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Back to School Day, Sept. 24, 2010 Understanding Decision Making Facilitating High-Quality Conversations about Decision

Back to School Day, Sept. 24, 2010 Understanding Decision Making Facilitating High-Quality Conversations about Decision Situations. Opening session by Professor Patrick S. Noonan patrick_noonan@bus.emory.edu. Deepwater Horizon, Gulf of Mexico, April 2010.

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Back to School Day, Sept. 24, 2010 Understanding Decision Making Facilitating High-Quality Conversations about Decision

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  1. Back to School Day, Sept. 24, 2010 Understanding Decision Making Facilitating High-Quality Conversations about Decision Situations Opening session by Professor Patrick S. Noonan patrick_noonan@bus.emory.edu

  2. Deepwater Horizon, Gulf of Mexico, April 2010 © 2003-2010 Patrick S. Noonan - Emory University

  3. Where am I coming from?The Decision-Centric Worldview The only way that individuals can purposely exercise any control over their lives, their careers, or their surroundings it through their decision making. -- Ralph Keeney In a few hundred years, when the history of our time will be written from a long-term perspective, it is likely that the most important event historians will see is not technology, not the Internet, not e-commerce. It is an unprecedented change in the human condition. For the first time -- literally -- substantial and rapidly growing numbers of people have choices. For the first time, they will have to manage themselves. And society is totally unprepared for it. -- Peter Drucker © 2003-2010 Patrick S. Noonan - Emory University

  4. Decisions are “Fundamental Particles” © 2003-2010 Patrick S. Noonan - Emory University

  5. Mastering decision-making is easy… …isn’t it? © 2003-2010 Patrick S. Noonan - Emory University

  6. Discussion Question • What are the biggest obstacles to high-quality decision making… • … to you as a consumer? • … to you as a manager & leader? • … to your organization? © 2003-2010 Patrick S. Noonan - Emory University

  7. Decisions are Inescapable • US President Herbert Hoover on vacation: • “I’m tired of making decisions -- one after another all day long.” • “My view of Heaven is of a place where no one ever has to make a decision.” © 2003-2010 Patrick S. Noonan - Emory University

  8. … or Are They? • Decision-making researcher Gary Klein to an NYC Fire Department battalion commander: • “Tell me about some difficult decisions you’ve made.” • Commander: • “I don’t make decisions.” • “I don’t remember when I’ve ever made a decision.” • “Commanders never make decisions.” • Source: Gary Klein, Sources of Power, 1999 © 2003-2010 Patrick S. Noonan - Emory University

  9. © 2003-2010 Patrick S. Noonan - Emory University

  10. Telling us to obey instinct is like telling us to obey "people." People say different things: so do instincts. Our instincts are at war… Each instinct, if you listen to it, will claim to be gratified at the expense of the rest. -- C. S. Lewis © 2003-2010 Patrick S. Noonan - Emory University

  11. Going with the Gut © 2003-2010 Patrick S. Noonan - Emory University

  12. This Slide is Brought to you by... the Letter K • In a typical sample of text in the English language, is it more likely that a word (of three or more letters): • starts with the letter K? or • has K is its third letter? © 2003-2010 Patrick S. Noonan - Emory University

  13. The Beijing Questions © 2003-2010 Patrick S. Noonan - Emory University

  14. The Pentagon Questions © 2003-2010 Patrick S. Noonan - Emory University

  15. Risk Estimation Questions • Which cause of death is the more common in the US? • Diabetes or homicide • Tornado or lightning • Car accident or stomach cancer • Shark or items falling from airplanes © 2003-2010 Patrick S. Noonan - Emory University

  16. Level of Confidence • Example question: Tourmaline is... • A) a kind of cloth, or • B) a precious stone • My answer is: • A) or B) • The probability that my answer is correct is: • .50 .55 .60 .65 .70 .75 .80 .85 .90 .95 1.00 © 2003-2010 Patrick S. Noonan - Emory University

