the appropriate frame 2 1.06 the appropriate frame this section defines “frame” and illustrates...

The Appropriate Frame

21.06 • The Appropriate Frame

This section defines “frame” and illustrates tools to help establish the appropriate frame.

• Introduction to Framing− What is a frame?

− Why is it important?

• Tools and Techniques−Sharing a common purpose

−Adopting a conscious perspective

−Scoping the problem

• Summary


The first step in the Dialogue Decision Process sets the frame: the purpose, perspective, and scope.

EvaluatedAlternatives

Plan

Decision Board

Project Team

Alter-

nativesFrame

Tools to Establish Purpose, Perspective, and Scope

••••••••

Issues

Decision Hierarchy

Influence Diagram

Business Situation

Market Assessment


To illustrate what we mean by “frame,” we will conduct a competitive bid for a $20 bill.

• Rules− Anyone can bid.

− Bids must exceed high bid by $1.

− The highest bidder receives $20.

− The top two bidders must pay their bids.

− Bids cannot be withdrawn.

• Who wants to start the bidding?

Bid

$xxx

20

20

20

20

$1st

2

3


What frames and strategies emerged during the bidding?

Frames Strategies


Frequent frames and strategies from “the frame game.”

FramesStrategi

es

Plunging in, or “why not?”

Incremental bidding

$21, “Holy expletive!”

Cooperation or “cut the losses”

Intimidation

Bid 50¢

Add $1

Add $1

Negotiate with 2nd bidder

Open at $19.50

Common Assumptions:“The bidding won’t exceed $2”, ... “or 10” ... “or 20!”


The competitive bidding game shows the danger of getting caught in the “thrown frame.”

• When a situation (problem or opportunity) presents itself, there is a tendency to accept a frame unconsciously.

• As a result, people often start their decision-making on an ill-conceived foundation.

• In the bidding example, people usually start with a frame of “I can’t lose by bidding a small sum relative to the $20.”

• Then they shift to an “incremental” decision frame.

• Then...


What is a decision frame?

The personal image we form of a situation, which consciously and unconsciously guides our decision-making.

—Strategic Decisions Group

The mental structures that people create to simplify and organize the world.

—Russo & Schoemaker, Decision Traps

We all have visions (frames). They are the silent shapers of our thoughts.

—Thomas Sowell, A Conflict of Visions, 1987


A frame is a limited description of a problem that filters out what is irrelevant or immaterial.


Inappropriate frames generally result in poor decision-making.

Problem:Overwhelm

Results:• Non-decisions• Oversight

Problem:Blindness

Results:• Errors of the third

kind—right answer; wrong question

• Unforeseen threats• Lost opportunities


What does a decision frame consist of?

• Purpose—what we intend to achieve in this situation

• Perspective—the context that sets the stage for a decision (e.g., how to view the problem, whom to involve, what conversations to have, what behaviors to expect)

• Scope—the boundary that we use to distinguish what is included and excluded in considering the situation








• Summary


The team selects from these tools to establish a common frame.

• Sharing a Common Purpose− Vision Statement

• Adopting a Conscious Perspective

– Issue Raising

– Force-Field Diagram

••••••

Issues

• Scoping the Problem

– Decision Hierarchy

– Strategy Table

– Values and Trade-offs

– Influence Diagrams

For Against

Values, trade-offs, and influence diagrams are discussed later.

NPV vs. ?


Agreement on a one-page vision statement helps ensure that team members share a common purpose.

“Eighty percent of Silicon Valley project disasters could have been avoided if the team had answered three simple questions before it started.”

—Charles GoldenThe “Red Adair” of project managers

Vision Statement

Why are we doing this?

What are we going to do?

How will we know ifwe are successful?


This sample vision statement guided a successful strategy-development project.

Project Vision StatementWhat are we going to do?

• Develop a therapeutic area long-term strategic plan, including 10-year vision • Assess the chances of achieving the revenues goal for the Oncology Franchise ($2B)• Provide a platform for recommending R&D and commercial strategic projects to support the growth of the Oncology Franchise based on the assessment of value contribution, risk and investment required of both internal and external projects

• Pilot the approach for other therapeutic teams

Why are we doing this?• To bring the organization together via a common long-term vision for the Oncology Franchise.

• We need to ensure we optimize our resource allocation.• Sufficient information is now available to conduct the work.

How will we know if we are successful?• The Steering Committee accepts the recommended strategy and allocates the required resources.

• The Steering Committee accepts the analytic approach we have taken.

How could we fail?• We will fail if we do not get all the right people (real decision-makers, all functions) involved, or don’t finish the project on time, or don’t reach any new insights.





– Issue Raising




– Strategy Table




NPV vs ?

••••••

Issues

For Against


One’s perspective is formed by personality, training, and experience.

