why (are we doing it this way)?

Consider, when identifying barriers & action steps:

– Resources

– Support

– Reward systems

– Timing

– Monitoring & controlling

– Culture

Stakeholder Analysis

Identify change/topic for analysis

Identify major stakeholders for this topic

Determine their degree of support or opposition to the action or change

Assess the balance of support

If not sufficient, work on changing to a more favorable balance of support

– Decrease larger opposing forces

– Increase supporting forces

Stakeholder ExerciseStakeholder Exercise

TBDTBD

Case 4, Implementation DisasterCase 4, Implementation DisasterBrief summary?Brief summary?Questions at end:Questions at end:

1.1. Critique John's implementation.Critique John's implementation.

2.2. What would have been a more appropriate procedure What would have been a more appropriate procedure for John to follow before, during, and after calling the 25 for John to follow before, during, and after calling the 25 employees together for quality circle interaction?employees together for quality circle interaction?

3.3. Discuss the advantages and disadvantages of Discuss the advantages and disadvantages of continuing to use the quality circle technique in the continuing to use the quality circle technique in the Fairlee plant, given the events that have already Fairlee plant, given the events that have already occurred.occurred.

4.4. Recommend a course of action for John Stevens now Recommend a course of action for John Stevens now that his quality circle experiment is in trouble. Explain that his quality circle experiment is in trouble. Explain your reasoning.your reasoning.

Next TimeNext Time

Mental locks 6, 7, 8 (read Oech sections)Mental locks 6, 7, 8 (read Oech sections)

Perceptions of risk (see Notes on DM Perceptions of risk (see Notes on DM Section 5)Section 5)

Perceptions of Risk Affect Perceptions of Risk Affect Decision MakingDecision Making

ChoicesChoicesa. Sure gain of $240a. Sure gain of $240

52, 59% 52, 59% (this class, last year)(this class, last year)

b. 25% gain $1,000; 75% zerob. 25% gain $1,000; 75% zero 49, 41%49, 41%

c. Sure loss of $750c. Sure loss of $750 25, 18%25, 18%

d. 75% lose $1,000; 25% lose nothingd. 75% lose $1,000; 25% lose nothing 75, 82%75, 82%

However, framing had a a big effectHowever, framing had a a big effect

a. Sure gain of $240a. Sure gain of $240

52, 59% picked this52, 59% picked this

+ d. 75% lose $1,000; 25% lose nothing+ d. 75% lose $1,000; 25% lose nothing

75, 75, 82%82%

= e. 25% chance to win $240 & 75% = e. 25% chance to win $240 & 75% chance to lose $760chance to lose $760

0, 3%0, 3%

More Framing EffectsMore Framing Effects

b. 25% chance to gain $1,000, 75% b. 25% chance to gain $1,000, 75% chance to gain nothingchance to gain nothing

44, 41% picked this44, 41% picked this

+ c. sure loss of $750+ c. sure loss of $750

25, 25, 18%18%

= f. 25% chance to win $250 & 75% = f. 25% chance to win $250 & 75% chance to lose $750chance to lose $750

100, 97%100, 97%

Perception of risk is function of:Perception of risk is function of:

UncertaintyUncertainty

Potential gains and lossesPotential gains and losses

Framing of informationFraming of information

Personal involvementPersonal involvement

Personal characteristicsPersonal characteristics

Uncertainty– About potential outcomes, probabilities,

and/or controllability– More uncertainty = more risk– We try to control or ignore it

Potential gains & losses– Prefer positive outcomes, overestimate them– Seek risk when facing guaranteed losses– Avoid risk with guaranteed gain

Information framing

– More value on possibility of avoiding loss over accepting a certain loss

Personal involvement (relevance, responsibility, consequences)

– Take greater risks with less personal impact

Personal characteristics vary

– Risk-taking propensity

– Beliefs about control & competence

PARADIGMSPARADIGMS

Some Historical Paradigms

The earth is flat

Earth is the center of the solar system

Night vapors cause illness

A bloody apron is a sign of a good doctor

Only property owners may vote

Women have no right to...

Race X is inferior because...

Time is absolute

Paradigms

To be successful in the future, an organization needs:– Excellence

– Innovation

– Anticipation

Organizations must stay in an advantageous stance relative to paradigm shifts

Paradigm shifters are almost always outsiders

Being a paradigm pioneer works

Need to shape your future

What is impossible to do right now, but, if you could do it, would fundamentally change your business?

When a paradigm shifts, everyone goes back to zero.

"The real voyage of discovery consists not in seeking new lands but in seeing with new eyes." - Proust

We need to avoid paradigm paralysis to do effective problem

solving or decision making

Make this useful for youMake this useful for you

Identify from this part of the course at least Identify from this part of the course at least two of the suggestions and/or blocks to two of the suggestions and/or blocks to effective decision making – that you want effective decision making – that you want to work onto work on

For each, write down at least two specific For each, write down at least two specific things you can do to apply the suggestion things you can do to apply the suggestion or reduce the block in your work and lifeor reduce the block in your work and life

ActAct