  17. Quantity Estimation • Suppose you could fold a piece of paper in half, again and again and again. • After 100 folds, how thick will it be? • My best guess is that the paper will be _________ thick. • I am 90 percent sure that the correct answer lies between _________ and __________ . © 2003-2010 Patrick S. Noonan - Emory University

  18. ease of recall, imaginability presumed associations status quo bias: insufficient adjustment of anchor overconfidence excessive influence of regret stereotyping (pattern matching) insensitivity to base rates insensitivity to sample size Some Heuristics… and Resulting Biases • Availability • Anchoring & Adjustment • Representativeness © 2003-2010 Patrick S. Noonan - Emory University

  19. © 2003-2010 Patrick S. Noonan - Emory University

  20. St. Louis’ Gateway Arch: Wider or Taller? © 2003-2010 Patrick S. Noonan - Emory University

  21. The Arch Fits Perfectly into a Square © 2003-2010 Patrick S. Noonan - Emory University

  22. Doh! Being Smart Doesn’t Help… … and It Might Even Hurt • Edward de Bono:(“Thinking in America… the Lost Art,” Critical Intelligence, 1994) • The “intelligence trap” • A highly intelligent person will take a point of view... and then use that intelligence to defend it. • Many excellent minds are trapped in poor ideas because they can defend them well. • See also: “The Dunning-Kruger Effect” © 2003-2010 Patrick S. Noonan - Emory University

  23. High Points in the Art of Prediction © 2003-2010 Patrick S. Noonan - Emory University

  24. High Points… continued © 2003-2010 Patrick S. Noonan - Emory University

  25. High Points… continued © 2003-2010 Patrick S. Noonan - Emory University

  26. January 28, 1986 – Challenger’s Last Flight Before After © 2003-2010 Patrick S. Noonan - Emory University

  27. “What are some limits on my intuition?” • Experiments reveal important insights about the mental operating system (OS) of humans • Intuition & expertise have important roles… • …but also some limitations. • The human OS displays systematic weaknesses… • … but that’s actually good news! The brain is a machine assembled to survive. -- Edward O. Wilson This view of mind suggests that the liberal arts are those modes of reasoning needed in civilized society that are not innate because they had no survival value on the savanna. -- David S. Moore © 2003-2010 Patrick S. Noonan - Emory University

  28. © 2003-2010 Patrick S. Noonan - Emory University

  29. The Central Questions of Decision & Information Analysis To think is easy. To act is hard. But the hardest thing in the world is to act in accordance with your thinking. -- Goethe © 2003-2010 Patrick S. Noonan - Emory University

  30. What DIA seems to be about © 2003-2010 Patrick S. Noonan - Emory University

  31. What DIA actually is about • “The objective of decision analysis is to facilitate a high-qualityconversation about a decision situation.” [Prof. Ron Howard, Stanford University] • “The art of management is making meaningful generalizations from inadequate facts.” [Stanley Teele, former Dean of the Harvard Business School] © 2003-2010 Patrick S. Noonan - Emory University

  32. Most Decision Makers need some Therapy © 2003-2010 Patrick S. Noonan - Emory University

  33. The Decision Quality Chain“What do I need for a great decision?” • Source: Matheson & Matheson © 2003-2010 Patrick S. Noonan - Emory University

  34. Russo & Schoemaker’s “Decision Traps” • Source: Decision Traps, Russo & Schoemaker (1989) • Most common organizational decision-making dysfunctions: 1. Plunging In 2. Frame Blindness 3. Lack of Frame Control 4. Overconfidence 5. Shortsighted Shortcuts 6. Shooting from the Hip 7. Group Failure 8. Fooling oneself about Feedback 9. Not Keeping Track 10. Failure to Audit the Decision Process © 2003-2010 Patrick S. Noonan - Emory University

