Effective Decisions

1
Effective Decisions

• Nicolas Göll
• 25.04.2002

2
The Decision Process
Peter Drucker states five elements that make up
an effective decision process

• Classification of the problem at hand in order to
  go for the most efficient approach for solving it
• Definition of the boundary conditions, the
  constraints a solution to the problem has to
  satisfy
• Development of a clear vision what actions are
  needed to achieve the goals
• Make the necessary preparations for executing the
  decision
• Feedback make sure your actions achieved what
  you intended them to

3
Four Types of Occurrences
As a first step the decision maker has to
classify the problem at hand into one of the
following categories

• The truly generic problem, which occurs many
  times with only slight variations
• Problem that might be unique for the individual
  institution, but from a global point of view can
  be identified as generic ones
• The truly unique situation
• First manifestation of a generic problem

• All but the truly unique events require a generic
  solution based on a principle
• Chances for drawing the wrong conclusion are
  greatly reduced
• You will save time if adaptation of a universal
  rule is possible

4
Specifications of Decision
Define clear specifications as to what the
decision has to accomplish These are called the
boundary conditions

• The more precisely they are defined, the greater
  is the likelihood that the decision will
  accomplish what it is intended to do
• Insufficient definition of the boundary
  conditions leads to ineffectual decisions

Dont waste your time on decisions, that only
work if nothing whatever goes wrong - they are
highly probable to fail Think through the given
problem thoroughly in a clear and rational way
and face the unpleasant reality
5
What Is Right

• Start out with putting down what would be the
  right actions to satisfy the boundary conditions

• Leave considerations about costs and efforts for
  later
• In the end compromises will be necessary to make
  the actions acceptable
• Only if it is clear what actions should ideally
  be carried out, one can make the right compromises

6
Converting into Action
Converting the decision into action is the most
time consuming task and need not be neglected

• Someone should be assigned the responsibility to
  carry out the necessary actions
• Unless the relevant people are told what actions
  they should take, no real decision was made

• Questions that should be considered
• Who has to know about this decision?
• What actions should be taken?
• Who is going to take it?
• What does the action have to be so that the
  people can take it?

7
Feedback
Finally the decision maker is responsible to
verify that the ordered actions have been carried
out and the reactions turned out as expected,
because

• Human beings have to be considered as unreliable
• Circumstances may change and render certain
  decisions useless

• The feedback system in military organizations
  works well, because every action is reviewed by
  the accountable officer himself
• Due to the increasing use of computers, the
  person that gives instructions is often located
  far away from the place of action - thus
  increasing the need for feedback even further

8
Opinions Rather Than Facts
Much work related to the topic of making
decisions claim you should first find the facts
and then come to a conclusion based on them.
However Peter Drucker states

• Often opinions are taken for facts. As long as
  they arent checked against reality this leads to
  wrong decisions
• It is very tempting to find data that support the
  conclusion you have already reached

• Opinions are useful as long as
• They are thought through carefully
• You bear in mind opinions are only untested
  hypothesis

9
Develop Disagreement

• Disagreement isnt something annoying, but a very
  important tool, because
• By discussing conflicting point of views you will
  understand why someone disagrees
• Understanding of different theories and opinions
  leads to a general idea of the problem
• Without a general idea chances are that you will
  come to a seemingly right conclusion even if it
  is far from perfect
• In the course of the debate alternative solutions
  will come up from which the decision maker can
  choose the best one
• Additionally, if circumstances change you will
  have alternatives to fall back to

10
Is a Decision Really Necessary?

• One alternative is always the one of doing
  nothing
• Like doctors dont do unnecessary surgery,
  intervention into a system should only be made if
  its worth the effort
• The effective decision maker compares effort and
  risk of action to risk of inaction - He will
  act if the benefits outdo the cost and risk - He
  will either act or not, but dont go for an
  incomplete solution
• Often it becomes clear that the decision isnt
  going to be pleasant
• Dont delay the execution for more than a few
  weeks
• Convince yourself that the decision - has been
  discussed carefully - will solve the problem -
  is the right one
• Execute it