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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Decision trees or backing a hunch - smart advice on the art and science of decision making.
Das E-Book Smart Things to Know About Decision Making wird angeboten von Capstone und wurde mit folgenden Begriffen kategorisiert:
smart; critical; process; introduction; decisionmaking; ix; preparing; context; langdon; ken; experience; risk
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Seitenzahl: 230
Veröffentlichungsjahr: 2012
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Table of Contents
Cover
Title page
Copyright page
What is Smart?
Preface
Introduction
1 An Introduction to the Decision-Making Process
Learning objectives
Complex problem-solving
Talking about cause-and-effect
Levels of decision-making
Principles of decision-making
Key points of assessing cause-and-effect
2 Preparing to Decide
Learning objectives
The decision-making process
Smart decisions solve customer problems
Identifying issues
Involving the stakeholders
Identifying stakeholders
Taking a preliminary look at the financial case
Key points of stakeholder involvement
3 Critical Thinking and Creating Options
Learning objectives
Thinking critically
Involving the backsliders
Getting support by persuasive communication
The persuasive communication template
Background
Issues
Key points for solving problems
4 Evaluating the Options
Learning objectives
Time, cost, and performance
Selecting criteria
Marking options against criteria
Moving towards the decision
Key points of option evaluation
5 Checking the Financial Case
Learning objectives
Choose a timescale
Estimate the benefits
Estimate the costs
Weigh up the financial risks to the costs and benefits
Produce a projected profit and loss account
Key points of checking the financial case for investing in a project
6 Deciding by Cashflow
Learning objectives
Produce a cashflow
Evaluate possible projects, along with their risks, with each other and with a benchmark
More about financial risk analysis
Key points of financial decision-making
7 Analyzing the Risk
Learning objectives
Principles of risk management
Risk management
The persuasive communication template (continued)
BSF
Key points of risk identification and mitigation
8 Recording the Decision and Learning from Experience
Learning objectives
Recording the decision
Judgment and decision-making
Learning from experience
Re-evaluating the decision
Key points to ask before embarking on a difficult decision
9 Putting Decision-Making into Context
Learning objectives
Crisis meeting at Europower
Europower summary
Acknowledgements
About Ken Langdon
This second edition (eBook only) first published 2012
© 2012 Ken Langdon
First edition published 2001
© Ken Langdon
Registered office
Capstone Publishing Ltd. (A Wiley Company), John Wiley and Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom
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ISBN 978-0-857-08380-7 (emobi)
ISBN 978-0-857-08381-4 (epub)
ISBN 978-0-857-08379-1 (epdf)
What is Smart?
The Smart series is a new way of learning. Smart books will improve your understanding and performance in some of the critical areas you face today such as customers, strategy, change, e-commerce, brands, influencing skills, knowledge management, finance, teamworking, and partnerships.
Smart books summarize accumulated wisdom as well as provide original cutting-edge ideas and tools that will take you out of theory and into action.
The widely respected business guru Chris Argyris points out that even the most intelligent individuals can become ineffective in organizations. Why? Because we are so busy working that we fail to learn about ourselves. We stop reflecting on the changes around us. We get sucked into the patterns of behaviour that have produced success for us in the past, not realizing that it may no longer be appropriate for us in the fast-approaching future.
There are three ways the Smart series helps prevent this happening to you:
By increasing your self-awareness.
By developing your understanding, attitude and behavior.
By giving you the tools to challenge the status quo that exists in your organization.
Smart people need smart organizations. You could spend a third of your career hopping around in search of the Holy Grail, or you could begin to create your own smart organization around you today.
Each Smart book contains the following icons, features, and signposts to help you use the ideas in your career and business:
Smart quotes from key figures
Smart examples to develop your thinking
Smart case studies about those who’ve put Smart ideas into practice
Smart tips and questions to keep you ahead of the game
Finally, a reminder that books don’t change the world, people do. And although the Smart series offers you the brightest wisdom from the best practitioners and thinkers, these books throw the responsibility on you to apply what you’re learning in your work.
Because the truly smart person knows that reading a book is the start of the process and not the end …
As Eric Hoffer says, “In times of change, learners inherit the world, while the learned remain beautifully equipped to deal with a world that no longer exists.”
David FirthSmartmaster
Preface
The most optimistic description of Phil’s demeanor when he left his boss’s office was “bloody but unbowed”. It had been an unpleasant twenty minutes. His boss, Rudi Lenkov, the IT director of Compusell, had been impressively well informed about the whole sales team thing. He had plainly been well briefed by the sales director, who had in her turn been well briefed by her people.
The situation had started simply enough. A person from marketing had approached Phil, the IT representative for the sales organization, with a request that Phil find a standard format or “boiler-plating” system so that salespeople would write better sales proposals faster.
Ironically the solution that Phil had found fitted the bill rather well, and it should have been a triumph. A company called Matiffe supplied a piece of software for the very purpose. One of the software tools it provided was a template-type system that guided a salesperson through the headings of an executive summary. All they had to do was follow it by answering questions and converting the output from the template into good written English.
