Decision Making

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					2010              DECISION MAKING

                 Tips and tools for making great decisions




  © Copyright 2010 Docstoc Inc.                              1
Table of Contents
Introduction ..................................................................................................................................... 3
Decision making defined ................................................................................................................ 3
Decision making steps and tools ..................................................................................................... 4
   1. Define the problem or issue ................................................................................................. 4
   2. Gather information ............................................................................................................... 5
   3. Brainstorm............................................................................................................................ 5
   4. Understand the implications ................................................................................................ 5
   5. Select the best option ........................................................................................................... 6
Special decision-making tools ........................................................................................................ 6
   1. Pareto Analysis .................................................................................................................... 6
   2. Pro-Con List ......................................................................................................................... 8
   3. Cost Benefit ......................................................................................................................... 9
   4. Six Thinking Hats .............................................................................................................. 10
Make the decision ......................................................................................................................... 11
Decisions, decisions, decisions ..................................................................................................... 13




© Copyright 2010 Docstoc Inc.                                                                                                      2
Introduction
Some decisions are pretty easy: Should I make a fresh pot of coffee this morning? Should I
return my friend’s call? Should I set my alarm clock so that I don’t sleep through my first
meeting?


Some decisions, however, are anything but easy: Should our company invest in this multi-
million dollar software upgrade? Should I use my summer vacation to travel, work on the house,
or volunteer? Should I quit my job and start a freelance business?


Regardless, everyone is required to make decisions all the time, every day whether the decisions
are conscious or simply automatic choices.


Manager and leaders, however, are often required to make even more decisions, decisions that
can have a heady combination of financial, business, emotional, and personal consequences.
These decisions, then, can’t be haphazard or by chance but require logic, structure, and
discipline.


Using some thoughtful decision-making tips and tools can make the decision-making process
both a little easier and more streamlined, while also leading to more satisfying results and
outcomes.




Decision making defined
Decision making can be defined as the outcome of some cognitive process that leads to the
selection of some course of action among several alternatives by Wikipedia. Likewise, decision
making can also be defined as the study of identifying and then choosing alternatives based on
the decision maker’s values and/or preferences or as the process of reducing uncertainty so as to




© Copyright 2010 Docstoc Inc.                                                           3
make a reasonable choice. One thing all definitions have in common is the ideas of making some
choice.


Some decisions are simple yes or no decisions – should I take a walk or should we go out to eat
tonight?


Some decisions are more complex and include a list of possibilities and alternatives – which
advertising agency should our company work with to help us promote our brand- new products
or which new car should we purchase? These decisions, of course, require more care, time, and
thought.


Regardless, some people struggle with decision making (while others can be overly confident
and boldly make decisions without enough information or consideration) due to numerous
factors including fear (of failure, reprimand, change, and so on), procrastination, lack of
experience, lack of information, or general lack of clarity in regards to the decision and its
importance.




Decision making steps and tools
If your decision is even somewhat complex, it will help to use a logical framework to examine
your possibilities. You can use the following five steps to get started before you make any big
decision:



   1. Define the problem or issue

   Before you do anything, you should be perfectly clear about the particular problem or issue
   you’re trying to make a decision about. Clarify the issue and determine how time-sensitive it
   is.




© Copyright 2010 Docstoc Inc.                                                            4
   Ask questions such as: Where is this issue happening? How is it happening? Who is
   involved? What is my role in the problem? What are the potential causes of this issue or
   problem?


   Then, actually write the issue down in a few sentences so that you can refer back to this
   concrete definition as you move along in making a decision.



   2. Gather information

   Obtain as much information, from several diverse sources, as possible; the more informed
   you are, the better equipped you’ll be to make any decision. Information can take the form of
   surveys, qualitative interviews, reports, analysis, financial spreadsheets, informal voting, and
   more.



   3. Brainstorm

   This step is really important and can also be a lot of fun – you want to generate as many
   possible ideas and solution as possible. Remember that during brainstorming there are no
   wrong answers or suggestions – write everything down and you can sift through it later.


   Also, try to involve people or businesses with different perspectives so you get a solid variety
   of vantage points and ideas.



   4. Understand the implications

   Any big decision comes with a set of potential implications, at work, at home, or the in the
   community. This may include a pro and con list. Consider all of these possibilities before you
   move forward.




