Decision Making

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Information about Decision Making

Published on March 18, 2011

Author: Maharonga


Decision Making & Problem Solving Skills: Decision Making & Problem Solving Skills Personal Development Club Training Activities Contents: Contents Decision Making – An Overview Functions of Mind The Depth of Mind (Subconscious) The Classic Approach to Decision Making Define objectives Collect relevant information Generate feasible options Make the decision Implement and evaluate Eight Elements of Smart Choices Slide 3: Techniques for Effective Decision-Making Skills Pareto analysis Paired comparison analysis Grid analysis Decision trees Plus/Minus/Implication (PMI) Force field analysis Impact Analysis Improving Decision Making The Ladder of Inference Six Thinking Hats Reactive Decision-Making Psychological Traps to Decision-Making I. Decision Making – An Overview: I. Decision Making – An Overview Decision making can be regarded as the mental processes (cognitive process) resulting in the selection of a course of action among several alternatives. Other definitions: From psychological perspective : decision is made based on the context of a set of needs, preferences an individual has and values they seek. From cognitive perspective : decision is made as a continuous process integrated in the interaction with the environment. From normative perspective : decision is made in concern with the logic of decision making and rationality and the invariant choice it leads to 1. Functions of Mind: 1. Functions of Mind Separating a whole into its constituent parts. Establishing success criteria, evaluating, appraising performance, and judging people. Putting things together to make it a whole. 2. The Depth of Mind (Subconscious): 2. The Depth of Mind (Subconscious) Level 1 : You don’t know that you don’t know. Level 2 : You know that you don’t know. Level 3 : You know that you know. Level 4 : You don’t know that you know. The Conscious Competence Ladder II. The Classic Approach to Decision Making: II. The Classic Approach to Decision Making Step 1: Define objectives Step 2: Collect relevant information Step 3: Generate feasible options Step 4: Make the decision Step 5: Implement and evaluate Not to decide is to decide. 1. Define Objectives: 1. Define Objectives Ask yourself: What you want to achieve If you don’t know what port you are heading for, any wind is the right wind. 2. Collect Relevant Information: 2. Collect Relevant Information It is a good principle not to make decisions in the absence of critically importance information that is not immediately to hand. Required Information Available Information 3. Generate Feasible Options: 3. Generate Feasible Options Brainstorm for possibilities Generate feasible options. Form alternatives Select the course of actions The Lobster Pot Model 4. Make the Decision: 4. Make the Decision List the advantages and disadvantages Examine the consequences of each course Test the proposed course against your objectives Weighing the risks against the expected gains Look before you leap. He who hesitates is lost. 5. Implement and Evaluation: 5. Implement and Evaluation After having made decision, it’s time to follow through your thoughts and courses of action. Create a PNR (Point of No Return). 5. Implement and Evaluate (cont): 5. Implement and Evaluate (cont) In case of simple choice, use your conscious mind. In case of complex choice, use your subconscious mind Our subconscious mind can best process all the complex information that comes from another person and transform it into a simple but profound judgment. III. Eight Elements of Smart Choices: III. Eight Elements of Smart Choices Problem Objectives Alternatives Consequences Tradeoffs Uncertainty Risk tolerance Linked decision IV. Techniques for Effective Decision Making Skills: IV. Techniques for Effective Decision Making Skills Pareto analysis Paired comparison analysis Grid analysis Decision trees Plus/Minus/Implication (PMI) Force field analysis Impact Analysis 1. Pareto Analysis: 1. Pareto Analysis Selecting the most important/most beneficial changes to make. How to use tools: List the problems you face, or the options you have available. Group options where they are facets of the same larger problem. Apply an appropriate score to each group. Work on the group with the highest score. 