1) Some Definitions
2) Kinds of Decisions
a- Decisions whether
b- Decisions which
c- Contingent decisions
III- Risking
1)Some Definitions
2)Kinds of Decisions
This is the yes/no, either/or decision that must be made before we proceed
with the selection of an alternative. Should I buy a new TV? Should I travel
this summer?
b- Decisions which
c- Contingent decisions
These are decisions that have been made but put on hold until some
condition is met.
For example, I have decided to buy that car if I can get it for the right
price; I have decided to write that article if I can work the necessary time
for it into my schedule. OR even, We'll take the route through the valley if
we can control the ridge and if we detect no enemy activity to the north.
Most people carry around a set of already made, contingent decisions, just
waiting for the right conditions or opportunity to arise. Time, energy, price,
availability, opportunity, encouragement--all these factors can figure into
the necessary conditions that need to be met before we can act on our
decision.
The manager makes the decision based on the knowledge he can gather.
He then must explain the decision to the group and gain their acceptance
of it. In some studies, the time breakdown for a typical operating decision
is something like this:
Make decision, 5 min.; explain decision, 30 min.; gain acceptance, 30 min.
b- Group
The group shares ideas and analyses, and agrees upon a decision to
implement. Studies show that the group often has values, feelings, and
reactions quite different from those the manager supposes they have. No
one knows the group and its tastes and preferences as well as the group
itself. And, interestingly, the time breakdown is something like this:
group makes decision, 30 min.; explain decision, 0 min.; gain acceptance,
0 min.
Clearly, just from an efficiency standpoint, group decision making is better.
More than this, it has been shown many times that people prefer to
implement the ideas they themselves think of. They will work harder and
more energetically to implement their own idea than they would to
implement an idea imposed on them by others. We all have a love for our
own ideas and solutions, and we will always work harder on a solution
supported by our own vision and our own ego than we will on a solution we
have little creative involvement with.
There are two types of group decision making sessions.
1. Free discussion in which the problem is simply put on the table for
the group to talk about. For example, Joe has been offered a job
change from shift supervisor to maintenance foreman. Should he
take the job?
2. Developmental discussion or structured discussion. Here the
problem is broken down into steps, smaller parts with specific goals.
For example, instead of asking generally whether Joe should take the
job, the group works on sub questions: What are Joe's skills? What
skills does the new job require? How does Joe rate on each of the
skills required? Notice that these questions seek specific information
rather than more general impressionistic opinions.
As you know, there are often many solutions to a given problem, and the
decision maker's task is to choose one of them. The task of choosing can
be as simple or as complex as the importance of the decision warrants,
and the number and quality of alternatives can also be adjusted according
to importance, time, resources and so on. There are several strategies
used for choosing. Among them are the following:
a- Optimizing
This is the strategy of choosing the best possible solution to the problem,
discovering as many alternatives as possible and choosing the very best.
How thoroughly optimizing can be done is dependent on
In this strategy, the first satisfactory alternative is chosen rather than the
best alternative. If you are very hungry, you might choose to stop at the
first decent looking restaurant in the next town rather than attempting to
choose the best restaurant from among all (the optimizing strategy). The
word satisficing was coined by combining satisfactory and sufficient. For
many small decisions, such as where to park, what to drink, which pen to
use, which tie to wear, and so on, the satisficing strategy is perfect.
c- Maximax
d- Maximin
This stands for "maximize the minimums." In this strategy, that of the
pessimist, the worst possible outcome of each decision is considered and
the decision with the highest minimum is chosen. The Maximin orientation
is good when the consequences of a failed decision are particularly
harmful or undesirable. Maximin concentrates on the salvage value of a
decision, or of the guaranteed return of the decision. It's the philosophy
behind the saying, "A bird in the hand is worth two in the bush."
d- PMI
Weighing the Pros and Cons of a Decision
PMI stands for 'Plus/Minus/Interesting'. It is a valuable improvement to the
'weighing pros and cons' technique used for centuries.
PMI is an important Decision Making tool: the mind tools used so far in this
section have focused on selecting a course of action from a range of
options. Before you move straight to action on this course of action, it is
important to check that it is going to improve the situation (it may actually
be best to do nothing!) PMI is a useful tool for doing this.
By carrying out the analysis you can plan to strengthen the forces
supporting a decision, and reduce the impact of opposition to it.
Many successful people think from a very rational, positive viewpoint, and
this is part of the reason that they are successful. Often, though, they may
fail to look at problems from emotional, intuitive, creative or negative
viewpoints. This can mean that they underestimate resistance to change,
don't make creative leaps, and fail to make essential contingency plans.
