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PROBLEM SOLVING AND DECISION-MAKINGPROBLEM SOLVING AND DECISION-MAKING

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Running a Stoplight:Running a Stoplight:

$75 fine.$75 fine.

10% federal income tax rate.10% federal income tax rate.

8% Idaho income tax rate.8% Idaho income tax rate.

Employee share of FICA at 7.65%Employee share of FICA at 7.65%

Need $94 pretax earnings to pay a $75 fine.Need $94 pretax earnings to pay a $75 fine.

If you figure one minute of your time is worth If you figure one minute of your time is worth $94, that extrapolates to $5,640 an hour.$94, that extrapolates to $5,640 an hour.

At a median wage of $14.43 in Idaho, you would At a median wage of $14.43 in Idaho, you would have to work 6.5 hrs. to pay this fine.have to work 6.5 hrs. to pay this fine.

Additionally, you might receive an increase in Additionally, you might receive an increase in your automobile insurance premium or have your automobile insurance premium or have your drivers license revoked.your drivers license revoked.

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Focus Point #1: Small decisions become big Focus Point #1: Small decisions become big decisions through frequencydecisions through frequency..

Don’t get into the mindset that it is a small, Don’t get into the mindset that it is a small, inconsequential decision. inconsequential decision.

Repeated enough times, the probabilities will Repeated enough times, the probabilities will catch up with you, and a small decision will catch up with you, and a small decision will become the biggest decision of your life.become the biggest decision of your life.

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Focus Point #2: Decisions involve consequencesFocus Point #2: Decisions involve consequences..

Ask yourself what are the consequences to your Ask yourself what are the consequences to your decision? decision?

Understanding the consequences helps us put Understanding the consequences helps us put decisions into perspective.decisions into perspective.

Spend more time arriving at the right decision Spend more time arriving at the right decision and less time correcting wrong decisions.and less time correcting wrong decisions.

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Focus Point #3: Think preventive, not reactionary!Focus Point #3: Think preventive, not reactionary!

Reactionary decisions often involve:Reactionary decisions often involve: A great deal of time.A great deal of time. Large sums of money.Large sums of money. Heartache.Heartache.

This is known as “Management by catastrophe”This is known as “Management by catastrophe”

It becomes similar to a dog chasing its tail!It becomes similar to a dog chasing its tail!

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Systematic or Six Step Process to Decision-Systematic or Six Step Process to Decision-making:making: (4)(4)

An organized evaluation of a decision situation An organized evaluation of a decision situation considering and reviewing the critical information considering and reviewing the critical information needed to make good decisions.needed to make good decisions.

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Step #1, Identify the problem.Step #1, Identify the problem.

Separate the problem from the symptoms:Separate the problem from the symptoms: What is the consequence of doing nothing?What is the consequence of doing nothing? What is not the problem?What is not the problem? What do we want to preserve, achieve, or What do we want to preserve, achieve, or

avoid?avoid? Is something wrong that needs corrected?Is something wrong that needs corrected? Is something threatening that needs Is something threatening that needs

prevented?prevented? Is something inviting that needs accepted?Is something inviting that needs accepted? Is something missing that needs provided?Is something missing that needs provided?

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Step #2, Determine alternative courses of action:Step #2, Determine alternative courses of action:

Using practical, feasible, cost effective research.Using practical, feasible, cost effective research.

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Step #3, Analyze all pertinent alternatives:Step #3, Analyze all pertinent alternatives:

Establish comparative Establish comparative standards.standards.

Designate priorities – Designate priorities – what needs to be what needs to be absolutely satisfied.absolutely satisfied.

Apply the Law of Apply the Law of Diminishing Returns.Diminishing Returns.

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Step #4, Select the best alternative:Step #4, Select the best alternative:

Strike a balance between feelings & logic.Strike a balance between feelings & logic.Know your values.Know your values.Assess your goals, resources, strengths, and Assess your goals, resources, strengths, and weaknesses. weaknesses. It is normally your resources and strengths It is normally your resources and strengths

that get you through a bad decision.that get you through a bad decision. It is normally your weaknesses that lead to a It is normally your weaknesses that lead to a

bad decision.bad decision.Troubleshoot your decision; anticipate problems Troubleshoot your decision; anticipate problems and their impact.and their impact.

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Step #5, Implement the decision!Step #5, Implement the decision!

Quickly and efficiently.Quickly and efficiently.

On January 27, 1986, the right decision was On January 27, 1986, the right decision was made but was not implemented. What was that made but was not implemented. What was that decision?decision?

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Step #6, Follow up the decision:Step #6, Follow up the decision:

Measure your success.Measure your success.

Use the results as feedback.Use the results as feedback.

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Why do systematic approaches fail?Why do systematic approaches fail?

Because enlightened ??????? humans tend to Because enlightened ??????? humans tend to fail (not follow) the system!fail (not follow) the system!

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John D. Arnold:John D. Arnold:

Owner of a business called “Executrak.”Owner of a business called “Executrak.”Has written nine narrative (not math analytical) Has written nine narrative (not math analytical) books on decision-making.books on decision-making.Books are published by the American Books are published by the American Management Association (Amacom Press)Management Association (Amacom Press)Arnold’s books are commonly found in the Arnold’s books are commonly found in the psychology section.psychology section.1972, “Make Up Your Mind” 1972, “Make Up Your Mind” (1)(1)

1978, “The Art of Decision Making”1978, “The Art of Decision Making”1995, “The Complete Problem Solver”1995, “The Complete Problem Solver”

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John D. Arnold’s Philosophies:John D. Arnold’s Philosophies:

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Matrix Process:Matrix Process:

Create a list of desirable objectives.Create a list of desirable objectives.Edit the list.Edit the list.Prioritize the list.Prioritize the list.Move the prioritized list to the matrix.Move the prioritized list to the matrix.The top desirable objective must get a value of 100.The top desirable objective must get a value of 100.Every criteria must receive a value lower than the Every criteria must receive a value lower than the one above it and higher than the one below it.one above it and higher than the one below it.List all alternatives horizontally across the matrix.List all alternatives horizontally across the matrix.The top alternative that meets the desirable The top alternative that meets the desirable objective must get a value of 100.objective must get a value of 100.

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Matrix Process Continued:Matrix Process Continued:

Multiply the column value times the objective Multiply the column value times the objective value for a column score.value for a column score.Select the next best alternative until all the Select the next best alternative until all the alternatives have been ranked against the alternatives have been ranked against the criteria.criteria.Total the matrix.Total the matrix.

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In Conclusion:In Conclusion:

““If you always sit where you always sat, you will If you always sit where you always sat, you will always see what you always saw, and you will always see what you always saw, and you will always get what you always got.” always get what you always got.” Laura LiptonLaura Lipton