The Matiffe solution had looked so good—the marketing guy had loved it—that Phil couldn’t find an easy alternative. There were some other options, but they were so different in their approach that it was impossible to make a sensible comparison. So he had gone into negotiations with the Matiffe rep and bought twenty copies of the software, which was well within the budget that sales had said was reasonable. In any case, sales management said that you could not attempt to cost-justify such a tool, since it was about the quality and professionalism of the salesforce, and you can’t quantify the benefit of that.
Then the problems had started.
They started from the technical: why do technical managers make such a meal of everything? They had insisted that since Matiffe was in effect proposing a new platform, their software would have to go through the IT tests procedure to make sure that it was compatible with all the other software in use. Actually it passed, but it took ages.
Then the salespeople took against it. Phil didn’t understand their negative reaction until one of them explained that such new initiatives come and go in any salesforce. They never stick for any length of time and were always about management control rather than helping the sales force to sell. “We have a name for it,” the salesman had confided. “We call it BOHICA management, standing for Bend Over, Here It Comes Again.”
The effect of the salespeople’s resistance was catastrophic. They simply ignored the system; or, when pushed to use it by their managers, they made hundreds of phone calls to Phil’s helpdesk with very elementary questions. The helpdesk people got to the stage that they would not take the call then and there but would promise to call back. No one complained when they didn’t, so that was that—a Ghandian-style passive resistance that the Mahatma would have envied for its speedy and complete success.
Meanwhile Matiffe wanted its money and Phil, under the terms of the contract, eventually had to pay—even though not all the salespeople had the software installed. The final straw that broke the project and caused the writing-off of a considerable sum of money was the discovery that the European headquarters was about to introduce a Europe-wide sales system that would cover everything in the Matiffe solution with a bit to spare.
“Come on,” said Phil to Lucy, the manager of the helpdesk and a great source of support. “I’ll buy you a drink at six if you will help me to work out what we need to learn from the Matiffe disaster. Rudi just gave me a step-by-step guide to the wrong decisions we made over the period of six months and each one was a bull’s eye. I really don’t want that to happen again.”
At the end of an hour with a laptop in the bar, Phil and Lucy had made this list:
How do you work out in advance who needs to be consulted in making a decision?
Why did we not spot the alternative that eventually was the best solution?
How do you give yourself the opportunity to pull out of a decision cheaply if it is proving difficult to implement?
How do you make sure that you have a financial argument behind you, even if the decision is more about qualitative rather than quantitative improvement?
How do you compare a number of totally different approaches with different characteristics?
Why do all our decisions seem to be made under pressure?
How can we make sure that we are not about to reinvent the wheel? If someone has gone through a decision-making process in a similar situation, how do we get to know about it?
“Hmm,” mused Phil. “This decision-making thing is happening all the time whether we know it or not. There must be a simple, practical process that we could go through each time to get to a conclusion with a reasonable chance of being right; a process that would work if we have six months to make the decision or six minutes. I wonder if anyone has written a book about it …”
Introduction
How true this Addison quote is, and decision-making is about giving judgments in exactly those circumstances.
What Is Hard about Decision-Making?
Most people, if they are asked to think about it, are surprised at the number of decisions they make in their business life. If you add all the routine ones, where there appears to be no choice, to the ones where there are plainly a number of alternatives, managers do make decisions. After all that is what they are paid for doing—making choices between two or more alternative ways of progressing.
Some decisions are easy to make and we tend to make those ones fast. Others are difficult and those are the ones we put off for as long as possible, or until there is no decision to be made because someone or something has taken it out of our hands. There are two traps in this simple breaking-down of a decision into easy and difficult. Just because a decision is easy to make does not mean that the decision made is the right one.
Similarly, if we do not make progress on a difficult decision, the situation is likely to get worse, we put ourselves under more stress and the end result is unlikely to be in our personal favor whatever its impact on the business.
(Incidentally, the processes and skills that this book discusses in relation to making good business decisions are equally useful in making personal decisions, and I will come to that. But for the moment let’s stick to business decisions.)
Why are some decisions so difficult? Here are some of the reasons we put off making decisions, or make poor decisions or wrong decisions:
Because, as in the fax example, you are not sure what you are trying to achieve.
You do not have all the information you really need to make the right choice. (Nor, I am afraid, if you wait until the trains run on time will you ever have a perfect set of data to work with.)
You do not understand all the implications of making the decision. Most people have, in this respect, particular trouble with the financial implications of a decision. Is it possible to make a realistic estimate of the financial value of each option? Experienced people say “Yes” to this, but acknowledge that it is a tricky one and that you might have to use certain devices to work it out.
There is an element of risk involved that puts you off making the decision. After all, if it does go wrong and the worst does come to the worst, you might have been better off doing nothing.
I have left the best until last. We often do not make decisions at the appropriate time because of sensitivities to people. Internal politics (if we bring that person in on the decision it could cause more problems than it solves); turf issues (“But I have always been responsible for that”); and gaining acceptance that the decision was a good one and that anyone involved will help with implementation rather than hinder it by deliberate action or lack of it.