  35. Decision Trap #1: Plunging In • Source: Decision Traps, Russo & Schoemaker (1989) • Behavior: • Starting the analysis & decision making before thinking about the objectives, the context and the most appropriate decision process • Consequence: • Inefficient decision making, often sloppy and misdirected • Solution: • Devote careful thought to the metadecisions first. © 2003-2010 Patrick S. Noonan - Emory University

  36. The Metadecisions: “How Should I Decide?” • Source: Decision Traps, Russo & Schoemaker (1989) • There are very important decisions you can make about the decision processes you use • Higher-order decisions make you think about the nature of what you’re trying to decide • Examples: • What’s the main difficulty in this issue? • In general, how should decisions like this one be made (participants, style, time allotted, etc.)? • Is this decision linked to others, i.e. does it materially affect other decisions, or is it affected by others? © 2003-2010 Patrick S. Noonan - Emory University

  37. More Metadecision Questions The most basic of all decisions is who shall decide. This is easily lost sight of in discussions that proceed directly to the merits of particular issues, as if they could be judged from a unitary, of God's eye, viewpoint. A more human perspective must recognize the respective advantages and disadvantages of different decision making processes, include their widely varying costs of knowledge, which is a central consideration often overlooked in analyses which proceed as if knowledge were either complete, costless, or of a 'given' quantity. -- Thomas Sowell • Source: Decision Traps, Russo & Schoemaker (1989) Must this decision actually be made? Should I make the decision along, with others, or delegate it? How much time should it take? Must the decision be made now? If not, when should it be made? Are the constraints and deadlines real? Should I move sequentially in the process, or back and forth? © 2003-2010 Patrick S. Noonan - Emory University

  38. Still MoreMetadecision Questions • Source: Decision Traps, Russo & Schoemaker (1989) What’s a good balance of effort, i.e. where should I concentrate my time & resources? Is there some feedback or history from related experiences to draw upon? What are my own capabilities, biases & limitations in dealing with an issue like this? Do I need to bring in others’ points of view? What other points of view might be helpful? How would an admired, more experienced decision maker handle this issue? © 2003-2010 Patrick S. Noonan - Emory University

  39. Discussion Questions • How much thinking or discussion does your organization apply to the meta-decisions, the decisions about how to decide? • How would you describe your organization’s typical “balance of effort” in tackling important decisions? © 2003-2010 Patrick S. Noonan - Emory University

  40. “What’s the appropriate balance of effort?” © 2003-2010 Patrick S. Noonan - Emory University

  41. “Analysis Paralysis” vs. “Extinction by Instinct” © 2003-2010 Patrick S. Noonan - Emory University

  42. Decision Tree: An Analytical Journey © 2003-2010 Patrick S. Noonan - Emory University

  43. The Road Ahead © 2003-2010 Patrick S. Noonan - Emory University

  44. “What are the elements of the decision?” Decisions & Alternatives Uncertainties & Outcomes Consequences © 2003-2010 Patrick S. Noonan - Emory University

  45. From Insight to Action“How do I move from issues to implementation?” © 2003-2010 Patrick S. Noonan - Emory University

  46. The Generic Modeling Process“How should I proceed? What are the steps?” Success doesn't "happen." It is organized, preempted, captured, by consecrated common sense. -- Frances E. Willard Industry is a better horse to ride than genius. -- Walter Lippman © 2003-2010 Patrick S. Noonan - Emory University

  47. The Process must be Robust When you’re going through Hell… keep going. -- Sir Winston Churchill © 2003-2010 Patrick S. Noonan - Emory University

  48. Always Look for Good Shortcuts!“Have we done enough to make a good choice?” © 2003-2010 Patrick S. Noonan - Emory University

  49. Real World vs. Model World All models are wrong, but some are useful. -- George Box © 2003-2010 Patrick S. Noonan - Emory University

  50. Step One: Defining the Problem“What are the central issues and boundaries?” The greatest challenge to any thinker is stating the problem in a way that will allow a solution. -- Bertrand Russell © 2003-2010 Patrick S. Noonan - Emory University

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