Decision Making Techniques

The techniques in this chapter range from the very simple to the rather sophisticated. Which technique you choose for a given decision will be influenced by the importance and complexity of the decision. As a preview to a discussion of techniques, then, let’s consider a few preliminary ideas that will help identify some decision making levels.

Planning for Decision Making

While decision making without planning is fairly common, it is often not pretty. The terms used to describe it–crisis management, putting out fires, seat-of-the-pants governing–all reveal the inelegance and awkwardness of this way of life. Planning allows decisions to be made in a much more comfortable and intelligent way. Planning even makes decisions easier by providing guidelines and goals for the decision. We might even say that planning is a type of decision simplification technique (see the discussion of these techniques below).

Decision makers will find four major benefits to planning:

1. Planning allows the establishment of independent goals. The vision which will shape the decisions is set apart from surrounding events. Decisions are not made only as reactions to external stimuli. “Management by firefighting” is replaced by a conscious and directed series of choices. Managers now steer the organization, individuals now steer their lives, rather than being steered by external forces. Sometimes the difference between planning and not planning is described as “proactive” (taking control of the situation) versus “reactive” (responding to stimuli).

2. Planning provides a standard of measurement. A plan provides something to measure against, so that you can discover whether or not you are achieving or heading toward your goals. As the proverb says, If you don’t know where you’re going, it doesn’t matter which way you go.

3. Planning converts values to action. When you are faced with a decision, you can consult your plan and determine which decision will help advance your plan best. Decisions made under the guidance of planning can work together in a coherent way to advance company or individual goals.

Planning is useful in emergency situations, too. When a crisis arises, a little thought about the overall plan will help determine which decision to make that will not only help resolve the crisis but will also help advance the overall plan. Without a plan, crises are dealt with haphazardly and decisions are made which may ultimately be in conflict with each other.

4. Planning allows limited resources to be committed in an orderly way. Budgets, time, effort, manpower–all are limited. Their best use can be made when a plan governs their use.

A simple example would be planning to buy a house or a car. Rather than having to decide between buying the item right now with all cash or never having it, you can plan to buy it over several years by making payments. Or, you might combine this plan with the plan to buy a smaller house and add rooms later as they could be afforded. By planning you can thus accomplish things that might otherwise look impossible.

Decision Levels

We all recognize that some decisions are more important than others, whether in their immediate impact or long term significance. As a means of understanding the significance of a decision so that we can know how much time and resources to spend on it, three levels of decision have been identified:

1. Strategic. Strategic decisions are the highest level. Here a decision concerns general direction, long term goals, philosophies and values. These decisions are the least structured and most imaginative; they are the most risky and of the most uncertain outcome, partly because they reach so far into the future and partly because they are of such importance.

For example: Decisions about what to do with your life, what to learn, or what methods to use to gain knowledge (travel, work, school) would be strategic. Whether to produce a low priced product and gain market share or produce a high priced product for a niche market would be a strategic decision.

2. Tactical. Tactical decisions support strategic decisions. They tend to be medium range, medium significance, with moderate consequences.

For example: If your strategic decision were to become a forest ranger, a tactical decision would include where to go to school and what books to read. Or if your company decided to produce a low priced product, a tactical decision might be to build a new factory to produce them at a low manufacturing cost.

3. Operational. These are every day decisions, used to support tactical decisions. They are often made with little thought and are structured. Their impact is immediate, short term, short range, and usually low cost. The consequences of a bad operational decision will be minimal, although a series of bad or sloppy operational decisions can cause harm. Operational decisions can be preprogrammed, pre-made, or set out clearly in policy manuals.

For example: If your tactical decision is to read some books on forestry, your operational decision would involve where to shop for the books. You might have a personal policy of shopping for books at a certain store or two. Thus, the operational decision is highly structured: “Whenever books are needed, look at Joe’s Books.”

An important comment should be made here. Issues should be examined and decisions should be made at all of these levels. If you discover that nearly all of your thinking and decision making is taking place at the operational level, then you are probably not doing enough strategic thinking and planning. As a result you will lead a reactive life, responding only to the forces around you and never getting control of your life, your direction or your goals.

Some Techniques for Decision Making

This is a list of easy, practical techniques that can be applied to simple or complex decisions. They share the assumption that circumspect analysis is the key to making good decisions. Many decisions are made with too little information and too little thought, in a non-deliberate way. Think about it for a moment: how many people do you know who commonly spend even five minutes structuring and analyzing a decision?

Note how these techniques provide a visible, structured, orderly set of factors involved in a decision, so that the decision maker can consider them in a thoughtful and coherent way.

