OU/SFC/BMS - SoftSkill & Corporate Communication Notes - 1.5

1.5.    DECISION MAKING SKILLS

Decision making is the process of a course of action from among alternatives. It is pervasive. Koontz said “decision making is the core of planning”

1.5.1.  DECISION MAKING PROCESS

7 Steps in Decision Making: from Identification to Implementation

1.    Identify a problem or opportunity

• The first step is to recognize a problem or to see opportunities that may be worthwhile.
• Will it really make a difference to our customers?
• How worthwhile will it be to solve this problem or realize this opportunity?

2.    Gather Information

• What is relevant and what is not relevant to the decision?
• What do you need to know before you can make a decision, or that will help you make the right one?
• Who knows, who can help, who has the power and influence to make this happen (or to stop it)?

3.    Analyze the situation

• What alternative courses of action may be available to you?
• What different interpretations of the data may be possible?

4.    Develop options

• Generate several possible options.
• Be creative and positive.
• Ask “what if” questions.
• How would you like your situation to be?

5.    Evaluate alternatives

• What criteria should you use to evaluate?
• Evaluate for feasibility, acceptability and desirability.
• Which alternative will best achieve your objectives?

6.    Select a preferred alternative

• Explore the provisional preferred alternative for future possible adverse consequences.
• What problems might it create?
• What are the risks of making this decision?

7.    Act on the decision

• Put a plan in place to implement the decision.
• Have you allocated resources to implement?
• Is the decision accepted and supported by colleagues?
• Are they committed to making the decision work?

1.5.2.  TYPES OF DECISIONS

Programmed Decisions: 

Programmed decisions are routine and repetitive, and the organization typically develops specific ways to handle them. A programmed decision might involve determining how products will be arranged on the shelves of a supermarket. For this kind of routine, repetitive problem, standard arrangement decisions are typically made according to established management guidelines.

Non Programmed Decisions:

Non programmed decisions are typically one shot decisions that are usually less structured than programmed decision.

1.5.3.  DECISION MAKNG CONDITIONS

While making decisions, the managers may face three different conditions: CERTAINITY, RISK and UNCERTAINITY

CERTIANITY: the ideal situation for making decisions is one of certainty, which is a situation in which manager can make accurate decisions because the outcome of every alternative is known.

RISK: a far more common situation than decision making under certainty is one of risk, conditions in which the decision maker is able to estimate the likelihood of certain outcomes. Under risk, managers have historical data from past personal experiences or secondary information that lets those assessing probabilities to different alternatives.

UNCERTAINITY: managers do face decision making situations of uncertainty, under these conditions, the choice of alternative influenced by limited amount of available information and the psychological orientation of decision maker, an optimistic manager will follow a maximax choice (maximizing the maximum possible payoff), a pessimist will follow maximini choice (maximizing the minimum possible payoff), and a manager who desires to minimize his maximum “regret” will opt for a minimax choice.

1.5.4.  PREFERENCES / OPTIONS

What makes us different? One way of classifying people that appears in many systems of personality profiling is to determine a person's preferences in terms of how they perceive and respond to the world.

 

Subjective vs. objectivity preferences

Think of a time when you were having fun. As you think about it, are you seeing the experience through your own eyes (subjective view), or can you see your body as if you are outside of it (objective view)?

The population is fairly evenly split between those who naturally take an objective view and those who take a subjective view. 

Subjective perception

Those with a naturally subjective view tend to be more emotional, as they think and remember their life very experientially. They also tend to live 'in the railroad tracks', meeting the future head-on, feeling 'done to' rather than being in control. Their experiential view will make them more empathetic and intuitive. 

Given the right encouragement, they also tend to be more easily empathetic with other people, as they are more accustomed to experiencing the agonies and the ecstasies of the subjective life.

Objective perception

People who see life more objectively prefer to stand back. This does not mean they are disinterested, only that they find the objective viewpoint a preferable place to be. Perhaps they find the subjective stance too painful or perhaps they find it too biased and untruthful of the whole picture. Whatever their reasons, they prefer to see things from a more disconnected, rational, unemotional viewpoint.