The Situation

ZZZ

Z Z Z

Solutions from Alternate Perspectives

Psychologist’s ProposalEngineer’s Proposal


The key is to recognize and respect diverse perspectives ...

W I LLY' S

... and have the team adopt a “conscious” perspective.

Once adopted, the perspective drives decisions about others to involve, conversations to have, behaviors to expect, etc.


“Issue raising” starts a “conversation” about the decision, which exposes perspectives and major concerns.

••••••

Issues

Objectives:

• To uncover issues that must be dealt with

• To expose team members to others’ perspectives

• To develop “ownership” of the problem by team members

Project Team


An “issue” is anything important to the decision problem.

• Decisions: “What we can do”− Investments− Alliances

• Uncertainties: “What we know and don’t know”− Competition− Regulation

• Values: “What we want”− Profit− Jobs

• Other:“Facts” or “process issues”− Last quarter’s profit− Organizational challenges

4. All communication is top down, never bottom up.

2. Our three top competitors may surpass our market share next year.

3. Shareholders objected to our stand on the environment.

Sample Issues

1. Should we launch the Viking Project?


An effective approach to issue raising is to:

• Explain and reach agreement on the topic.

• Give participants one or two minutes to create their own lists.

• Go around the room, collecting one issue from each participant.

• Open the floor for additional issues.

• Combine duplicates into a single issue.

• If appropriate, prioritize the issues.− Give each participant N/3 votes.

− Sort so that high vote getters appear first.

− Identify the natural break between high-and low-priority issues.

Issues often suggest “challenges,” which form a basis for strategy (to be covered later).


Refine the issues to assure breadth and quality.

• Consider major functions, such as research and development, manufacturing, regulatory, reimbursement, marketing and sales. Are the issues for each included?

• Assume different roles (e.g., customer, competition, outside director) and identify issues from their perspectives.

• Use “backcasting” to help raise issues on sensitive topics.− Suppose we meet five years from now.

− I tell you that results from our strategy were tremendous (miserable).

− Tell me why.

• Construct a force-field diagram to help identify arguments for and against “go/no go” decisions.


Categorizing the issues focuses attention on key decisions, uncertainties, and values.

Decisions

Issues

O

D U UD O

OO

VU

U V

U U V

VDDU

D

D

D D D

DD

D D

Uncertainties

U UU

UU

U

Values

V VVV

VV

V V

V

Other

OO

OO O

OOO

O


We use these definitions to categorize issues.

D

D D D

DD

D D

Decisions

Actions controlled by the decision-maker

– Launch product – Close plant

– Acquire competitor – Increase spending

U UU

UU

Uncertainties

U

Factors that can not be controlled

– Customer demands – Competitor’s price

– Court’s decision – Drug’s effectiveness

V VVV

VV

V V

Values

V

What we want or don’t want

Direct values Indirect values

– Profit – KPIs*

– Now, not later – “Strategic fit”

OO

OO O

OOO

O

Other

Examples:

– Facts – Process issues

*KPI: Key performance indicator


Separating decisions, uncertainties, and values adds clarity and sets up subsequent steps.

D

D D D

DD

D D

Decisions

Decision Hierarchy

V VVV

VV

V V

Values

V

Value Measure

$NPV + Other?

Facts +Process Issues

Record Facts; Address Process

Issues

OO

OO O

OOO

O

Other

U UU

UU

Uncertainties

U

Influence Diagram





– Issue Raising




– Strategy Table




NPV vs ?

••••••

Issues

For Against


A “decision hierarchy” specifies the scope of the decisions to be analyzed.

Example: Manufacturing Plant Modernization

•Continue manufacturing

Policy Decisions

Take asgiven

•Plant configuration and location

•Technological stretch•Product range•Quality and cost position

•Marketing strategy

Strategic Decisions Focus on in

this analysis

•Product design•Manufacturing operations

•Marketing plans

Tactical Decisions

Decide Later


The decision hierarchy reveals potential impediments to decision quality.

• Policy decisions that unduly restrict creative alternatives

• Policy decisions that have not been made—Should we work on them instead?

Policy Decision

s

• Scope too broad or too narrow

“Focus on” Decisions

• Premature detailed analysis of tacticsTactical Decisions








• Summary


Setting the appropriate frame is a key—but often neglected—link toward achieving decision quality.

2

3 4

5

6

DecisionQuality

1

•Appropriate Frame:

− Clear purpose− Conscious perspective− Defined scope

•Key tools:

− Team balancing− Vision statement− Issues and challenges− Assumption surfacing− Decision hierarchy

•Failure modes:

− Wrong people− “Frame blindness” or “plunging

in”− Scope too narrow− Unstated assumptions− Lack of conscious choice

of frame

•Appropriate Frame:

− Clear purpose− Conscious perspective− Defined scope

•Key tools:

− Team balancing− Vision statement− Issues and challenges− Assumption surfacing− Decision hierarchy

•Failure modes:

− Wrong people− “Frame blindness” or “plunging

in”− Scope too narrow− Unstated assumptions− Lack of conscious choice

of frame


In many projects, a decision board meeting is scheduled to agree on the frame.