The first three techniques are especially for whether-type decisions, those involving yes/no, either/or, or two-possibility decisions.

1. T-Chart. A T-Chart is an orderly, graphic representation of alternative features or points involved in a decision. In one form, it can be a list of positive and negative attributes surrounding a particular choice. Drawing up such a chart insures that both the positive and negative aspects of each direction or decision will be taken into account.

For example, what are the pros and cons of deciding to buy a sport utility vehicle?

In another form, two possible choices are listed, with the good points or arguments or effects listed for each. Suppose your company is trying to decide whether to create its own advertising or hire an agency.

To fill out this latter form, more than two choices can be included, and a list of negatives for each choice can be added as well.

2. PMI. Edward de Bono refines the T-Chart idea into a three part structure, which he calls PMI for plus, minus, and interesting. Here you first list all the plus or good points of the idea, then all the minus or bad points, and finally all the interesting points–consequences, areas of curiosity or uncertainty, or attributes that you simply don’t care to view as either good or bad at this point (consequences that some people might view as good and others might view as bad, for example). The “interesting” category also allows exploration of the idea or choice outside the context of judgment–you don’t have to evaluate the attribute into a positive or negative category.

As simple as this technique seems to be, and as often as others will tell you, “Well, of course, everyone does that all the time,” this is a very powerful but much neglected technique. Most people believe they list the pluses and minuses of a decision before making it, but in actual practice, many people make a decision or form an opinion before they consider the evidence in an orderly way. Only after they make a decision do they hunt around for reasons to support it.

Considering the evidence on both (or all) sides before you commit yourself emotionally and psychologically to a position will have a major impact on the quality of your decision making.

For example, suppose you are on a jury and must decide the guilt or innocence of the accused (or to hold for the plaintiff or defendant in a civil trial, if you prefer). What happens on most juries is that after the members meet in the room and choose a foreman, a preliminary vote is taken. “Let’s find our where we all stand now,” the foreman might say. Unfortunately, beginning a decision making session this way creates more problems than it solves. Before the jurors have had time to think over the issues or to discuss them to clarify the facts, they are asked to give their opinions. Giving an opinion is, in our society, accompanied by an ego investment, because we do not like to be wrong. As a result, each juror becomes emotionally committed to his first opinion and will very often proceed to look for arguments and facts that support this opinion (and hence defend his ego), rather than listen thoughtfully to the facts and decide the case on its merits.

If, on the other hand, the foreman said, “Instead of a preliminary vote on the case, let’s work together to draw up a list, first of all the evidence that would argue for the defendant’s guilt, then all the evidence that would argue for his innocence. And as we make the lists, we can also write down facts that are interesting but that don’t necessarily argue either for guilt or innocence.” Now all the jurors will work together, have the opportunity to ask questions and resolve doubts, consider evidence they might not otherwise have remembered, and can change their minds back and forth as many times as they want, all without a threat to their egos or their need to be correct. Notice that the PMI technique turns the jurors into collaborators, working together, instead of competitive debaters arguing for victory (rather than truth).

As another example, suppose that you are on the board of a missionary and relief organization and your group has decided to improve the roads in a small South American village. You as chairman must present the alternatives, which are that you have enough gravel either to pave half the roads completely or to fix the worst spots and holes in all the roads. If you stand up and say, “Well that’s it; what do you think?” you’ll get the usual off-the-cuff first impression opinions, backed up later by whatever arguments those who have committed to them can dredge up. But suppose you say, “Let’s make two PMI lists, first one of all the good and bad points for paving half the roads completely, and then one for the good and bad of fixing the worst problems on all the roads. Then we will have all the ideas and reasons before us when we make a decision.” This way, you will be pooling your ideas and working together without the threat of being wrong or the need to defend your first opinion.

Yes, this simple technique of deliberate pro and con identification is extremely powerful and extremely neglected. Get into the habit of using it and you’ll see your decision making quality improve remarkably.

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Try It Yourself

PMI Worksheet. Fill out a PMI worksheet on one of the following questions. Be sure to list at least ten reasons pro and ten con. Then on the back of the worksheet, name and defend your final decision on the question.

1. Should drivers in congested areas be charged 25 cents per mile during peak traffic hours?
2. Should manufacturers be required to reduce the amount of packaging they use for consumer products, as a means of reducing trash?
3. Should people desiring to marry be required to pass a sophisticated compatibility test before being allowed to marry?
4. Should parents be given a voucher to pay $2,500 per year toward their child’s education, to be applied toward education at any school, public or private? (This would apply to primary and secondary education, not to college.)

