a new engineering profession is emerging: decision coach

A new profession is emerging: Decision Coach

INFORMS Analytics ConferenceApril 15 -17, 2012

Huntington Beach, California

Stephen Barrager, Ph.D.Baker Street Publishing, [email protected]

© 2012 Baker Street Publishing, LLC. All Rights Reserved.

I started my career in aerospace and computers.

First job - Apollo. Second job - IBM360

That’s me -- to the right of

the analog computers.


Third job - Lead Teaching Assistant for Professor Howard’s probability and decision analysis courses at Stanford.

Professor Howard

Graduate StudentBarrager


I hope you learn the following things today:

• A new profession is emerging: decision coaching

• There is a core knowledge set required for strategic decision making: process, systems analysis, and applied probability.

• In addition, decision coaches must master facilitation skills, project management, and organizational learning.


StrategicDecision Making

Decision making is only one of the tasks of an executive. It usually takes but a small fraction of his time. But to make decisions is the specific executive task.

Peter Drucker, The Ef fective Manager 1966

Operational Management(execution)

Leadership

Success in any enterprise consists of doing three basic things well.

There is a lot to be gained if we can improve strategic decision making.


Expansion into new products, services or geographies

Investment in existing products, services or geographies

Building new infrastructure

Mergers and acquisitions

Maintenance of existing infrastructure

Organizational change for other reasons 21

5

11

12

15

34

A McKinsey survey of 2,327 executives from the full range of industries, regions and functions revealed the following goals of strategic decision making. (In percentage of total decisions.)

From “How companies make good decisions,” The McKinsey Quarterly, December 2008


Act

Generally there are 3 groups involved in important strategic decisions: decision makers, stakeholders, and experts.

Experts

Decision Makers

Stakeholders


Scene from Moneyball, Columbia Pictures


What is missing?

Act

Experts

Decision Makers

Stakeholders

Process?

Project Management?

Facilitation?

Tools?

Knowledge Management and training?


Who is missing?

Act

Experts

Decision Makers

Stakeholders

?


Knowledge Management and Training

Facilitation ProjectManagementToolsProcess

A decision coach brings several things to the table.


“If you can’t describe what you are doing as a process, you don’t know what you are doing.”

W. Edwards Deming


Two processes are fundamental. The Decision Analysis Process and the Collaborative Design Process.

Act

Decision framing and basis development

A B C12345

Deterministic Modeling andsensitivity analysis

Probability assessment and calculation

Appraisal and value of Information calculations

Situation

Systems Analysis

Probability Theory

Value of information

Decision Theory

Stakeholders and ExpertsFraming AlternativeGeneration Analysis Synthesis Act

Decision Makers

Stakeholders and experts


The Decision Analysis Process combines the power of:

in a normative way.

DecisionTheory

ProbabilityTheory

SystemsAnalysis


The Collaborative Design Process brings in the people.

Stakeholders and ExpertsFraming AlternativeGeneration Analysis Synthesis Act

Experts Stakeholders

Decision Makers

Coach


The Collaborative Design Process emphasizes framing and design.

DecisionTheory

ProbabilityTheory

SystemsAnalysis

Framing Design

Decision Analysis is the analytical backbone of the Collaborative Design Process.


Inappropriate framing is the root cause of most bad decisions.

Find x.

4 cm

3 cmx

Here�� it�� is!

Too often we get the right answer to the wrong question.


Design is the intersection of analysis and synthesis. We want this intersection to be big.

Stakeholders and ExpertsFraming AlternativeGeneration Analysis Synthesis

Design

Steve Jobs called synthesis, “Connecting

the dots.”



Facilitation ProjectManagementProcess Tools


Strategy

Competition

Market Share

Comfort andConvenience

Styling

Unit Costs

Investment

High SportMarket Size

Performance

Quality

Warranty Costs

Pricing Strategy

Net Present

Value

Decision and Framing hierarchies --- Which decisions are we working on? How do they fit with other decisions? What are the givens.

Strategy tables --- How do alternative strategies differ? Do they cover the range of possibilities?

Decision Diagrams --- What issues are relevant to the strategy?How do issues influence each other?

Dynamic System Simulation and Optimization Models --- Have we captured the complexities and dynamics logically?

Sensitivity Analysis --- What are the important uncertainties? Where should we focus our attention?

Probability assessment techniques --- How do we express what we don’t know? How do we deal with cognitive biases?

Bayesian updating of information --- How do probabilities change as we learn more? What is the value of better information?

Policy

Strategy

Tactics

A B C

1

2

3

4

5

A decision coach brings a bag full of tools.


A business enterprise is a complex system. Systems modeling is the best tool we have for understanding it.

Diagram adapted from:“Business Model Generation,” by Alexander

Osterwalder and Yves Pigeur, Wiley 2010

Key Resources

RevenueStreams

CostStructure

Value

Prop

ositi

ons

Channels

Customer Segments

Customer Relationships

Key Activities

Key Partners


Computer-based, mathematical models are the key to cutting through complexity and dynamics.

