how to make better business and personal decisions

8/25/2015

1

(c) 2015 Arvon Management Services, LLC

How to Make

Better Business

and Personal

Decisions

Presented by:

Dr. Robert Vaughn

Investments Purchases

Hiring Relationships

Politics

Employment

Vacations

Whatever….


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Thoughts about Decision

Making


" Cheshire Puss, would you tell me, please, which way I ought to

walk from here?"

"That depends a good deal on where you want to get to," said the

Cat.

"I don't much care where ---" said Alice.

"Then it doesn't matter which way you walk," said the Cat.

"--- so long as I get somewhere," Alice added as an explanation.

"Oh, you're sure to do that," said the Cat, "if only you walk long

enough."

- Lewis Carroll

Today’s Agenda

Pretest

The Process of Making a Decision

The Seven Steps

Developing Options

Narrowing Down the Choices

Human & Technology Factors

Presenting the Decision


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True / False Pre-Test

You’ll have seven seconds per question, so don’t

over analyze them.

1. We all make hundreds of decisions every day.

2. All decisions are made in an essentially similar pattern.

3. Choices should be evaluated as they appear.

4. Decision making applies to all phases of management or supervision.

5. Creativity is not necessary in most decision making.


Pre-Test - continued

6. Intuition is more important than rational

thought in the early stages of decision

making.

7. Limits should be established early in the

decision-making process.

8. Tolerance for risk influences decision

making for managers.

9. Good decisions are both properly made

and effective.

10. Organizational decisions tend to be more

“convoluted” than “straightforward” in

nature.(c) 2015 Arvon Management Services, LLC

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Pre-Test Answers

1. We all make hundreds of decisions every day. T

2. All decisions are made in an essentially similar pattern. T

3. Choices should be evaluated as they appear. F

4. Decision making applies to all phases of management or supervision. T

5. Creativity is not necessary in most decision making. T (Most decisions are “programmed.”)


Pre-Test Answers- continued

6. Intuition is more important than

rational thought in the early stages of

decision making. T

7. Limits should be established early in

the decision-making process. T (“Limited”

limits)

8. Tolerance for risk influences decision

making for managers. T

9. Good decisions are both properly made

and effective. T

10. Organizational decisions tend to be

more “convoluted” than

“straightforward” in nature. T


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Making

Effective Decisions

Part One

The Anatomy of a Decision


Why is a Process Important?

First, it can give us confidence that we can handle the situation.

Second, it can provide a discipline to follow as we work through the

process.

Finally, it can allow us to concurrently develop the information and

support necessary to get others buy into the idea.


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Thoughts about Decision Making

"Start with the end in mind."

- Steven Covey


Steps in Decision Making

1. Determine that a decision is needed.

2. Determine that decision's importance.

3. Assess what limits apply to the decision.

4. Determine possible choices.

5. Gather information about the possible choices.

6. Evaluate or test the possible choices.

7. Decide & Implement the Decision (or recycle).


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Step 1. Determine that a decision is needed

Does it have to be decided?

Do I have the authority and/or power to make and implement the

decision?

Do I have or can I get the necessary information to make the decision?

Who else could make it better? Why don’t they?


Step 2: Determine the Decision's

Importance

How much does it cost?

How long is the commitment?

Who is involved?

Can it be changed later?

---Other Considerations---

How soon does it have to be made?

How much information is available to make the decision?


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Step 3: Assess What Limits Apply to

Implementing the Decision

Limits have to do with available resources:

time

money

equipment or facilities

technological capabilities

people

technical and managerial skills

other resources

Etc. What will affect progress

toward the goal?


Step 4: Determine Possible Choices

Find appropriate sources (More about this shortly)

You almost never need to consider all available options, so …

Create an “adequate list” of options.

Complete step four before you even consider step five.


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Step 5: Gather Information about the

Choices

Too much information can be as bad as too

little information

Limit your choices and collect data

selectively


Step 6: Evaluate or Test the Possible

Choices

Can be done in many ways – all depends on

the nature of the decision


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Step 7: Decide and Implement the

Decision (or “Recycle”)

The best decision is not always the cheapest or most

easily implemented.

Many other factors must be considered:

Organizational Culture

People’s needs and tolerance for change

Perceptions, etc.

More on these in a few minutes


(Step 7a: Recycle)

A decision which is too complex to

implement can be the basis for lower

level decisions. You then just repeat the

process for each.


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Review of Seven Steps





5. Gather information about the possible choices.


7. Decide and Implement the Decision / Recycle.


Decision Making isn’t all logic

There’s often too much to analyze

Simple problems require reason, but complicated problems also

require emotions

Need a balance between deliberate and instinctive thinking


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Truly successful decision making relies on a

balance between deliberate and instinctive

thinking.

-- Malcolm Gladwell

Rationality can lead us astray; we focus on too

much to manage.

-- Jonah Lehrer


Making

Effective DecisionsPart Two

Developing Options


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Where to get ideas


Review: Decision Making

Steps





5. Gather information about the possible

choices.