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3. Buriden’s Ass. This method of decision making is used when two or more equally attractive alternatives are faced. (From an old fable of an ass placed between two equally nice bales of hay. The ass couldn’t decide which bale to turn to because they were both so attractive, and so it starved to death from indecision.) The method is simply to list all the negative points or drawbacks about each decision. That is, when two or more alternatives seem very desirable, we become blinded to any drawbacks. The Buriden’s Ass method simply focuses on the drawbacks.

For example, suppose you are a young lady about to become engaged. Mr. Right asks you, “Darling, would you rather have a $4,000 diamond engagement ring or $4,000 worth of furniture for our new Swiss chalet?” You find these to be both very attractive alternatives, so you decide to use the Buriden’s Ass method to decide between them. What are the drawbacks of the ring? It might get stolen or lost; it isn’t useful like furniture; people might think you married Mr. Right for his money (or that he had to buy your consent with a big rock); it might make your friends feel bad because they have little rings; you might worry about damaging it. And so on.

Now, what are the drawbacks of the furniture? It will wear out eventually and be gone, while the ring should last a lifetime; you might worry about staining or damaging the furniture; furniture isn’t “romantic” like diamonds; and so on.

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Try It Yourself

Buriden’s Ass. Perform a Buriden’s Ass analysis (criticizing each alternative) on one of the following dilemmas. Afterwards, choose and defend your choice for one of the alternatives.

1. Your kindly boss wants to increase your total compensation. He offers you these choices: (1) take an increase in hourly pay, (2) work fewer hours per week so that your per-hour pay rate will increase, (3) take a long paid vacation each year and continue to work at the same hourly pay. In terms of economic value, each of the three choices comes out exactly the same.

2. Through a careless accident (you really ought to watch yourself), only your brain is left, sitting in a jar waiting for transplant. The doctors have three choices available to you and want you to choose one. The first is to be put into a stunningly attractive body. The second is to be put into the below average body of a multi-millionaire. The millionaire’s estate will recognize you as the true millionaire, giving you ownership of all assets. The third choice is to be put into the body of a rather homely person. In the process, however, for this body only, it is possible for the doctors to increase your intelligence level to highly superior. Which body do you want? (All the bodies are the same in age, health, etc.)

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The last two techniques are especially useful for which-type of decisions: those involving several alternatives and several criteria.

4. Measured Criteria. With this technique, you list the criteria you want your decision to meet and assign points to each criterion based on its relative importance in the decision. Then, each alternative is given a certain number of points according to how fully it meets the criterion. For points you can use a scale of 1 to 10, 1 to 100, or any other range that makes sense to you.

In the example below, traveling by train is rated at 25 out of 30 points for the “comfort” criterion, while the plane is ranked a little less comfortable, at 21 out of 30. Once all the alternatives have been assigned their due points for each criterion, all the points for each alternative are added up and the alternative with the highest total points is the one chosen. In the example below, that would be the plane.

Example:

5. Decision Matrix or Weighted Decision Table. This is a slightly more sophisticated version of the measured criteria technique. Here a table is set up with each criterion given a weight depending on its importance in the decision and with each alternative given a ranking for that criterion.

For example, suppose you want to decide on which class to take next semester, and you have the following alternatives:

Behavior Disorders
Personal Finance
Screenwriting
Beginning Acting

You set up a decision matrix with the alternatives across the top and with the criteria you want a class to meet listed down the side. Each criterion is also given a weight to show its relative importance. In this example below, note that “personal interest” is weighted with a 9, a very high weight, while “good hour” is weighted with a 3, a low weight. Taking a class at a good hour is important to you (because you named it as one of the criteria), but personal interest is three times as important.

Now each alternative is ranked according to how well it meets the named criterion in each case. In our example below, we have decided to use higher numbers to represent better or more important, so the “most personally interesting” class according to the ranking below, is Personal Finance.

After ranking all the alternatives, the total points are added up, and the one with the largest total is the alternative chosen.

Instead of ranking the alternatives from one to the total number of alternatives as we did above (1-4 because of 4 alternatives), you can use relative ranking numbers, where, say 10 would be the best possible and 1 would be very poor. There are two advantages to this latter method. One is that very low and very high rankings can be moved apart–a ranking of 1 out of 10 is much lower than 1 out of 6. The second advantage is that two alternatives can be given the same ranking in points. Thus, the absolute scale, whether 1 to 10 or 1 to 100, gives more flexibility than the 1-out-of-number-of-alternatives scale, above.