Making a Decision

Risk Level

Certainty

• info is
  • reliable
  • measureable
  • accurate
• outcome is
  • predictable

Risk

• info is
  • incomplete
  • secondhand
  • possibly biased
• outcome is
  • calculable - budget sheet for conferences
  • probable

Uncertainty

• Info is unknown
• Outcome is unpredictable

Many of our crucial decisions fall into this category, unfortunately!

Umbrella Exercise

Not trusting the weather forecaster, you have a problem as you leave home - will you take your umbrella? [Rue & Byars p62]

best outcome - no umbrella & no rain [umbrella & rain not best - have to carry umbrella]

worst outcome - no umbrella and rain

risk averting - take umbrella regardless - depends on:

your aversion/liking for risk

size of the outcome

Sun Tsu - prepare for the worst, hope for the best!

Forces at work

Other individuals .....................staff, superiors

Groups ................................unions, committees, peer groups

Organisational atmosphere ..........conservative, purpose, structure

Your personality ......................background, experience, biases [unrecognised ones do most damage]

Limitations of knowledge. time, resources & cost [lead to satisficing, not optimal decisions]

Aids to Decision Making

• set and reset priorities - cigarette story
• allocate time accordingly
• obtain as much info as you can
  • background to problem
  • possiblities for future action
  • performance outcome
  • effects on profit
    • max budget figure?
    • minimum sales level?
• proceed slowly and mehodically

Techniques

• Surveys and questionnaires
  • find size,
  • extent,
  • nature of problem; political polls as example
• Matrix to measure responses
  • criteria and
  • scores to assess priorities: see above
• Flow charts, maps and diagrams
  • large, simple, clear; key, titles and scales
  • a whiteboard is an important tool for a manager
• What-if trees
  • similar to flow charts
  • each branch asks and provides solution to one simple question
    • what will happen if we do this ....?
    • on the other hand, what will happen if we do this ...?
  • answer to problem lies in "best" route, fewest problem implications
  • like a road map - what if we go via this highway, or alternatively ...?
• Brainstorming
  • no criticism,
  • no validation,
  • mere recording of ideas - then you can pick out what appears most relevant
• Lateral thinking
  • all possibilities, no matter how irrelevant or impractical they may seem
    • no rejections,
    • no sense of right and wrong;
  • build on ideas;
  • even an "impossible" idea may lead to another thought
    • that wouldn't work, but how about if we changed this or that ...?
  • use right side of brain
    • ie, look at things from a different perspective
    • see the problem as a completely disinterested outsider
    • shut out all your biases, prior training, gut feelings
    • imagine the problem as a 3D1 object and try "turning it around"
      • eg, problem of fixing an uneven floor which can't be cleaned easily
        • does it really need cleaning?
        • does it need cleaning as often as it is at the moment?
        • can we contract it out to a firm with better equipment?
        • can we use the room for another purpose?

Methods of Solving

1. Element of risk and size of outcome 

What are the chances of success or failure?

What will happen if I am correct - what will happen if I am wrong?

Low risk, minimal outcome - decisions made by shop floor

High risk, huge outcome - made by CEO

Will I take the umbrella?

Course of Action	Result	In Business
Don't take & it rains	Look stupid and get wet	Go broke!
Don't take it and it doesn't rain	No worries	Status quo - lucky?
Take it and it doesn't rain	Look stupid but remain dry	Cost of insurance
Take it and it does rain	Laugh at all those without	Outdo competitors

For umbrella, use your imagination & read any business adventure facing you.

2. Non-scientific, or non-logical

Based on feelings, experience, hunches, intuition, consultation.

Most common method of solving problems - why?

Advantages and disadvantages, eg,

Good for programmed problems.

Can leave out vital info, settle for first or easiest solution

What if the risk is high and/or the outcome large?

3. Scientific or logical

This is a recognised and standard method for approaching all problems. Learn it by practising it thoroughly, then, like riding a bike, you may take shortcuts!

Group Decision-Making

• Two heads better than one
  • Sum total of knowledge is greater
    • Greater range of skill &
    • experience
  • Can raise more possibilities -
    • brainstorming &
    • lateral thinking
  • Participation increases acceptance
    • members can communicate effectively
      
• Too many cooks spoil the broth
  • Will take greater risks than each individual member would - anonymity
  • Can be dominated by one member or group
  • Can opt for first possible solution especially if there is a time restraint
    
• Need to know team roles of participants -
  • Belbin or
  • joke committee members styles
    
• Remember who is accountable at the end of the day
  • danger of groupthink
  • a benevolent despot considers other's views but then makes the decision because she/he knows what is best for all concerned!

Limitations on all Methods

• Time - usually lack of
• Resource availablility
• Influences of personal training, biases
• Tendency to select first satisfactory alternative - why ?
• Environmental Factors - those factors outside your control:
  • eg, if boss wants the most expensive because he thinks that is the best
• Company politics

Problem examples

If you want to try some typical problems, you can think about the What-if Tree and work out your own answers to the problem of reducing/enlarging staff numbers and the implications of each step - rather than accepting the points I have made. You could elaborate on those I have given and take each one further.

Another useful exercise is to look at the weighted matrix example and use your own data for a relevant supplier to your business, then allot your own scores and weightings.

listed below are three further examples of problems - they are suitable as group exercises for anyoone who may be presenting a workshop on problem solving. They are written up briefly, can easily be modified to suit your own circumstances - email me if there are any queries.

Catering Case

Liver Transpalnt Case

Go on to Effecting a Plan for Change

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