In the mid-1980’s Herb Simon* gave a lecture at Stanford University. He discussed the slow, but unrelenting march of critical thinking about complex social problems.

Toward the end of his talk he stated that he thought the computer-based, mathematical model was perhaps the greatest invention of all time. I was a bit taken back. I was expecting him to suggest something like the microprocessor, not esoteric computer models like those I was building.

He went on to explain that these models were so important because they offered the first opportunity for groups of people to think collectively about very complicated problems. Individuals can model parts of the problem and then combine their knowledge with that of other people in a logically consistent way. Mankind has never had this capability.

When used properly, these models are like meta neural networks. They combine the thinking of many brains. They capture the thinking in a way that can be shared and refined by many people spread out over the globe.

*Herb Simon was the first winner of the Nobel Prize in Economics.



ProjectManagementToolsProcess Facilitation


There are 3 well known barriers to good decision making:

• Cognitive biases, e.g., anchoring and availability

• The confirmation bias

• Organizational defenses


Overcoming the confirmation bias is a big challenge in group decision making.

We tend to hear only those things that are consistent with our prior experience and beliefs.

From: The Complete Far Side, Gary Larson


What do we do if there is a warthog in the room and no-one wants to talk about it?

What if the warthog is the boss?

Organizational defenses are pervasive.


Your Purpose•Valid information•Informed choice•Internal commitment

The Mutual Learning Model is normative. We say this is how we should think and behave.

Acting•State thinking behind own view•Inquire into other’s views•Make dilemmas discussible•Express and reflect on emotion•Design ways to test merits of differing views

Source: Action Design. Adapted from Chris Argyris & Donald Schön

Results•Increased understanding•More informed decisions•High commitment to action•Mutual learning•Better working relationships

Framing•How you see yourself-What I see is one perspective-I may be missing something

•How you see others-Acting sensibly in own mind-Caught in a dilemma



FacilitationSkills

ProjectManagementToolsProcess


Coaches can fill the project management role.

Framing AlternativeGeneration

Analysis Synthesis

A

Decision Makers

Stakeholders and experts

ProcessTools

Money

A B C

1

2

3

4

5

Phase

Sept Oct Nov Dec Jan

Alternative Generation

AnalysisSynthesisImplementation

Schedule

People andOrganization

Project Management

Plan


FacilitationSkills




Organizations need a memory.“When important decisions are not documented, one becomes dependent on individual memory, which is quickly lost as people leave or move to other jobs. In my work, it is important to be able to go back a number of years to determine the facts that were considered in arriving at a decision. This makes it easier to resolve new problems by putting them into proper perspective. It also minimizes the risk of repeating past mistakes. Moreover, if important communications and actions are not documented clearly, one can never be sure they were understood or even executed.” From Doing a Job, by Admiral Hyman G. Rickover


Someone needs to be responsible for knowledge management and organizational learning. This is a natural role for the decision coach.

Act

Act Act

ActAct

Best PracticesRoster

Successful failures

Lessons Learned



FacilitationSkills


A decision coach brings several things to the table.


Core Skills

Skill MBA ORManagement Science andEngineering

Process

Decision Analysis ☀ ☀ ☀ Collaborative Design ? ? ?

Tools

Framing ☀ Systems Analysis ☀ ☀ Applied probability ☀ ☀

Facilitation ☀

Project Management ☀ ☀

Organizational Learning ☀

We need more qualified coaches. Where are they going to come from?


In summary,

• A new profession is emerging: decision coaching

• There is a core knowledge set required for strategic decision making: process, systems analysis, and applied probability.

• In addition, decision coaches must master facilitation skills, project management, and organizational learning.

Odds are good that more engineers will become decision coaches and ultimately move into executive positions. This will lead to major, sustained improvements in public and private decision making.


The Baker Street mission is to supply decision coaches with the things that they need to be successful. For more information see the following:

• Coach’s Guide to Framing, slide deck, PDF http://bakerstreetpublishing.com/publications/framing-strategic-decisions-an-overview/

• Coach’s Guide to the Decision Analysis Process, slide deck, PDF http://bakerstreetpublishing.com/publications/coachs-guide-to-the-decision-analysis-process/

• Coach’s Guide to the Collaborative Design Process, slide deck, PDF http://bakerstreetpublishing.com/publications/coachs-guide-to-the-collaborative-design-process/

• Coach’s Guide to Mutual Learning, forthcoming, enhanced e-book for the iPad.

• Baker Street Publishing Blog http://bakerstreetpublishing.com/blog/

• Speaking of Decisions: Precise Decision Language, Ron Howard, INFORMS, Onlinehttp://da.journal.informs.org/content/1/2/71.abstract

a new engineering profession is emerging: decision coach

Career

master facilitation

decision coach

process coachs

strategic

collaborative

project management

decision coaching

applied probability