HUMBLE DECISIONS FOR UNCERTAIN TIMES fmi PD WORKSHOP

1. HUMBLE DECISIONS FOR UNCERTAIN TIMESfmi PD WORKSHOP Hana Carbert, CMA, FCMA

2. Decisions, decisions

3. What decisions do you make? • Past decisions • Future decisions • Business or personal • Successful or not

4. Agenda • Decision context • Decision process • Environment & uncertainty • Human factors • Adapting for uncertainty & risk • Managing risks

5. Decision Process: this?

6. Decision Process: or this?

7. Decision 1:

8. Decision 2:

9. Problem-Solving Steps • Recognize Problem • Define Alternative Courses • Evaluate Alternatives and Decide • Implement Decision and Monitor • What is the problem with this? • Anything missing? • What is assumed?

10. The rational model • “Evidence-based decision making” • Good – if we have the right evidence and know how to use it • Assumes decision maker wants to be rational • Assumes clear/single criteria • Assumes relative certainty of outcomes

11. BUT… • Clear goal? • Clear decision criteria?

12. Exercise List goals and criteria for your decisions

13. Types of Decisions Programmed • Experience • Routine • Information • Decision-rules exist Non-programmed • Poorly defined • Unique situation • Often combined with lack of information and uncertainty or risk

14. Exercise Categorize your decisions: programmed or not?

15. Agenda • Decision context • Decision process • Environment & uncertainty • Human factors • Adapting for uncertainty & risk • Managing • risks

16. What causes uncertainty?

17. Environment of uncertainty • Risk regarding decision environment • Economic risk: e.g. growth, commodity prices, deflation/inflation; interest rates • Leadership direction • Weather & Nature • Technology • Human behaviour • Lack of information or poor information • Validity of assumptions • Ambiguity of goals and criteria

18. Exercise List uncertainties related to the decisions

19. Four ways of knowing • We know what we know • We know what we don’t know • We don’t know what we know • We don’t know what we don’t know

20. Exercise What are the (known) unknowns of the decisions?

21. Agenda • Decision context • Decision process • Environment & uncertainty • Human factors • Adapting for uncertainty & risk • Managing risks

22. Critical thinking • What forms our assumptions and experience?

23. Discussion • How can you reduce ‘what you do not know’?

24. Reducing what we don’t know • Edward de Bono: Six Thinking Hats • Defined but separate focus of team members • Diverse teams: backgrounds, training, types • Critical thinking: questioning assumptions, explicit reasoning • Culture • People awareness

25. How does your mind work? • How do you gather information? • Sensing vs. Intuitive • How do you evaluate information and make decisions? • Thinking vs. Feeling

26. Information Processing • What is YOUR Cognitive Style (Jung/Slocum)? Sensing Thinker Intuitive Thinker Sensing Feeler Intuitive Feeler

27. Discussion: • Relate Jung’s/Slocum’s framework to decisions made • Do you recognize people you know? • What does new insight suggest for future approaches?

28. Agenda • Decision context • Decision process • Environment & uncertainty • Human factors • Adapting for uncertainty & risk • Adapt process steps • Select decision model • Communicate goals, criteria and risks • Managing risks

29. How does this Doctor decide?

30. Humble decisions (Etzioni) • Focused trial and error • Tentativeness • Procrastination • Decision-staggering

31. More humble decision tactics.. • Fractionalization • Hedging bets • Maintaining reserves • Reversible decisions

32. Reversible decisions • Final sale?

33. Exercise List ways the humble tactics could have been used

34. BUT….. • Clear objective/goal? • Clear decision-criteria?

35. Agenda • Decision context • Decision process • Environment & uncertainty • Human factors • Adapting for uncertainty & risk • Adapt process steps • Be aware of decision model • Communicate goals, criteria and risks • Reducing risks

36. Decision Models (Harrison) • Rational • Organizational • Political • Process

37. Rational Model • Seeks perfection/optimization - a decision-making prescription • Requires (almost perfect) information • Requires clear decision objectives/criteria - shared by all • Uses MS tools such as decision-trees, CPM, etc. • Problems?

38. Rational model • “Illusion of precision”

39. Organizational Model • Challenges assumption of perfect information • Recognizes limitations of decision-makers • Seeks rational, rather than perfect, decisions • Quick, satisfactory decisions

40. Political Model • Recognizes a variety of goals, agendas • Organizational power is the key driver impacting decisions

41. Process Model • Focus on the process, as opposed to end objective • Interdependence of steps: process will impact exhaustiveness of choices • Objective-oriented outcome, long-term focus • Recognizes behavioural impacts • Open to external environment

42. Exercise Which decision model applied? How did it affect the decision?

43. Agenda • Decision context • Decision process • Environment & uncertainty • Human factors • Adapting for uncertainty & risk • Adapt process steps • Be aware of decision model • Communicate goals, criteria and risks • Reducing risks

44. More than one goal

45. Decision Matrix - example

46. Decision Matrix – Example +

47. Decisions with uncertainty • Communicate range of outcomes • Communicate sensitivities • Communicate at what point does the preferred decision changes • Outcomes • Criteria changes • Decision process changes

48. Decisions with uncertainty • Segment decision elements • Identify points of no return • Revisit decision through implementation • Communicate and manage risks

49. When is the decision point?

50. Show variability