8/25/2015
1
(c) 2015 Arvon Management Services, LLC
How to Make
Better Business
and Personal
Decisions
Presented by:
Dr. Robert Vaughn
Investments Purchases
Hiring Relationships
Politics
Employment
Vacations
Whatever….
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8/25/2015
2
Thoughts about Decision
Making
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" Cheshire Puss, would you tell me, please, which way I ought to
walk from here?"
"That depends a good deal on where you want to get to," said the
Cat.
"I don't much care where ---" said Alice.
"Then it doesn't matter which way you walk," said the Cat.
"--- so long as I get somewhere," Alice added as an explanation.
"Oh, you're sure to do that," said the Cat, "if only you walk long
enough."
- Lewis Carroll
Today’s Agenda
Pretest
The Process of Making a Decision
The Seven Steps
Developing Options
Narrowing Down the Choices
Human & Technology Factors
Presenting the Decision
(c) 2015 Arvon Management Services, LLC
8/25/2015
3
True / False Pre-Test
You’ll have seven seconds per question, so don’t
over analyze them.
1. We all make hundreds of decisions every day.
2. All decisions are made in an essentially similar pattern.
3. Choices should be evaluated as they appear.
4. Decision making applies to all phases of management or supervision.
5. Creativity is not necessary in most decision making.
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Pre-Test - continued
6. Intuition is more important than rational
thought in the early stages of decision
making.
7. Limits should be established early in the
decision-making process.
8. Tolerance for risk influences decision
making for managers.
9. Good decisions are both properly made
and effective.
10. Organizational decisions tend to be more
“convoluted” than “straightforward” in
nature.(c) 2015 Arvon Management Services, LLC
8/25/2015
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Pre-Test Answers
1. We all make hundreds of decisions every day. T
2. All decisions are made in an essentially similar pattern. T
3. Choices should be evaluated as they appear. F
4. Decision making applies to all phases of management or supervision. T
5. Creativity is not necessary in most decision making. T (Most decisions are “programmed.”)
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Pre-Test Answers- continued
6. Intuition is more important than
rational thought in the early stages of
decision making. T
7. Limits should be established early in
the decision-making process. T (“Limited”
limits)
8. Tolerance for risk influences decision
making for managers. T
9. Good decisions are both properly made
and effective. T
10. Organizational decisions tend to be
more “convoluted” than
“straightforward” in nature. T
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8/25/2015
5
Making
Effective Decisions
Part One
The Anatomy of a Decision
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Why is a Process Important?
First, it can give us confidence that we can handle the situation.
Second, it can provide a discipline to follow as we work through the
process.
Finally, it can allow us to concurrently develop the information and
support necessary to get others buy into the idea.
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8/25/2015
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Thoughts about Decision Making
"Start with the end in mind."
- Steven Covey
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Steps in Decision Making
1. Determine that a decision is needed.
2. Determine that decision's importance.
3. Assess what limits apply to the decision.
4. Determine possible choices.
5. Gather information about the possible choices.
6. Evaluate or test the possible choices.
7. Decide & Implement the Decision (or recycle).
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8/25/2015
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Step 1. Determine that a decision is needed
Does it have to be decided?
Do I have the authority and/or power to make and implement the
decision?
Do I have or can I get the necessary information to make the decision?
Who else could make it better? Why don’t they?
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Step 2: Determine the Decision's
Importance
How much does it cost?
How long is the commitment?
Who is involved?
Can it be changed later?
---Other Considerations---
How soon does it have to be made?
How much information is available to make the decision?
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8/25/2015
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Step 3: Assess What Limits Apply to
Implementing the Decision
Limits have to do with available resources:
time
money
equipment or facilities
technological capabilities
people
technical and managerial skills
other resources
Etc. What will affect progress
toward the goal?
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Step 4: Determine Possible Choices
Find appropriate sources (More about this shortly)
You almost never need to consider all available options, so …
Create an “adequate list” of options.
Complete step four before you even consider step five.
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8/25/2015
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Step 5: Gather Information about the
Choices
Too much information can be as bad as too
little information
Limit your choices and collect data
selectively
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Step 6: Evaluate or Test the Possible
Choices
Can be done in many ways – all depends on
the nature of the decision
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8/25/2015
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Step 7: Decide and Implement the
Decision (or “Recycle”)
The best decision is not always the cheapest or most
easily implemented.
Many other factors must be considered:
Organizational Culture
People’s needs and tolerance for change
Perceptions, etc.
More on these in a few minutes
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(Step 7a: Recycle)
A decision which is too complex to
implement can be the basis for lower
level decisions. You then just repeat the
process for each.
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8/25/2015
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Review of Seven Steps
1. Determine that a decision is needed.
2. Determine that decision's importance.
3. Assess what limits apply to the decision.
4. Determine possible choices.
5. Gather information about the possible choices.
6. Evaluate or test the possible choices.
7. Decide and Implement the Decision / Recycle.
(c) 2015 Arvon Management Services, LLC
Decision Making isn’t all logic
There’s often too much to analyze
Simple problems require reason, but complicated problems also
require emotions
Need a balance between deliberate and instinctive thinking
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8/25/2015
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Thoughts about Decision Making
Truly successful decision making relies on a
balance between deliberate and instinctive
thinking.
-- Malcolm Gladwell
Rationality can lead us astray; we focus on too
much to manage.
-- Jonah Lehrer
(c) 2015 Arvon Management Services, LLC
Making
Effective DecisionsPart Two
Developing Options
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Where to get ideas
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Review: Decision Making
Steps
1. Determine that a decision is needed.
2. Determine that decision's importance.
3. Assess what limits apply to the decision.
4. Determine possible choices.
5. Gather information about the possible
choices.