EvaluatedAlternatives Plan

Decision Board

Project Team

Alter-natives

Frame

Tools to Establish Purpose, Perspective, and Scope

••••••••

Issues

Decision Hierarchy

Influence Diagram

Business Situation

Market Assessment


The decision board engages in dialogue to agree on the project’s purpose, perspective, and scope.

• Scope—the boundary that we use to distinguish what is included and excluded for this decision

Continue manu-facturing• Plant

configuration•Technological stretch• Product range• Quality and cost position

• Product design•Manufacturing operations• Marketing plans

?

?

• Perspective—the context that sets the stage for a decision

• Purpose—what we intend to achieve in this situation

Vision


Framing is an ongoing process; reexamining the frame lets you adapt to changing conditions.

Frame 1 Frame 2

Frame 3

Have the decision board agree on the frame and then review it at subsequent board meetings.

Experience AccumulatedDuring First Frame

Reexamine Frame

Experience AccumulatedDuring Second Frame

Reexamine Frame


Although a frame is essential, remember that it is a limited description of the problem.

•The map is not the territory.

•—Gurdjieff


Appendix


When complete, the frame will guide the conduct of the decision-making project.

DDPProjectFrame

Decision board & project team(s)

Geography, technology,markets, etc.

Corporateculture and

style

Schedule of major

meetings & conversations

Valuemeasures

Decisions andother business

issues addressed

Involvement ofothers in

organization

Logistic (e.g., team

room)


A force-field diagram helps organize issues for and against “go/no go” decisions.

Force-Field DiagramForces Pushing forPlant Modernization

Increased flexibility to meet market demand

Increased production volume

Improved product quality

Local and upper management support (high-profile project)

Competitors’ with similar technology

Forces Pushing Against

Plant Modernization

Capital costs for equipment and facilities

May not substantially increase production rates or product quality

Increased training operating costs associated with flexibility

Possibility of customers remaining loyal to older product lines

An “unbalanced” diagram may indicate biases or a decision that is clear now.


Metrics must provide a clear “line of sight” to value—Total Shareholder Return.

What’s that in dollars?


Decision analysis provides the concepts and tools to value complex business decisions.

Future decision opportunities need to be included.

• A mix of tangibles and intangibles

Equivalent Cash Flows

• Cash flows over time Present Equivalent

• Uncertain prospects Expected Value

• Risk attitude Certain Equivalent


A strategy table helps develop specific alternatives for each strategic decision.

Decision Hierarchy

Tactics

Policies

Strategic Decisions

• Plant• Technology• Products• Quality• Marketing

Strategic Decisions (one column for each)

Strategy Table

Plant

Alternative 1

Alternative 2

Alternative 3

• • •

Technology

Alternative 1

Alternative 2

Alternative 3

• • •

Products

• • •

Quality

• • •

Marketing

• • •

Listing the alternatives in each column helps illustrate the scope chosen for decision-making; alternatives will be combined later into strategies.


Judging the quality of the frame helps build confidence in the decision process.

2Creative,Doable

Alternatives

3Meaningful, Reliable

Information

4Clear

Values andTrade-offs

5LogicallyCorrectReasoning

6Commitmentto Action

0% 100%

DecisionQuality

1Appropriate

Frame

1Appropriate

Frame

The Appropriate Frame

0% “Plunging in” or “frame blindness”

No conscious perspective

Scope unstated

Assumptions unstated

No conscious choice of frame

50% “Lists, but not fully structured”

Identified issues

Identified perspectivesand concerns

100% “Conscious, shared perspective”

Clear statements of:Purpose, scope, and perspective

Decisions to be addressed


In our experience, improper framing is the most common failure in making major, strategic decisions.

Purpose & Perspective– Define the goal and value metrics for the strategy effort – Ask the right questions– Test the perspective and boundaries of the problem?

People/Process/Tools – Tailor the approach to fit the problem

Problem Characterization – Recognize the true need to solve the problem

Analytical

Organ-ization

Complexity


Failures at higher levels cannot be corrected at lower levels...

…and seeming failures at lower levels can be traced to root causes at higher levels.

?

Analytical

Organ-ization

Complexity

the appropriate frame 2 1.06 the appropriate frame this section defines “frame” and illustrates...

Documents

frame game

bidders bids

geoff bid

high bid

competitive bid

bidders rulegive

sabrina bids

common purpose