7. Decide & Implement the Decision (or

recycle).


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Creativity is important


You already are creative

You dream nearly every night

You solve problems

You may also have artistic talents, etc.

But…

Being creative does not require being artistic

Being creative does not demand great skill

Being creative is not a function of intelligence


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Clarifying the Goal of the Decision

What do you want to happen as a result of

the decision making process?

Write down related facts about the issue:

What is not known that we need to find out


Separate cause from effect


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Developing Data on Options

Probably no choice is perfect.

You almost never need to consider

all available options.

An “adequate” list of options may

be a couple up to a dozen.

Risk tolerance influences how

much data will be collected about

choices.(c) 2015 Arvon Management Services, LLC

Dealing with Risk in Decisions

Risk Averters want a high

level of confidence

Gamblers are willing to

take bigger risks

Most people are willing to

take some risks if the

decision is not too

significant; less so with

important decisions


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Making

Effective DecisionsPart Three

Narrowing Down the Options


Gathering Information

Sources of primary data

Getting unique information which has not

been collected before (through surveys,

quality control tests, etc.)

Sources of secondary data

Useable data collected for another purpose

and probably by someone else


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How much information?

How many options are there?

A couple or ?

How difficult or expensive is it to obtain?

How much risk is associated with the decision?



We like market research because it provides

“certainty” – a score, a prediction. If someone asks us

why we made the decision we did, we can point to a

number. But the truth is that for the most important

decisions, there can be no certainty.

-- Malcolm Gladwell


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Pareto Analysis

Pareto analysis is a technique to separate the significant few

from the trivial many.

Also known as the “80-20 Rule”

In inventory, it’s called “ABC Analysis”

List the data you could collect, then order it into level of

importance.


Organizing the Data

Data must be organized into meaningful

groups.

Separate necessary from nice to have

data.

If collecting primary data, consider

sampling techniques


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"Too often, our minds are locked on one track. We are

looking for red – so we overlook blue. Many Nobel Prizes

have been washed down the drain because someone did

not expect the unexpected."

- John D. Turner


Making

Effective DecisionsPart Four

The Human Aspects:

Emotional & Irrational Factors


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Group Decision Making

Some predictable things happen as groups begin to make decisions: They …

make decisions more slowly than individuals.

make decisions which are more extreme than those made by individual members.

are often subject to weak decisions supported by a minority of the members.

may have to compromise, making their decisions less effective than desired.


Thoughts about Decision Making (Groups)

“Football combines the two worst elements of

American society: Violence and committee

meetings.”

-- George Will

“No one ever erected a statue to a

committee.” -- Wil Rogers


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Group Decisions

may be better when …

Input is needed from different perspectives.

Support for the decision needs to be developed.

Individuals need to feel involved.

Creativity would be helpful.

Limited precedents exist.

Any of a variety of options would be acceptable to management.


Individual Decisions

may be better when …

Time is a critical factor.

The group does not have expertise in the issue to be

decided.

Group norms don't agree with management objectives

in the organization.

The group is significantly dominated by one or a few

members.


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“When experts* make decisions, they don’t systematically and logically compare all

options. … it is much too slow… they size up the situation and act.”

-- Gary Klein, Sources of Power

(*Experts means individuals trained in a professional field such as

nurses, firemen, doctors, chemists, accountants, etc.)


Experts vs. Laymen

Experts have a much more intuitive

process

Experts have developed complex rating

systems that laymen seldom understand

Laymen may make good decisions, but

may not be able to explain and document

them

Our brains (experts and laymen, both)

detect subtle patterns earlier than we

know


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Framing the Decision

“Framing” is the perspective from which you

view the decision. The “cliché” is the glass

half full / glass half empty comparison.

The perspective can make an amazing

difference in our decisions.


Technology Influences


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More Technology Means …

Faster obsolescence = more frequent &

more complex decisions

More computer-based decision making

tools available

“Easier” web research options =

information overload

A need to streamline decision systems in

order to reduce workplace stress


Making

Effective Decisions

Part Five:



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Four Key Points to Presenting

Your Decision

Focus on the audience

Design it to an appropriate level

Make the decision credible

Avoid distractions; make the idea central

(The subject of a whole different webinar)


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We, as human beings, have a “storytelling”

problem. We are a bit too quick to come up with

explanations for things we don’t really have an

explanation for.

-- Malcolm Gladwell


Program Summary

The Process of Making a Decision

The Seven Steps

Developing Options

Narrowing Down the Choices

Human & Technology Factors



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Last Thoughts on Decisions

"It is much more pleasant to make the decision than to justify it."

- Malcolm Forbes

Decisions made quickly can be every bit as good as ones we agonize over.

- Malcolm Gladwell

"Life is full of choices.... and sometimes all of them are yucky!"

- Joanne Lee



Questions & Discussion

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Thank You for Participating


Bob Vaughnwww.ArvonManagement.com

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