Problem Solving / Decision Making

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Problem Solving /Decision Making

• Kepner-Tregoe
• The New Rational Manager
• Chapter 4

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Chapter 4 Contents

• Conditions Skills of Making Choices
• Major Elements of Decision Analysis
• The Techniques of Decision Analysis (DA)

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People and Decisions

• Almost universally, people will tell you they
  want to be included in making decisions that
  impact them
• But, many shun the task of making a decision
• Controversy
• Lack of unbiased procedure
• Power play vs non-confrontational

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People and Decisions

• When people are provided a common approach they
  find they can work well in teams and arrive at
  mutually acceptable decisions
• more sharing of information
• differences are effectively reconciled
• decision making is less biased

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Decision Analysis

• Decision Analysis (DA) is a systematic procedure
  based on the thinking pattern we use when making
  reasoned choices.
• Recognize a choice must be made
• Consider specific factors to be satisfied
• Decide on an action
• Consider the risks

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DA Thinking Pattern

• These four elements of the decision making
  thinking pattern play a roll in every decision we
  make.
• For simple and repetitive decision we may not
  even be conscious of this process because memory
  and experience play such an important roll.
• Contrast when you were first learning to drive
  with your driving decisions today.

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DA and Information

• For complex decisions, there are a myriad of
  details behind every decision.
• But the information available may not match the
  need
• not enough information
• poor quality information
• too much information
• questions of relevancy accuracy

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K-Ts Decision Making Procedure

• What we need is a systematic procedure that will
  do the following
• blend experience and judgement
• with the best, most relevant information
  available
• to produce good decisions.

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K-Ts Decision Analysis

• The purpose of K-Ts DA is to
• identify what needs to be done,
• develop the specific criteria for its
  accomplishment,
• evaluate the available alternatives relative to
  the criteria
• identify the risks involved.

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Major Elements of DAThe Decision Statement

• The decision statement is the identification of
  the choice dilemma to be resolved.
• Provides focus
• sets limits
• Wording deserves careful attention
• implies level of decision
• implies prior decisions

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Major Elements of DAThe Objectives of the
Decision

• Objectives are the criteria for the decision.
• Identification of MUSTs and WANTs
• the specific results and benefits to be achieved
• This approach is the antithesis of identifying a
  course of action and then building a case to
  support it.

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Major Elements of DAMUST Objectives

• MUSTs are mandatory
• They must be achieved by a successful decision
• MUSTs may not be the most important objectives
• MUSTs must be measurable
• MUSTs operate as a screen for decision
  alternatives

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Major Elements of DAWANT Objectives

• All other objectives are WANTs
• They are used to evaluate relative performance
  among the alternatives
• WANTs create a comparative picture
• MUSTs decide who plays WANTs decide who wins
• The same objective (slightly reworded) may be
  both a MUST and a WANT

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Major Elements of DAAlternatives

• An ideal alternative (1) satisfies the MUSTs (2)
  is the best relative performer against every
  WANT (3) doesnt add new difficulties.
• Ideal alternatives are rare so seeking a balanced
  choice among the alternatives is common.

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Major Elements of DAAlternatives

• Choices among alternatives may take the form of
• Choosing between several alternatives,
• Deciding whether a single alternative is good
  enough to accept,
• Choosing between a current and proposed method.

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Major Elements of DAIdentification of Risks

• The final step in DA is to search for possible
  adverse consequences of all feasible
  alternatives.
• Before the final choice is made
• Judgement, experience, and intuition are
  critically important here.

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The Techniques of Decision Analysis

• State the Decision
• Develop Objectives
• Classify objectives into MUSTs and WANTs
• Weigh the WANTs
• Generate Alternatives

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The Techniques of Decision Analysis

• Screen alternatives with the MUSTs
• Compare alternatives against the WANTs
• Identify adverse consequences
• Make the best balanced choice

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Techniques of DADecision Stmt and Objectives

• State the decision
• review case discussion (W 86-87, B 90-91)
• Develop and classify objectives
• MUSTs are measurable GO/NO GO
• WANTs are additional desirables
• see case discussion (W 87, B 91-92)

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Techniques of DAWeighting

• Weigh the objectives
• most important one(s) get a 10 all others get
  weights between 1 and 10
• Danger signals
• too many high or low numbers
• too many reflecting a single viewpoint
• Review the case discussion (W 88, B 92-93)

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Techniques of DAGenerate MUSTs

• Generate alternatives
• Generate, Generate, Generate!
• Do Not Evaluate -- yet!
• Once generated, compare the alternatives to the
  MUSTs
• Retain if GO on all MUSTs
• Drop if NO GO on any MUST
• See case example (W F7 90-91, B F6 94-95)

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Techniques of DAWANTs

• Compare against the WANTs
• Alternative that best satisfies the WANT gets a
  10
• Others are scored relative to this alternative .
• This scoring is based on selecting the best
  alternative not on determining closeness to an
  ideal.

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Techniques of DAWANTs

• If none of the alternatives deserve a 10 comes
  up repeatedly, consider
• are the objectives realistic?
• do we need to generate more alternatives?
• Alternatively, if all alternatives score very
  high on all objectives, consider
• do the objectives need to be more demanding?

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Techniques of DAWeighted Scores

• See case example ( W F8 92-93, B F7 96-97)
• Next compute the weighted score for each
  alternative under each WANT
• multiply objective weight by alternative score
• Total the weighted scores for an alternatives
  total weighted score.

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Techniques of DATentative Choice

• See case example (W F9 94-95 , B F8 98-99)
• The highest total weighted score becomes the
  tentative choice.
• This choice is not the best balanced choice yet
  since risks have not been considered.

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Techniques of DAWhy Evaluate Risks

• Identifying risks is often skipped. Why?
• A clear winner as a tentative choice
• Attitude of pessimism
• Dont want to revisit painful lessons from the
  past
• To make the analysis objective and rigorous, we
  must evaluate risks!

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Techniques of DAQuestions to Evaluate Risks

• Considering adverse consequences
• What are the implications of being close to a
  MUST limit?
• What information might be invalid? What are the
  implications?
• What could go wrong in the short-term? Long-term?
• What might keep this alternative from being
  successful?

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Techniques of DAEvaluating Risks

• Evaluating adverse consequences
• alternatives are evaluated separately, not in
  comparison to one another.
• State the consequence
• Rate its probability
• Rate its seriousness
• See Case example (W 97, B 101)

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Techniques of DABest Balanced Choice

• Start with the Tentative Choice Alternative
• Ask are we willing to accept the risks of this
  choice to gain the benefits?
• If yes, select as the best balanced choice
• If no, move to the next highest weighted score
  and re-ask the question.
• See case discussion (W 98, B 101-102)

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Decision Analysis Summary

• DA does not guarantee a perfect decision every
  time.
• DA provides for the productive use of all
  available information judgements.
• DA enables a manager to reduce the incidence of
  poor decision making by providing a systematic
  framework for evaluating alternatives.