Effective Decision Making AIM-IRS 41st Annual Business Meeting & Training Seminar

Decision, decisions… Decision Origin: Latin decidere, to cut off The passing of judgment on an issue under consideration The act of reaching a conclusion or making up one’s mind A conclusion or judgment reached or pronounced Origin: Latin decidere, to cut off Based on the word origin, decision or decide denote a resolution of alternatives or difficulties by cutting through them, as with a sword or knife—dealing with problems “at a stroke.” Related words are chisel, precise, excise, incision, and scissors. American Heritage Dictionary of the English Language, 1976, Houghton Mifflin Company

Typical Paradigm Define the problem Analyze/gather data Identify possible solutions Select the best solution Implement solution Follow-up/feedback Typical problem solving/decision making paradigm. Very data driven. Most training on problem solving and decision making uses this paradigm and provides tools for analyzing data and selecting the “best” solution. Examples are pareto analysis, multi-voting techniques, criteria ranking, force-field analysis, cause and effect analysis, etc. These tools can be very powerful, they can provide significant insight into problem areas, and can identify solutions that may not have been obvious at first glance. However, these tools are very data driven and often ignore the human factors that influence the decision making process. Not to say that data is not important. Knowing the facts about a situation are of course important in any effective decision. However, by a heavy reliance on data-driven processes, it’s easy to lose sight that in the end, all decisions involve judgment. They are a choice between alternatives. At best, we have a choice between “almost right” and “probably wrong.” More often than not, our choices are between alternatives none of which are probably more right than any other. Instead of the standard problem solving/decision making overview of define, analyze, identify, select, implement, and follow-up and an overview of the tools, I’d like to suggest a slightly different paradigm, one that recognizes the human factors we bring to the decision making process and recognizes the importance of judgment. Before we talk about that model, let’s talk about a couple of the individual personality traits each of us brings to the decision making process and how that can influence, for better or worse, our performance, particularly if we are working with others that have conflicting styles.

Myers-Briggs Types Sensors vs. Intuitives: How you gather information Specific General Direct Random Present Future Realistic Conceptual Actual Theoretical Down-to-earth Head-in-clouds What do you personally bring to the decision making process? How does the way you view the world impact you as an effective decision maker? How many of you are familiar with or have taken the Myers/Briggs Type Indicator instrument? (See addendum). Myers/Briggs types include two dimensions that deal with processing information and making decisions. The first is sensing vs. intuiting, and this dimension describes how individuals prefer to process information. Sensors are literal about their observation of the world. They are interested in the experience, the hands-on, tangible parts of a situation. They rely on what they can see, hear, touch, taste, and smell. They prefer to focus on the facts and details and feel less need to interpret what they mean. About 70% of the US population gathers information this way. Intuitives translate what they gather through the five senses and look for meaning and relationships. They prefer to look holistically and put things into a theoretical framework. They see things in relation to “the grand scheme”; the see the forest, and not the trees. About 30% of the US population gathers information this way. Stories about Sensor and Intuitive: “What’s the time?” and “Where’s the copy room?”

Myers-Briggs Types Thinking vs. Feeling: How you make decisions Thinkers Feelers Objective Subjective Firm Persuasive Clarity Harmony Detached Involved Analytical Appreciative Outcome-oriented People-oriented The second Myers Briggs type is thinking/feeling and describes how we approach the decision making process. Thinkers prefer to be very logical and analytic. They’re driven by objective values as they come to conclusions. They prefer that the consequences of the decision be a driving factor and tend not to let their personal involvement influence a decision. About 40% of the US population are Thinkers Feelers on the other hand value subjective values in the decision making process and focus their efforts on interpersonal involvement. They consider the impact of a decision or action on people as extremely important. About 605 of the US population are Feelers. This isn’t a black/white dichotomy—thinkers feel, and feelers think. This dimension describes what a person prefers in making a decision. Sensing/Intuiting and Thinking/Feeling are dimensions of personality we bring to the decision making process. It’s important to recognize these in yourself and to understand the personality dimensions that the people you work with bring to the table. Share personal stories of these dimensions. These are some of the human factors we bring to the decision making process. Let’s discuss a paradigm of that process that takes human factors into account.

Elements of an Effective Decision Making Process Problem Rationalization Boundary Conditions The Right Thing to Do Action Feedback Peter Drucker identifies these five essential elements of a decision making process. The Essential Drucker: The Best of Sixty Years of Peter Drucker’s Essential Writings on Management, Peter Drucker, Collins Business Essentials

Problem Rationalization Know the problem you’re trying to solve Truly generic Generic, but unique for the organization Truly unique Early manifestation of a new generic problem Drucker identifies four types of problems that we face. Most problems are generic—the specific problem we’re facing or decision we have to make is a manifestation of an underlying generic problem. The situation we’re facing is a symptom of generic problem condition. We need to identify that generic problem and attack it rather than the immediate problem we’re faced with, or we will keep trying to solve the same generic problem over and over. Think about a doctor with a patient that complains about fever, headache, and a sore throat. He could treat the symptoms with aspirin to reduce the fever and headache and lozenges to reduce the throat pain, but he wouldn’t be addressing the underlying problem, which in this case is a streptococcus infection. If he ignores that, the underlying problem gets worse, and the doctor is presented with more symptoms which probably will be more severe. If he identifies and addresses the underlying problem by prescribing an antibiotic, the symptoms clear when the true problem is solved. <<More>> Drucker says that the solution to all generic problems is a decision that results in a standard rule or principle. Once that principle is established, all manifestations of the generic problem can be addressed by applying that principle and adapting it to the specific circumstances of the case. The only problem that requires a unique solution is the truly unique problem—you can’t develop a rule for the exceptional.

Boundary Conditions What does the decision have to accomplish? Clearly state the boundary conditions Define minimum success Know what “good” looks like Expect things to go wrong Know when a decision has to be abandoned

The Right Thing to Do Recognize what’s right rather than what’s acceptable Know what “right” is Compromise after you know what’s right

Action Commitments Convert decisions into actions Assign the right owners to the actions Support the action owners

Feedback Test decisions against reality Distrust communication—find out for yourself Decisions become obsolete <<Tie in Lincoln on Leadership, managing by walking around>>

Relevant Decision Making Criteria Know what to measure What you’ve always measured isn’t the answer Judgment and risk-taking Always have alternatives

Opinions Over Facts Decisions are judgments Start with opinion Know the relevant criteria Test your opinions against reality