so, you think you are good at making decisions? - 8th october - aberdeen
TRANSCRIPT
To change the image, select the image >right click > change picture Use the Reset button if you need to realign the picture to the slide.
INTECSEA Consulting
So, You Think You’re Good
At Making Decisions??
A B C
INTECSEA 2
An Investment ‘Opportunity’
Investment of £10 with uncertain return
Investment is sunk cost (will not be returned)
To simulate uncertainty, we use four playing cards – two red and two black.
- Two black cards win £30
- One black and one red win £15
- Two red cards attract an additional penalty of £6 i.e. total loss of £16
INTECSEA 3
A Decision Tree Makes The Problem Clearer
Do Not Invest
Invest
-£10
Two Black
One Red / One Black
Two Red
£30
£15
-£6
£0
INTECSEA 4
The Expected Value
Do Not Invest
Invest
-£10
Two Black
One Red / One Black
Two Red
£30
£15
-£6
£0
1/6
1/6
2/3
EV = 30.(1/6) +15.(2/3) – 6.(1/6)
£14
£4
INTECSEA 5
Value of Information
Do Not Invest
Invest
-£10
Two Black
One Red / One Black
Two Red
£30
£15
-£6 -£3
Info
£0
INTECSEA 6
The First Card is Red
Do Not Invest
Invest
-£10
Two Black
One Red / One Black
Two Red
£30
£15
-£6
£0
0
1/3
2/3
EV = 30.(0) +15.(2/3) – 6.(1/3)
£8.00
-£2.00
-£3
Info
INTECSEA 7
The First Card is Black
Do Not Invest
Invest
-£10
Two Black
One Red / One Black
Two Red
£30
£15
-£6
£0
1/3
0
2/3
EV = 30.(1/3) +15.(2/3) – 6.(0)
£20.00
£10.00
-£3
Info
INTECSEA 8
The Monty Hall Problem
A B C
INTECSEA 9
The Monty Hall Problem
A B C Stick with original choice
INTECSEA 10
The Monty Hall Problem
A B C Switch from original choice
INTECSEA 11
Decision Quality
DQ represents the periodic application of structured decision making to specific opportunities and decision problems.
Organisational Decision Quality (ODQ) is the understanding and use of DQ by the full, corporate-wide decision making community, in collaborative value creation.
INTECSEA 12
Elements of Decision Quality
INTECSEA 13
Appropriate Frame
Clear Values and Trade- off
Creative Alternatives
Meaningful Reliable
Information
Logically Correct
Reasoning
Commitment to Action
A Decision Is Only As Good As Its Weakest Link
Defining the Decision Frame
Policy
Strategic
Tactical
Constraints and boundaries within which the decision must be made
Primary decisions to be made
Secondary decisions
INTECSEA 14
Decision Framing Workshop
INTECSEA 15
Business Opportunity
Strategic Questions
Business Drivers
Decision Criteria
Strategy Map – All Options
Concepts to be
Considered
Decision Frame
Values and Trade-offs
Creative Alternatives
Information Reasoning
Action
Business Framing
Concept Identification
Prospect Development Study
INTECSEA 16
INTECSEA 17
Strategy Map
INTECSEA 18
Strategy Map
INTECSEA 19
Summing Up
An organisation’s value is just the sum of the decisions it makes and executes
Humans are not naturally wired to consistently make good decisions
Decision Quality methods provide a structured framework within which complex decision making can be transparent and auditable
Decision Quality is a learned skill
Take a look at …………….
SPE Technical Report – Guidance for Decision Quality for Multi-company Upstream Projects
Society of Decision Professionals website www.decisionprofessionals.com
INTECSEA 20