A combination of these elements of decision-making paralysis leads to the method that a UK civil servant uses to put their political masters off decisions that the Civil Service regards as being wrong, or at least not in the best interests of the UK Civil Service. They simply describe the decision the minister is recommending as “a courageous one.” This leads to the member of the government thinking again. After all, a “courageous” decision is one that will cause the decision-maker considerable distress if it goes wrong—ministers come and ministers go.
How Does This Book Help Make Smart Decision-Makers?
So Smart decision-makers have the guts to size up a situation, look at the alternatives, and decide. Well yes, but they also alleviate the risk by using, in most cases, a process to come to the best decision. Sticking your neck out is best done when you have determined what the percentage shot is; that is, when you have applied a set of logical analysis tools to the problem as well as exercised your creativity and “gut feel.”
Thus this book identifies five steps in the decision-making process:
How Long Does It All Take?
It is, of course, horses for courses. Some decisions that have to be taken fast will only allow you a quick iteration of a short-cut through the decision-making process. Others can and should take a lot longer. And yet you will often see people using the opposite logic in coming to conclusions. I have seen a salesman agonizing for hours on end over many weeks to decide which of three possible versions of the car the company allows him to buy he should go for. He sought the views of others, he bought technical magazines to make comparisons, and he tried them all out repeatedly. The same salesman spent the best part of three minutes updating his monthly sales forecast by postponing the orders he had not taken that month into the following month and creating a document that had almost no value in predicting the future. And yet that forecast was rolled with the others into the production plan for the following quarter.
As well as making sure that you are spending the right amount of time on a decision, another point that I will emphasize is that the experience of Smart decision-makers makes them look always for focus: “What is this decision about?”, “Why am I making a decision?” and “Halfway through the process, am I still focused on what is important?”
Smart Instincts Are Good, But …
Let’s face it, most decisions are made in your head, and that will still be the case once you have read this book. Smart managers do not allow a decision-making process to completely overcome their gut feelings and instincts. You do not need a pencil and paper or a computer template to decide what present to buy your partner. But in truth, you do check such a decision in a routine or process way, against certain criteria—even if it is only to think for a moment about whether they will like the present.
Some decisions, however, cry out for the use of a logical process. It is smart to use such a process when:
A lot of people in your organization are affected by your decision.
The decision involves a lot of money.
If the decision goes wrong, it will have a hugely detrimental impact on the organization or, perhaps more importantly, on you or your career.
There are many options to be weighed against each other.
And there is another reason for putting logical decision-making tools and techniques into place, and using it for at least a limited number of the decisions you make. It is called learning—you learning from others and others learning from you.
Suppose you are about to select a supplier of packaging material. You are not the first person to do this, possibly not even the first in your organization. You can probably find out quite easily where others have gone. You can simply ask them from whom they are buying. But that does not tell you how they made the decision or what they took into account, so that you cannot be sure that the circumstances of their decision were the same as the ones you are facing now. Unless you discuss the process they went through—that is, how they made the decision—they are of limited use in guiding your choice.
People have used “expert systems” in this way with a greater or lesser level of success. Broadly speaking, an expert system uses the experience of a specialist to form a series of questions that others must go through to make a decision. The aim is to allow less experienced or less expert people to make decisions based on expert knowledge.
It remains very difficult to make expert systems expert enough to meet all eventualities. But what teams and organizations need are easy-to-use decision-making processes that people find useful in coming to decisions and that, as a side effect, record how the decision was made.
As well as the full cycle of the logical decision-making process, the book will also discuss a short cut way of achieving some of the same results in a very short time. We will look at checking that a decision is V-SAFE—standing for Valuable, Suitable, Acceptable, Feasible, and Enduring.
Decision-making, like politics, is the art of the possible—but the art of decision-making is making the right decision in time, confidently and (yes) courageously seeing the decision through to implementation. OK, so there might be much to be said on both sides, but the Smart decision-maker, like a Daniel, comes to a judgment.
It is possible to document parts of the decision-making process as a template. You will find these called Smart tools.
Where I am suggesting that a process or part of a process can be helpful in coming to a good decision, I will also suggest that you try the process out on a live example.
1
An Introduction to the Decision-Making Process
WHEN DO YOU MOVE FROM PROBLEM-SOLVING TO DECISION-MAKING?
Learning Objectives
At the end of this chapter you will be able to:
Distinguish problem-solving from decision-making.
Use good questioning technique to find the real cause of problems.
Use a cause-and-effect diagram to structure critical thinking.
Define and use a decision-making process.
At this stage we need to be clear on the difference between problem-solving and decision-making. Just as decision-making must be followed by action, it is frequently preceded by problem-solving or finding causes. It is not a good idea to start the decision-making process to solve a problem if you are unaware of what is causing the problem.
This book is about decision-making, so I will limit this part on problem-solving to some simple, but effective, techniques that help with the logical search for the cause of a problem.
