Decision Making

What decision making is, the step-by-step process behind a good decision, the main types and models, and the biases that quietly derail us

Define decision making

The process of choosing between options to reach a goal

How to make a good decision ?

Create a clear process , use the right method for the situation and be aware of biases that quietly cloud/distort judgment.

Outline the steps of the decision making process (including statements on what each step entails)

1.Define - State exactly what you are deciding and define a good result

2.Gather - collect the information that bears on the choice and notice what you are assuming

3.Identify options - List the alternatives , including unobvious or unfavourable options

4.Weigh - score the options against specific weighted criteria instead of gut judgment

5.Decide and Act - Choose, Commit, Implement ; a decision not acted on is no decision

6.Review - Check the results against what you predicted, and learn from the gap.

Outline the biases that derail judgment (including statements on what each bias entails)

Conformation bias - Favouring evidence that fits what you already believe

Anchoring - Over relying on the first number/option you see

Sunk cost fallacy - Continuing because of past investment instead of future merit

Overconfidence - trusting your judgment more than the evidence warrants

Availability bias - Overweighting whatever comes to mind most easily.

How to make better decisions ?

Use explicit criteria for judgment, seek evidence that would prove you wrong, review outcomes to calibrate judgment.

What are the 5 ways to make a decision ?

Intuition

Following of a rule/policy

Weighing options against specific criteria

Consensus with the people affected

Deferring to authority

All have situations of uses but some much more than others.

How are decisions classified ?

By level, routine and by who decides.

State the classes by level (state explanations and examples)

Strategic - Long term high impact direction (e.g. Entering a new market)

Tactical - Medium term choices that put strategy into practice (e.g. choosing a marketing channel for that market)

Operational - Day2Day/routine running of work(e.g. scheduling this weeks shifts)

State the classes by routine (state explanations and examples)

Programmed - routine and rule based , handled by a standard procedure (e.g. Reordering a stock when it hits threshold)

Non-Programmed - Novel and unstructured , needs judgment (e.g. Responding to a sudden competitor launch)

State the classes by who decides (state explanations and examples)

Individual - one person decides , fast and clear , but narrow (e.g. a manager approving a small expense)

Group - A team decided , more expertise and buy in , but slower (e.g. a committee choosing a new supplier)

Why does the type of decision matter in the decision making process ?

Because different types deserve different models , extensions of the process and effort levels , matching of effort to a decision/problems type is imperative/wise.

What is Ethical decision making ?

It is choosing what is right , not just what is effective. Weighing impact, rights and duties involved and what a good charactered person would do.

State the main ethical frameworks that must be looked through when making ethical decisions (in addition state weak points of each)

Utilitarian - Which option produces the overall most good and least harm. * Can be used to justify harming a minority for the greater good.

Rights - Whose rights are at stake ? and does the option respect them ? * Rights can conflict and one must be chosen.

Justice/Fairness - Are people treated equally and is the process fair ? * “Equal” and “Fair” are not always the same thing

Virtue - What would a person of integrity (honest and strongly moral) do here ? * Depends on ones idea of integrity and morals

Care - What best honours our relationships and responsibilities ? * Can favour those closer over strangers

State a step by step ethical decision model

1. Recognise that there is an ethical issue, not just a practical one.

2. Get the facts and identify everyone affected (the stakeholders).

3. Evaluate the options through several lenses above — they often agree.

4. Test your choice: could you defend it openly to those affected?

5. Act, then reflect on how it turned out and what you would change.

What is a decision making model ?

A structured method for reaching a choice.

State all off the decision-making models (state when they are used and how they work)

Rational model - Used for important comparable decisions with time to analyse. Define the criteria , weigh every option against them and pick the one with the highest score. Thorough but slow.

Bounded rationality - Used for real decisions with limited time and information. “Satisfice” ; choose the first option that is good enough rather than the theoretical best.

Recognition primed - Used when Experienced decider with time pressure. Pattern-match the situation to ones you have seen before , mentally simulate the obvious action and act if it works.

Intuitive - Used for a familiar domain , fast call needed. Trust the judgment built from experience, fast and often accurate , check for bias on big calls.

Vroom Yetton - Used when deciding how much to involve the team. Answer a few questions about quality and buy in to choose between deciding alone, consulting or deciding as a group.

OODA loop - Used for fast changing competitive situations. Observe, Orient, Decide, Act ; those who cycle fastest win.

Decision matrix - Used when choosing between a few concrete options. Score each option on weighted criteria and total the score (3x score for profit 1x score for Ease or 2x score for Ease etc)