People with objective viewpoint are sometimes easier to persuade, as they can see things from your viewpoint too. However, they are more rational in their approach and may be good negotiators themselves. Negotiating on objective terms is, after all, playing on their natural territory.

1.5.5.  THINKING VS. FEELING

Thinking and Feeling are one of the preferences used. The naming is unfortunately a bit archaic as thinking is more than thought, and feeling is not about being over-emotional or fluffy. They are about how we decide: through logic or through considering people.

Thinking

Thinkers decide based primarily on logic, and when they do so, they consider a decision to be made. They tend to see the world in black and white and dislike fuzziness. Perhaps because people are so variable, they focus on tangible things, seeking truth and use of clear rules. At work, they are task-oriented, seek to create clear value. Interacting with them tends to brief and business-like. They may be seen as cold and heartless by Feelers.

Feeling

Feelers decide based primarily through social considerations, listening to their heart and considering the feelings of others. They see life as a human existence and material things as being subservient to this. They value harmony and use tact in their interactions with others. At work, they are sociable and people-oriented and make many decisions based on values (more than value). They may be seen as unreliable and emotional by Thinkers.

With thinkers:

• Be brief and concise.
• Be logical; don’t ramble with no apparent purpose.
• Be intellectually critical and objective.
• Be calm and reasonable.
• Don’t assume that feelings are unimportant; they may have a different value.
• Present feelings and emotions as additional facts to be weighed in a decision.

With feelers:

• Introduce yourself and get to know the person; full acceptance may take a considerable amount of time.
• Be personable and friendly.
• Demonstrate empathy by showing areas of agreement first.
• Show how the idea will affect people and what people’s reaction would be.
• Be aware that how you communicate is as important as what you’re communicating.
• Let them talk about personal impact; accept decisions that may not be based on facts.

1.5.6.  EMOTION AND DECISION

We make many decisions, and sometimes we are more or less logical about them. And it is arguable that all decision are, ultimately emotional.

Logical vs. emotional decision-making

Decision-making is a cognitive process where the outcome is a choice between alternatives. We often have different preferences as to our preferred, approach, varying between thinking and feeling.

Logical decision-making

When we use logic to make decisions, we seek to exclude emotions, using only rational methods, and perhaps even mathematical tools. The foundation of such decisions is the principle of utility, whereby the value of each option is assessed by assigning criteria (often weighted).

Emotional decision-making

There is a whole range of decision-making that uses emotion, depending on the degree of logic that is included in the process. A totally emotional decision is typically very fast. This is because it takes time (at least 0.1 seconds) for the rational cortex to get going. This is the reactive (and largely subconscious) decision-making that you encounter in heated arguments or when faced with immediate danger. Common emotional decisions may use some logic, but the main driving force is emotion, which either overrides logic or uses a pseudo-logic to support emotional choices (this is extremely common). Another common use of emotion in decision is to start with logic and then use emotion in the final choice.

1.5.7.  THE POINT OF DECISION

Always emotional decision?

So at the point of decision, emotions are very important for choosing. In fact even with what we believe are logical decisions, the very point of choice is arguably always based on emotion. We talk about decisions that feel or seem right. When logical decisions are wrong, we will often feel that this is so. Emotions are perhaps signals from the subconscious that tell us a lot about what we really choose.

Subconscious in charge?

An even stranger factor is research where the subject's brain was wired up to recorders and the subject was asked to simply press a red button at any time. The notion You might notice that STJs are 24% of the population. This 'Left-side bias' is unsurprising, as our schools are workplaces tend very much to encourage logic and structure. This makes life particularly difficult for the NFPs of the world, but like left-handed tennis players, those that can handle the other side tend to excel. If you want someone else to make a decision, first find how emotional or logical they prefer to be in that process, and follow their their normal preferences.