© Copyright 2010 Docstoc Inc.                                                           5
    5. Select the best option

    After you’ve taken the time and reviewed all of the information and alternatives at hand, take
    some time (using some of the tools provided below) to make a thoughtful and respectful
    decision. Then you can put all of that work into action as you start implementing your
    decision.




Special decision-making tools
While your instincts should always count for something, most large decisions will benefit from
some special decision-making tools that can provide analysis and information to make the
decision a little more clear.


The following four tools are recognized for being reliable and informative ways to help people
and groups make decisions:



    1. Pareto Analysis

    This simple decision-making tool that can help you find the changes that will lead to the
    biggest benefits is also known as the 80/20 rule – the idea that you can generate 80 percent of
    the advantage of the entire job by just doing 20 percent of the work.


    To use the tool, create a list of the decision or changes you’re considering making; then,
    simply score the items (scoring is up to you – you can score based on profitability, complaint
    reduction, personal satisfaction, etc). The first issue you’ll focus on is the one with the
    highest score – the one that will provide the biggest benefit if you can solve it. The items
    with the lowest score might not even be worth your time.


    Here’s an example: A new business owner is struggling with customer satisfaction issues.


© Copyright 2010 Docstoc Inc.                                                             6
   Customers complain that:


   a) Some of the store’s employees aren’t especially friendly or helpful.


   b) The store doesn’t have enough hours.


   c) Online orders take too long to arrive.


   d) Merchandise is priced inconsistently.


   e) They have to walk too far from the parking lot to the store’s entrance.


   f) The store’s background music is sometimes too loud.


   The business owner, then, groups and scores the items as follows:


         Employee issues: items a, b, and c: 22 complaints


         Physical store issues: items b, e, f: 14 complaints


         Organization and inconsistency issues: items a, c, d: 7 complaints


   The business owner can then determine that addressing employee issues should be the top
   priority, followed by some issues and decisions related directly to the store’s layout and
   location. Some of the other issues may be worth addressing down the road and some may be
   solved by handling the more immediate issues.




© Copyright 2010 Docstoc Inc.                                                          7
   2. Pro-Con List

   Another simple option is a pro and con list – a list of potential advantages and disadvantages
   related to the decision at hand. As a rule, this tool is better for more simple and
   straightforward decision.


   On either a sheet of paper or on your computer, write down all the options for the issue
   you’re deciding on and then start to create a pro and con list for each of them. Once the list is
   completed, you can compare the advantages and disadvantages for each choice. Perhaps it
   will be as simple as adding up the items in the pro column and the items in the con column,
   but perhaps that won’t be sufficient.


   If you need more assistance, you can also try making a weighted pro and con list, still listing
   the pros and cons but giving each item a score from 1-5 or 1-10 to provide more detailed
   information.


   For example:



                          Should our family move from Seattle to Paris?
            Pros                   Score                  Cons                           Score
   New culture             5                      Costly                       5
   Opportunities for       3                      Infrequent visits to         4
   travel                                         family
   Better job              3                      Language barrier             3
   Family togetherness     4
   Total 4 pros            15                     Total 3 cons                 12


   Again, this type of list can give you some concrete concepts and pluses and minuses worth
   examining closer.




© Copyright 2010 Docstoc Inc.                                                             8
   3. Cost Benefit

   A cost/benefit analysis is another relatively simple and popular decision-making method that
   can help you determine if your potential solution is worth the time and money you’ll invest in
   it. Essentially, you add up the value of all of the benefits of your solution and then subtract
   any costs associated with it.


   Costs can either be one-time costs or ongoing costs while benefits are generally more
   ongoing, so you’ll need to calculate the payback period (the time it takes for the benefits to
   repay the costs) in your equation.


   For instance, if you’re going to implement new technology for your company’s sales team,
   you would add up the direct costs of the actual technology as well as IT costs for installation,
   training costs, and so on.


   From that, you could compute the work hours and money saved due to new technology-
   related efficiencies and then determines if the new solution made financial sense. You can
   also get creative and try to add in factors such as sales team compliance, number of expected
   calls to the help desk.


   If you do the math and learn that the payback period for the new sales software would be
   about five months, you might decide that this makes great fiscal sense and move forward. If,
   however, the payback period is going to be three to four years, you might want to reconsider,
   especially since technology changes and moves so quickly that you might already be
   considering new software for your sales team in a couple years.