2. Paired Comparison Analysis: 2. Paired Comparison Analysis Evaluating the relative importance of different options and set priorities when there are conflicting demands on your resources. To use the technique, compare each option with each other option, one-by-one. For each comparison, decide which of the two options is most important, and then assign a score to show how much more important it is. You can then consolidate these comparisons so that each option is given a percentage importance. 2. Paired Comparison Analysis (cont.): 2. Paired Comparison Analysis (cont.) How to use tools: List the options you will compare. Assign a letter to each option. Set up a table with these options as row and column headings. Block out cells on the table where you will be comparing an option with itself (the diagonal from top-left to bottom-right). Also block out cells on the table where you will be duplicating a comparison. Normally, these will be the cells below the diagonal. Within the remaining cells, compare the option in the row with the one in the column. For each cell, decide which of the two options is more important. Write down the letter of the more important option in the cell, and score the difference in importance from 0 (no difference) to 3 (major difference). Finally, consolidate the results by adding up the total of all the values for each of the options. You may want to convert these values into a percentage of the total score. 2. Paired Comparison Analysis (cont.): 2. Paired Comparison Analysis (cont.) Case: you need to decide to buy only one among these items: cell phone, laptop, motorbike, and Playstation 3. Cell phone (A) Laptop (B) Motorbike (C) PS3 (D) Cell phone (A) Step 3 Laptop (B) Step 4 Step 3 Motorbike (C) Step 4 Step 4 Step 3 PS3 (D) Step 4 Step 4 Step 4 Step 3 2. Paired Comparison Analysis (cont.): 2. Paired Comparison Analysis (cont.) Finally add up the A, B, C and D values, and converts each into a percentage of the total. This gives these totals: A=1 (12.5%), B = 5 (62.5%), C = 2 (25%), D = 0. Thus, you may decide to buy a new laptop, and then a new motorbike. Other two might not be as necessary as the first. Cell phone (A) Laptop (B) Motorbike (C) PS3 (D) Cell phone (A) B2 C1 A1 Laptop (B) B1 B2 Motorbike (C) C1 PS3 (D) 3. Grid Analysis: 3. Grid Analysis Selecting between good options while many factors to take into account. How to use tools: List your options and then the factors that are important for making the decision. Score each option for each of the important factors in your decision (from 0 [poor] to 3 [very good]). Work out the relative weights of the factors in your decision (variable value). Multiply the scores by the weights, and totals them. 3. Grid Analysis (cont.): 3. Grid Analysis (cont.) Cost System Storage Graphic Design Total MAC 1 3 1 3 3 SONY 2 2 2 2 2 DELL 3 2 3 2 2 HP 3 2 3 2 1 Cost 5 System 4 Storage 4 Graphic 3 Design 2 Total MAC 5 12 8 9 6 40 SONY 10 8 8 6 4 36 DELL 15 8 12 6 4 45 HP 15 8 12 6 2 43 4. Decision Trees: 4. Decision Trees Choosing between options by projecting likely outcomes. Clearly lay out the problem so that all options can be challenged. Allow us to analyze fully the possible consequences of a decision. Provide a framework to quantify the values of outcomes and the probabilities of achieving them. Help us to make the best decisions on the basis of existing information and best guesses. 4. Decision Trees (cont.): 4. Decision Trees (cont.) How to use tools: Start a Decision Tree with a decision that you need to make ( square represents decision ). From this box draw out lines towards the right for each possible solution, and write that solution along the line ( lines represent solutions or outcomes ). At the end of each line, consider the results. If the result of taking that decision is uncertain, draw a small circle ( circle represents uncertain outcomes ). Write the decision or factor above the square or circle. If you have completed the solution at the end of the line, just leave it blank. Slide 25: An example of the sort of thing you will end up with. Slide 27: the calculation of uncertain outcome nodes Slide 28: By applying this technique we can see that the best option is to develop a new product. It is worth much more to us to take our time and get the product right, than to rush the product to market. It is better just to improve our existing products than to botch a new product, even though it costs us less. 5. Plus/Minus/Implication (PMI): 5. Plus/Minus/Implication (PMI) Weighing the Pros, Cons, and implications of a decision. When you have selected a course of action, PMI is a good technique to use to check that it is worth taking. How to use tools: 'Plus', write down all the positive results of taking the action. While 'Minus' write down all the negative effects. 