1.5.8.  DECISION MAKING STYLES

Why are decision making styles important? In the process of making an important decision, using the wrong style can lead to disaster. Imagine a commander using a consensus decision style while in the middle of a battle where every second could cost lives. Alternatively, using an autocratic style for a highly complex strategic decision could cut off the decision maker from the valuable input of functional experts.

What's the hurry?

A critical balance must be maintained between how long it takes to make a decision and the time it takes to gather and analyze the information necessary to make a sound decision. Sounds like another decision... You bet.

What about rational vs. emotional decision making?

Each has a part to play. After all, humans are emotional beings. The key is to find the right balance between the emotional and rational components for a decision. We have found that the higher the value of a decision, the more important it is to move toward a rational decision style. No one likes the negative emotions brought on by buyer's remorse, a clear signal that more analysis should have been used in making the decision.

So what does this mean for you?

• Recognize that your decision style influences the effectiveness of your decisions.
• Before you make a decision think about the style that would be best for the decision you need to make.
• Build your decision making skills so that you are better equipped to make the decisions you need to make.

To learn more about common styles follow these links.

Collaborative Decision Making

A collaborative decision making style will generally increase the effectiveness of your decisions.

Emotional Decision Making

Emotional decision making is part of who we are and, when appropriately incorporated, this style can enhance the decision making process.

Intuitive Decision Making

When does it make sense to use an intuitive decision making style?

Rational Decision Making

An overview of the characteristics, limitations, and benefits of rational decision making.

1.5.9.  COLLABORATIVE DECISION MAKING

More often than not, collaborative decision making leads to better decisions

It's all about control. Choosing a collaborative decision making style is about making a choice of what level of control you want, or need, in the decision making process.

Let's not confuse style with personality

We talk about choosing to have a collaborative style because we consider a decision making style as something you can choose when trying to make a better decision. Style criteria considers personality, but is not defined by it. In this case, we are not identifying how collaborative someone is (personality), instead, we want to identify how much collaboration to choose when picking the style for making a specific decision.

For collaborative decision making the choice that you must make is the level of collaboration to use for the decision you want to make. This applies to personal and business decisions alike.

1.5.10.            EMOTIONAL DECISION MAKING

Research in the last few decades has started to look at emotional decision making with a new perspective. Instead of having only a rational vs. emotional perspective, work has taken a more complete view, recognizing positives as well as negative effects of emotions in the context of making decisions.

Prior decision making work in rational decision making focused on models that reduce or eliminate emotional bias. Advancements in technology, particularly in studying how our brains work, have made it possible to expand our understanding of how emotions influence our judgment and choice selection.

Are there positive effects of emotions in decision making?

It turns out that the current environment of information overload will likely lead to a greater amount of emotional decision making. Human brain research has suggested that, as our minds have more to process, the likelihood to decide emotionally increases. It makes sense that less time for reflection will lead to more decisions that seem irrational. The good news for emotions is that they function to reduce and bound our reasoning which then creates the opportunity to reason more fully. If we can identify which decisions can be addressed emotionally, we generate the opportunity to make more complex decisions rationally.

Emotion's other positives can include better decision efficiency, better employee engagement in the workplace, and enhanced creativity. Becoming aware of emotions has the benefit of correcting many emotional biases. Finding ways to minimize decision making driven by emotional bias while making better use of emotional intelligence can help use emotion to increase effectiveness in the workplace.

Emotions may be essential to decision making

Dr. Antonio Damasio, a neurologist known for his work on the relationship between emotions and decision making, suggests that emotions may be fundamental to dealing with equal options and decisions that do not have a clear rational basis for choosing. In his 1994 book, Descartes' Error: Emotion, Reason, and the Human Brain, Damasio shows how patients with prefrontal cortical damage cannot create the emotions necessary for effective decision-making. In one example, his story of Elliot describes how, without emotion, he could not make simple choices, such as which color socks to wear. This suggests that at the point of selection, emotions may be key for choosing. Even when we believe they are rational decisions, the actual choice may in reality be based on emotion.