   Take a careful look at your cost/benefit analysis before you make a final decision.




© Copyright 2010 Docstoc Inc.                                                            9
   4. Six Thinking Hats

   A tool developed by Edward de Bono in his book “6 Thinking Hats” this unique technique
   can give you a variety of perspectives before you make a big decision; it helps you think out
   of the box and out of your traditional patterns. The Six Thinking Hats approach asks you to
   view an issue from six different viewpoints that include both logic and emotion, positivity
   and negativity, and more.


   Each of the hats encourages a different approach to decision making:


         White Hat
          When you put on the white hat, you focus on data and statistics. Carefully review all
          the information you have at hand, look for any holes or concerns, analyze past trends,
          and see how that information can help you move forward with a decision.


         Red Hat
          Next, try on the red hat to use both intuition and emotion to help you make your
          decision. Try to use empathy to understand how others would look at the issue, make
          a good decision, and potentially react to your decision. This can be a stretch for those
          accustomed to pure logic and numbers.


         Black Hat
          When you wear this hat, you should look at things negatively and defensively. What
          approaches might not work and why? What are the weak points in your possible
          decision? This hat will help you eliminate weaknesses and develop contingency plans
          as well. It can also make you more resilient and better prepared for challenges.


         Yellow Hat
          The yellow hat, then, encourages both positivity and optimism. Put it on to look at the
          myriad of possible benefits from your decision in addition to the associated



© Copyright 2010 Docstoc Inc.                                                          10
           opportunities that will arise. Put this hat on when you’re struggling with a team
           decision or are surrounded by many who seem to permanently wear the black hats.


          Green Hat
           Enjoy putting the green hat on because you’ll get to think creativity! Brainstorm,
           move to a new setting, try thinking of 10 different ways of making your decision or
           solving your problem – just be creative!


          Blue Hat
           Finally, the blue hat is your process control hat – you should wear it if you’re running
           a decision-making meeting. Turn to your other hats as needed when you’re in charge.


   All in all, the six hats will provide you with some new perspectives, helping you see your
   issue from people who think differently and from different audiences (customers, family,
   managers, and so on). The six hats also consider emotion and creativity along with analysis
   and process, which can be very valuable in decision making; after all, you have to feel good
   about the decision you ultimately make.




Make the decision
Making a decision can be hard or easy, fast or slow, enjoyable or challenging, but it’s something
you’ll have to do most of your life, so learning a few tricks, tips, and tools for decision making
can go a long way. Making a decision can solve a problem, lead to positive change, and give you
the opportunity to truly examine your priorities.


While all of these tools can provide useful information, remember that there is no magic formula
for decision making. Give yourself (and your team if others are involved) some latitude to try
new things and experiment with possibilities. Don’t be afraid to take risks, just do so
thoughtfully.



© Copyright 2010 Docstoc Inc.                                                             11
Sometimes, you’ll have quite a bit of time to analyze, plan, and then make your decision, and
sometimes, you’ll have no almost time at all. The more practice you have using a variety of
decision-making tools, the easier it should be in either scenario. When you select your best
option, make sure you also employ long-term thinking so you’re planning ahead and not just
planning for tomorrow.


With a little time and analysis, you can put your smart decision into action, using a detailed plan
and the assistance of others as needed.


At this point, you should also consider what the situation will look like once the decision is made
and what steps should be taken to implement it seamlessly, taking everything from resources to
time to money to any potential obstacles into account. Having vision goes into making good
decisions.


After the ball is rolling, monitor your progress regularly, checking on usage of resources as well
as the schedule and then making modifications as needed – it’s ok to make changes along the
way.


Finally, it is, of course, to important to evaluate any significant decision. What lessons did you
learn? How did the decision turn out? What, if anything, would you do differently next time?
Was it a good decision overall?


You should evaluate your decision using a variety of both qualitative and quantitative methods
shortly after the decision is made and then six months, a year, or more down the road to assess its
longer-term effects.




© Copyright 2010 Docstoc Inc.                                                            12
Decisions, decisions, decisions
In the words of President Theodore Roosevelt, “In any moment of decision, the best thing you
can do is the right, the next best thing is the wrong thing, and the worst thing you can do is
nothing.”


Think, plan, decide, and then act.




© Copyright 2010 Docstoc Inc.                                                            13
				
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