Similarly, pessimists may be excessively defensive, and people used to a
very logical approach to problem solving may fail to engage their creativity
or listen to their intuition.
If you look at a problem using the Six Thinking Hats technique, then you'll
use all of these approaches to develop your best solution. Your decisions
and plans will mix ambition, skill in execution, sensitivity, creativity and
good contingency planning.
This tool was created by Edward de Bono in his book "6 Thinking Hats".
g- Starbursting
h- Stepladder Technique
j- Decision Trees
Choosing Between Options
by Projecting Likely Outcomes
Decision Trees are useful tools for helping you to choose between several
courses of action.
They provide a highly effective structure within which you can explore
options, and investigate the possible outcomes of choosing those options.
They also help you to form a balanced picture of the risks and rewards
associated with each possible course of action.
This makes them particularly useful for choosing between different
strategies, projects or investment opportunities, particularly when your
resources are limited.
III- Risking
1. Only the risk takers are truly free. All decisions of consequence
involve risk. Without taking risks, you cannot grow or improve or even live.
2. There is really no such thing as permanent security in anything
on earth. Not taking risks is really not more secure than taking them, for
your present state can always be changed without action on your part. If
you don't take the risk of dying by driving to the store, your house could
collapse on you and kill you anyway.
3. You are supposed to be afraid when you risk. Admit your fears--of
loss, of rejection, of failure.
4. Risking normally involves a degree of separation anxiety--the
anxiety you feel whenever you are removed from something that makes
you feel secure. Many children feel this when they first leave their parents
for school. Some college students feel this when they go off to college.
Travelers sometimes feel it when they get homesick. The way to overcome
separation anxiety is to build a bridge between the familiar and secure and
the new. Find out what the new place--school or country--is like and how its
elements compare to familiar and secure things at home. Take familiar
things with you--books, teddy bear, popcorn popper, whatever.
The same is true of all risks. Make the opportunity as familiar as possible
and learn as much about it as you can before you release the security of
the old. Find out about the new job, its location, the lifestyle of those who
live there, and so on.
3)Advice on Risking
1. Decide whether the risk is necessary or desirable. Spend some
careful thought before acting, so that you will not end up taking
unnecessary risks.
2. Risk for the right reasons and when you are calm and
thoughtful. Don't take a risk because you are angry, hurt, depressed,
desperate, or frightened. Don't take risks just to get revenge or to harm
someone else. Don't risk when you are incapable of rational thought.
3. Have a goal. When you take a risk, have a clear purpose in mind so
that you will know, after the fact, whether you succeeded or not. What will
taking the risk accomplish?
4. Determine the possible loss as well as the gain. That is, know
exactly what the consequences of failure will be. Unless you know pretty
accurately what both loss and gain will be, you do not understand the risk.
There is a tendency either to underestimate or to overestimate the
consequences of risk. Underestimation can result in surprising damage,
cost, setbacks, pain, whatever. But overestimation is just as problematic,
because it can keep us from taking the risks we should be taking. Many
times, upon reflection, the worst case event of a failed risk is much less
harmful or negative that we originally believed.
It's a good idea in fact to list all the good expected effects of a successful
outcome and all the bad expected effects of an unsuccessful outcome.
5. Try to make an accurate estimate about the probability of each
case. Is the probability of success one in two, one in ten, one in a
hundred, one in a million? This can be sometimes difficult to do, but
usually you can guess the probability within an order of magnitude.
6. When possible, take one risk at a time. Divide your actions or goals
wherever possible so that you are not combining risks unless absolutely
necessary. Simultaneous risking increases anxiety, creates confusion, and
makes failure analysis very difficult.
7. Use imaging or role playing to work through the various possibilities,
successes and failures, so that you will be mentally prepared for any
outcome. Think about what can go right and what can go wrong and how
you will respond to or adjust to each possibility.
8. Use a plan. Set up a timetable with a list of steps to take. Use the plan
as a guideline, but be flexible.
9. Act decisively. When you have evaluated the risk and decided that it's
worth it, act. Go for it. Don't hesitate at the threshold or halfway through.
Once you get going, be courageous. Grit your teeth and move forward.
Don't procrastinate and don't act half heartedly.
10. Don't expect complete success. You may get it, of course, but
chances are the result of your risk will not be exactly what you had
imagined and there will be more a degree of success than absolute
success or failure.