Studies of people with ventromedial injuries, the area of the brain active in emotions, revealed a distinct difference in response to questions that present a moral dilemma of saving many people at the expense of one innocent. This suggests an ongoing tension between the rational cost-benefit calculations and the instinctive emotional decision making parts of our mind, particularly for moral judgments.

Are there emotional decision making advantages?

Recent research has revealed a number of positive elements of emotions in decision making.

• A totally emotional decision is very fast in comparison to a rational decision. This is reactive (and largely subconscious) and can be useful when faced with immediate danger, or in decisions of minimal significance.
• Some studies suggest an emotional insistence to respect the life of another human being.
• Emotions may provide a way for coding and compacting experience, enabling fast response selection. This may point to why expert's "gut" level decisions have high accuracy rates.
• Emotions are possible signals from the subconscious that provide information about what we really choose.
• Decisions that start with logic may need emotions to enable the final selection, particularly when confronted with near equal options.
• Individuals care about the emotional features of decision options.
• Emotions often drive us in directions conflicting with self-interest.

Emotional decision making can also come with a number of negatives.

• We make quick decisions without knowing why, and then create rational reasons to justify a poor emotional decision.
• Intensity of emotions can override rational decision making in cases where it is clearly needed.
• Immediate and unrelated emotions can create mistakes by distorting and creating bias in judgments. In some cases this can lead to unexpected and reckless action.
• Projected emotions can lead to errors because people are subject to systemic inaccuracy about how they will feel in the future.

Decision making solutions must address emotional and rational elements of our being

If your mind is distracted with an overload of information, too many priorities and no time to debate, the likelihood that the emotional brain will overrule the rational one increases. Valuable decisions deserve analysis. Competition and risk is more complex, so the demands on decision making solutions have increased.

Recent research in the area of emotional decision making has begun to expose the value, benefits and difficulties that emotions present to the decision making process. Interdependence of emotional and rational processes is powerfully presented in recent neurobiological studies which establish that emotion is essential in rational decision making.

How to proceed in light of this new knowledge

Decision making solutions must work to increase the positive benefits of both rational and emotional thought processes while providing approaches to minimize and learn from mistakes. The flexible decision making model used by Decision Innovation enables improvements in decision making as we learn more about how our mind works.

1.5.11.            INTUITION BASED DECISION MAKING

When is intuitive decision making beneficial?

Recent research into the workings of our brain has stirred the debate with respect to intuitive decision making versus rational decision making. How much we should rely on intuition when making difficult decisions? In his book, The Power of Intuition, Gary Klein suggests that 90 percent of critical decisions are made using our intuition. Even if only partially true, this would suggest that any approach to improved decision making should address this decision making style.

What do we mean when we talk about intuition?

When talking about intuition we are describing something that is known, perceived, understood or believed by instinct, feelings or nature without actual evidence, rather than by use of conscious thought, reason, or rational processes. This does not imply that intuitive decision making is irrational. Instead, we mean that the explanation for a choice is not directly available through conscious or logical thought.

Brain research points to parts of the brain that work simultaneously with our conscious thought processes, acting as parallel intelligent systems. These systems will create responses (usually emotional) that compete with each other in determining a person's response. When guided by experience with a previous pattern, these responses could be considered the result of intuition.

Problems with intuition and decision making

Intuition plays a significant role in the choices we make. Unfortunately, working alone, intuition can be the source of significant errors in the course of making a decision. Here are some of the problems with intuition that can be avoided with a structured decision making process.

• Flawed information - Intuition decision making will respond quickly to inaccurate, insufficient, unreliable, or incomplete information based on patterns from previous experiences.
• Short term emotional bias - Cognitive research has shown that even experts' decisions are influenced by unrelated emotions during the time of making a decision.
• Insufficient consideration of alternatives - Intuition generally relies on pattern recognition and will point to solutions that have worked well with the current perceived pattern. This will limit considered options even though you may be dealing with a new decision situation that might require a novel or unique solution.
• Prejudices - Emotions help form our intuition and can allow flawed experiences to overrule sound facts and evidence.
• Lack of openness - Every person has a different experience base that provides the platform for their intuitions. Given that one's intuition is not easily explained, it is difficult to use intuition in a group context.
• Inappropriate application - People that have good experience, expertise, and intuition in one area can become overconfident and apply their intuition in an unfamiliar or unrelated area. This also includes using "Rules of Thumb" that may not match the needs of the current decision context.