6. Evaluate or test the possible choices.
7. Decide & Implement the Decision (or
recycle).
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8/25/2015
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Creativity is important
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You already are creative
You dream nearly every night
You solve problems
You may also have artistic talents, etc.
But…
Being creative does not require being artistic
Being creative does not demand great skill
Being creative is not a function of intelligence
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8/25/2015
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Clarifying the Goal of the Decision
What do you want to happen as a result of
the decision making process?
Write down related facts about the issue:
What is not known that we need to find out
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Separate cause from effect
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8/25/2015
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Developing Data on Options
Probably no choice is perfect.
You almost never need to consider
all available options.
An “adequate” list of options may
be a couple up to a dozen.
Risk tolerance influences how
much data will be collected about
choices.(c) 2015 Arvon Management Services, LLC
Dealing with Risk in Decisions
Risk Averters want a high
level of confidence
Gamblers are willing to
take bigger risks
Most people are willing to
take some risks if the
decision is not too
significant; less so with
important decisions
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8/25/2015
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Making
Effective DecisionsPart Three
Narrowing Down the Options
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Gathering Information
Sources of primary data
Getting unique information which has not
been collected before (through surveys,
quality control tests, etc.)
Sources of secondary data
Useable data collected for another purpose
and probably by someone else
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8/25/2015
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How much information?
How many options are there?
A couple or ?
How difficult or expensive is it to obtain?
How much risk is associated with the decision?
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Thoughts about Decision Making
We like market research because it provides
“certainty” – a score, a prediction. If someone asks us
why we made the decision we did, we can point to a
number. But the truth is that for the most important
decisions, there can be no certainty.
-- Malcolm Gladwell
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8/25/2015
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Pareto Analysis
Pareto analysis is a technique to separate the significant few
from the trivial many.
Also known as the “80-20 Rule”
In inventory, it’s called “ABC Analysis”
List the data you could collect, then order it into level of
importance.
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Organizing the Data
Data must be organized into meaningful
groups.
Separate necessary from nice to have
data.
If collecting primary data, consider
sampling techniques
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8/25/2015
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Thoughts about Decision Making
"Too often, our minds are locked on one track. We are
looking for red – so we overlook blue. Many Nobel Prizes
have been washed down the drain because someone did
not expect the unexpected."
- John D. Turner
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Making
Effective DecisionsPart Four
The Human Aspects:
Emotional & Irrational Factors
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8/25/2015
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Group Decision Making
Some predictable things happen as groups begin to make decisions: They …
make decisions more slowly than individuals.
make decisions which are more extreme than those made by individual members.
are often subject to weak decisions supported by a minority of the members.
may have to compromise, making their decisions less effective than desired.
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Thoughts about Decision Making (Groups)
“Football combines the two worst elements of
American society: Violence and committee
meetings.”
-- George Will
“No one ever erected a statue to a
committee.” -- Wil Rogers
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8/25/2015
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Group Decisions
may be better when …
Input is needed from different perspectives.
Support for the decision needs to be developed.
Individuals need to feel involved.
Creativity would be helpful.
Limited precedents exist.
Any of a variety of options would be acceptable to management.
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Individual Decisions
may be better when …
Time is a critical factor.
The group does not have expertise in the issue to be
decided.
Group norms don't agree with management objectives
in the organization.
The group is significantly dominated by one or a few
members.
(c) 2015 Arvon Management Services, LLC
8/25/2015
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Thoughts about Decision Making
“When experts* make decisions, they don’t systematically and logically compare all
options. … it is much too slow… they size up the situation and act.”
-- Gary Klein, Sources of Power
(*Experts means individuals trained in a professional field such as
nurses, firemen, doctors, chemists, accountants, etc.)
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Experts vs. Laymen
Experts have a much more intuitive
process
Experts have developed complex rating
systems that laymen seldom understand
Laymen may make good decisions, but
may not be able to explain and document
them
Our brains (experts and laymen, both)
detect subtle patterns earlier than we
know
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8/25/2015
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Framing the Decision
“Framing” is the perspective from which you
view the decision. The “cliché” is the glass
half full / glass half empty comparison.
The perspective can make an amazing
difference in our decisions.
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Technology Influences
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8/25/2015
25
More Technology Means …
Faster obsolescence = more frequent &
more complex decisions
More computer-based decision making
tools available
“Easier” web research options =
information overload
A need to streamline decision systems in
order to reduce workplace stress
(c) 2015 Arvon Management Services, LLC
Making
Effective Decisions
Part Five:
Presenting the Decision
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8/25/2015
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Presenting the Decision
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Four Key Points to Presenting
Your Decision
Focus on the audience
Design it to an appropriate level
Make the decision credible
Avoid distractions; make the idea central
(The subject of a whole different webinar)
(c) 2015 Arvon Management Services, LLC
8/25/2015
27
Thoughts about Decision Making
We, as human beings, have a “storytelling”
problem. We are a bit too quick to come up with
explanations for things we don’t really have an
explanation for.
-- Malcolm Gladwell
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Program Summary
The Process of Making a Decision
The Seven Steps
Developing Options
Narrowing Down the Choices
Human & Technology Factors
Presenting the Decision
(c) 2015 Arvon Management Services, LLC
8/25/2015
28
Last Thoughts on Decisions
"It is much more pleasant to make the decision than to justify it."
- Malcolm Forbes
Decisions made quickly can be every bit as good as ones we agonize over.
- Malcolm Gladwell
"Life is full of choices.... and sometimes all of them are yucky!"
- Joanne Lee
(c) 2015 Arvon Management Services, LLC
(c) 2015 Arvon Management Services, LLC
Questions & Discussion
8/25/2015
29
Thank You for Participating
(c) 2015 Arvon Management Services, LLC
Bob Vaughnwww.ArvonManagement.com
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