'Implication' write down the interests and possible outcomes of taking the action, whether positive, negative, or uncertain. 5. Plus/Minus/Implication (PMI) (cont.): 5. Plus/Minus/Implication (PMI) (cont.) Plus Minus Implication More going on (+5) Have to sell house (-6) Easier to find new job? (+1) Easier to see friends (+5) More pollution (-3) Meet more people? (+2) Easier to get places (+3) Less space (-3) More difficult to get own work done? (-4) No countryside (-2) More difficult to get to work? (-4) +13 -18 -1 Case: A young professional is deciding where to live. Her question is 'Should she move to the big city?‘ She draws up the PMI table below: 6. Force Field Analysis : 6. Force Field Analysis Force Field Analysis is a useful technique for looking at all the forces for and against a decision. By carrying out the analysis you can plan to strengthen the forces supporting a decision, and reduce the impact of opposition to it. Describe your plan or proposal for change in the middle. List all forces for change in one column, and all forces against change in another column. Assign a score to each force, from 1 (weak) to 5 (strong) 7. Impact Analysis: 7. Impact Analysis Identifying the full consequences of change. Capture and structure all the likely conse-quences of a decision; and then ensure that these are managed appropriately. To conduct effective impact analysis: Prepare for impact analysis Brainstorm major areas affected Identify all areas Evaluate impacts Manage the consequences V. Improving Decision Making: V. Improving Decision Making The ladder of inference Six thinking hats Reactive decision making 1. The Ladder of Inference: 1. The Ladder of Inference The Ladder of Inference describes the thinking process that we go through, usually without realizing it, to get from a fact to a decision or action. Experience these selectively based on our beliefs and prior experience. Interpret what they mean. Apply our existing assumptions, sometimes without considering them. Draw conclusions based on the interpreted facts and our assumptions. Develop beliefs based on these conclusions. Take actions that seem "right" because they are based on what we believe. 2. Six Thinking Hats: 2. Six Thinking Hats Six Thinking Hats is a good technique for looking at the effects of a decision from a number of different points of view. Information: (White) - considering purely what information is available, what are the facts? Emotions (Red) - instinctive gut reaction or statements of emotional feeling (but not any justification). Bad points judgment (Black) - logic applied to identifying flaws or barriers, seeking mismatch. Good points judgment (Yellow) - logic applied to identifying benefits, seeking harmony. Creativity (Green) - statements of provocation and investigation, seeing where a thought goes. Thinking (Blue) - thinking about thinking. 3. Reactive Decision-Making: 3. Reactive Decision-Making Reactive decision making usually happens in case of emergency or when a disaster unfolds. In such case(s), Steps of Classic Approach to effective Decision-Making cannot be fully followed. Bad decision is more likely to happen. So contingency plan is highly needed. 3. Reactive Decision-Making (cont.): 3. Reactive Decision-Making (cont.) Planning for exceptional reactive decision-making: Look at the risks you face and determine if they have a high or low probability of occurring. Use a Risk Assessment Matrix (RAM): draw a simple table with a vertical axis marked as "Consequences" and a horizontal axis marked as "Probability". Use a simple scale of 0 (very small) to 5 (very large). "Consequences" are credible potential worst-case scenarios that may develop. Brainstorm the possible consequences to which you're exposed and assess the risk of each consequence occurring. Plot these into RAM. VI. Psychological Traps to Decision-Making: VI. Psychological Traps to Decision-Making Overrelying on first thought Keeping on keeping on Protecting earlier choices Seeing what you want to see Posing the wrong questions Being too sure of yourself Focusing on dramatic events Neglecting relevant information Slanting possibilities and estimates Seeing pattern where none exists Going mystical about coincidences Forewarned is forearmed

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