Can intuitive decision making be learned and improved?

Experts at MIT (Matzler, Ballom, & Mooradlan, 2007) and the Marine Corps (Krulak, 1999) believe so, and so do we. Cognitive models are continuing to be developed and evolved that help us understand intuition and decision making. The Recognition Primed Decision Model, developed by Gary Klein and others, suggests that recognition of patterns or cues is an important element of intuitive decision making, along with an ability to perform a rapid mental simulation of how an option would perform against other previously successful outcomes. This model, and others, point to the following approaches for improved intuitive decision making:

• Use a structured process when time allows - This will provide a framework for capturing and learning from previous decisions. It will also guard from errors that can occur when using intuition. Our 4-step Decision Innovation process strongly leverages this approach.
• Listen better - Improved listening will ensure getting more of the situational information. The better formed the pattern, the more likely that intuition will provide a solution well matched to the problem.
• Reflect on a decision before implementing - Look for areas where emotions might be distorting your perception of the current situation.
• Examine beliefs - Are they based on reliable facts and evidence?
• Consult others - Get feedback and validate that your decision seems reasonable. Also, pay attention to disconfirming assessments.
• Communicate - The reasoning behind your intuition can sometimes be made explicit through discussion with others. Failure to do this in a business decision may undermine its implementation.
• Increase experiences - Try new things. Patterns develop from experiences. More experiences will create and shape successful patterns. This leads to better intuition.
• Learn through repetition in different environments - Repetition in different emotional environments will help improve the consistency of intuitive decision making.
• Learn to recognize and interpret your emotions - Emotions provide signals of previous patterns and experiences. Learning what they indicate and their reliability improves your ability to know when to count on your intuition.
• Create the right learning environment - Better intuitive decision making comes from making more decisions. An environment that can provide tolerance and/or low risk for mistakes, and that examines decisions without attacking the pride and dignity of the person making them, will lead to better intuitive choices.
• Use decision making games - Games simulate life and provide a low risk environment to develop the patterns that can improve intuition.
• Situational assessment and case studies - Used in business and the military (e.g., After action reviews), studying previous outcomes with a focus on the decision making processes will help build patterns for intuition.

When does it make sense to use an intuitive decision making style?

Starting with the easy case, it certainly is reasonable to use intuitive decision making for trivial or low value decisions. Decision failure will have little consequence, and intuition will provide for a quick selection. These decisions are simple, unimportant, and in many cases may result in habit. Choosing the same kind of coffee everyday because you are happy with how it tastes is a good example.

Decisions that involve emotions are often subject to a fair amount of intuition and will often play a major role in personal relationships. However, emotions can change, and when relationships run into difficulty, do not be surprised if your intuition is no longer generating the outcomes you expect. At these times, relationships take work because intuitive decision making has to become more open, explicit and rational. People find that they may need to make choices that are not supported by their emotions.

Finally, when speed is critical to a successful outcome, expect to have to rely more heavily on intuitive decision making. Examples include choices made in battle or by first responders arriving at a crisis scene. In both cases, participants undergo extensive training that helps build the experience patterns that will improve intuition and decision making.

1.5.12.            RATIONAL DECISION MAKING - The benchmark for making effective decisions

Rational decision making brings a structured or reasonable thought process to the act of deciding. The choice to decide rationally makes it possible to support the decision maker by making the knowledge involved with the choice open and specific. This can be very important when making high value decisions that can benefit from the help of tools, processes, or the knowledge of experts.

Characteristics of rational decision making

Choosing rationally is often characterized by the following:

• Decision making will follow a process or orderly path from problem to solution.
• There is a single best or optimal outcome. Rational decisions seek to optimize or maximize utility.
• The chosen solution will be in agreement with the preferences and beliefs of the decision maker.
• The rational choice will satisfy conditions of logical consistency and deductive completeness.
• Decision making will be objective, unbiased and based on facts.
• Information is gathered for analysis during the decision making process.
• Future consequences are considered for each decision alternative.
• Structured questions are used to promote a broad and deep analysis of the situation or problem requiring a solution.
• Risk and uncertainty are addressed with mathematically sound approaches.

In the ideal case, all rational decision makers would come to the same conclusion when presented with the same set of sufficient information for the decision being made. This would suggest that collaborative decision making will often employ a rational decision making process.

Problems and limitations with choosing rationally

Most of the issues and limitations associated with rational choice result from falling short of the ideal proscribed in the full rational decision making model. Here are three areas that generate much of the concern.

1.  Limits of human capabilities - The limits on our human ability to gather, process, and understand all the information needed to optimize a decision outcome make it impractical to meet the ideal except in very constrained or simple situations. We have limits in our ability to formulate as well as solve very complex problems. Our desire to optimize is also limited, and we will usually "saticfice", or be content with acceptable solutions when confronted with obstacles.

2.  Limits on information and knowledge - The model assumes we should or can gather sufficient information in terms of quantity, quality, accuracy, and integrity. It also assumes that we have access to the required knowledge of the cause and effect relationships that are important to the evaluation of alternative solutions, particularly with respect to projecting future consequences.

3.  Limits in time - Search for the optimum solution will generate a delay that could negatively impact the benefits of the chosen alternative. In essence, if the decision alternatives are not properly discounted for changes due to decision timing, the chosen alternative may not be optimum.

More on decision making models

As with any ideal, additional models have been developed to address the problems with realizing the full rational model. The Bounded Rationality model acknowledges our cognitive and environmental limits and suggests that we act rationally within these constraints. Many decision making theories are a result of looking at the consequences of bounded rationality.

Rational ignorance takes a similar approach to looking at the cost of gathering information. In this model, it is suggested that if the cost to acquire information exceeds the benefits that can be derived from the information, it is rational to remain ignorant. This aligns with our concept of using decision value to limit the decision effort, ensuring an appropriate return from using a rational decision making process (See planning decision making).

The benefits of rational choice

Within the limitations described above, choosing rationally can provide a number of benefits that include:

• Addressing complex decisions by breaking them down
• Characterizing decision problems and goals to ensure addressing all needs and desires
• Being aided by structured techniques, mathematics, and computers
• Ongoing improvement when codified in a process, procedure, or program
• A long list of decision making techniques and tools with proven usefulness
• A growing capability to analyze and access the information that can improve guidance based on the facts

While unable to meet the requirements of the full rational decision making model, this ideal serves as a valuable approximation that supports predictions and decision making with increasingly broad application. Rational approaches continue to provide the standard for effective decision making when considered in light of current limitations. Coping with complexity and information overload will place greater demand on enhancing capabilities that support rational choice.

Impact of emotions on decisions

Much research has been conducted on the various impacts of emotion on decision-making. Studies indicate the complexity and breadth of those impacts. Listed below are some examples of their results.

• Decision-makers who were made to consider safety concerns that induced negative emotions when deciding which car to purchase, were more likely to “choose not to choose,” or to stick with the status quo.
• Study participants who experienced “frustrated anger” were more likely to choose a high risk, high reward option in a lottery – a choice the authors categorize as “self-defeating."
• "Fearful people made pessimistic judgements of future events whereas angry people made optimistic judgements."
• Study participants who had been induced to feel sad were likely to set a lower selling price for an item they were asked to sell; the researchers suggest that selling the item would bring about a change in the participants’ circumstances and thus perhaps a positive change in mood.
• Participants with “normal emotion processing” were engaged in a card-drawing task. When drawing from “dangerous decks" and consequently experiencing losses and the associated negative emotions, they subsequently made safer and more lucrative choices. Participants with brain damage that had left them unable to experience such emotional responses, did not change their behavior in this way.