What is a Decision?

At this moment you face a choice. Either to continue reading this handbook or not. A decision is simply what happens when we make up our minds, and even when we do not, we are still making a decision - a decision not to decide.

We need to make decisions because we are constantly either:

• responding to change
  
  or
  
  
• initiating change

Three conditions must exist before we can be sure a decision is required:

• two or more possible outcomes - otherwise there is no choice
• some value or importance attached to these outcomes - if none is significant there is no real choice to make
• variations in the effectiveness of outcomes and how much we want them- for when all are equally desirable or effective, why bother to choose?

When people decide, in essence they have to ask themselves:

• What do I want to achieve and how best can I do that in the circumstances?

The precise moment you make a decision is:

• An event
  
  The point you decide or decide not to choose

All the activity leading to this decision is part of:

• A process
  
  An important aspect of decision making is always to treat it as:
• A process leading to an event

Since the process is a continuous sequence of activities, it may be hard to break it down into discrete parts. Treating a decision solely as an isolated event can be misleading and downright unhelpful.

Note: All the circumstances surrounding a choice, not just the moment of choice itself, make up decision making.

The Decision Process

Could you describe the various steps you go through to make an important decision in your personal life? See how many separate ones you can identify by writing them down.

When we list the decision steps we intend to take we are making a framework which can be shared with other people. This helps create more predictable procedures for making choices.

A framework for making choices is helpful and can:

• ensure all important steps or factors are included
• provide a 'map' for evaluating choices and avoiding irrelevancies
• explain our approach to others
• inspire confidence
• document the process and justify decisions
• allow us to analyse and set priorities quickly

Frameworks support but do not guarantee effective decisions. What matters is how they are used. Excessive use leads to inflexibility. They are no substitute for common sense, judgement or intuition.

Here is a simple five-stage decision framework:



First we define the situation, it's boundaries and constraints. Next we analyse the situation to make sense of it and to unravel causes. This enables us to identify alternative courses of action or solutions, one of which we finally choose. The last step is to implement our choice.

Each of the stages needs to be carefully monitored. This lets us know what has happened at any one moment.

Some people prefer a slightly more detailed approach. For example, a study of how over 2000 managers, supervisors and executives took decisions. Eight stages were identified - nine if you include Monitoring.



These eight stages were tested on several hundred people and most reported it helped their decision-making ability.

You would not use the framework consciously to make a simple decision such as whether to have cornflakes or muesli for breakfast. But when more complex choices are involved, it is a powerful tool for making sense of the decision process.

Define and Specify

The first two stages in the process, DEFINE the situation and SPECIFY the decision objectives, are about clarifying the boundaries of the issue with which you are dealing.

People frequently agonise about a decision when the real issue is not choice but what you want to achieve. When you are not clear about what you want, how can you expect to make sensible decisions?

Even when people are clear about what they want, this may be an edited form of their desire rather than a full-blooded picture of their wishes. Again, this can make it hard to choose with precision.

We need objectives to:

• focus attention on what we want
• minimise distractions
• guide our intuition

Like any aspect of managing, though, we must avoid becoming fixated on a single way of working. Always demanding highly specific objectives can:

• programme the mind too narrowly
• make us overlook opportunities
• blind our intuition

Certainly you should adopt clear objectives, yet be willing also to respond to other opportunities and if necessary adjust the aims. Initial objectives might, for instance, be a greater return on capital, increasing market share or producing a competitive tender.

Objectives do not stand in isolation. We should also define the associated risks and identify the constraints.

Risks need defining because they may influence our ultimate choice. We want to know the constraints because these show the limitations within which we are working.

For example, if you were thinking of buying a house at an auction you would need to assess carefully the risks of purchase. Two constraints might be your inability to view the house before buying and to obtain a mortgage.

Diagnose and Develop

Here you are unravelling the situation, identifying what needs to be done or what has gone wrong. There are multitudes of techniques available to help you do this, ranging from the highly technical to the inspired guess.

Eventually you need to begin generating alternatives. These may take the form of specific solutions or courses of action. Either way it involves choices.

Suppose the doctor says you are run down and need a holiday. You decide to go to Italy for its sun and good food. Depending on the constraints - your resources, available time and tolerance for long journeys - you might go camping or take a coach tour, have a two-week fly-drive package by the sea, or spend a week visiting art galleries. Faced with many alternatives and possibly scores of bulging brochures, you might develop a basic list of alternatives with which to begin working.

The whole business of developing alternatives is a subject in its own right. It mixes both systematic thinking and creativity.

Establish and Choose

During this part of the process you become clear about how you will judge the various alternatives. The method used can influence the final choice radically, so it makes sense to give this some careful thought.

The simplest approach to appraising is to select a set of criteria and check the alternatives against each of these. So, for example, you might use six criteria for choosing your Italian holiday:

• By the sea
• Cost under £750
• Mid-week travel
• Children go free
• Golf course nearby
• Scuba diving facilities

If you are a keen scuba diver, scuba facilities might be far more important to you than, say, mid-week travel. So a further refinement in your method of appraisal could be to give twice as much weight to this criterion as to any other.

A company making a major investment decision may use a whole raft of criteria for selecting a specific course of action. It too might decide to weight some more heavily than others.

There are many methods for making sense of alternatives, ranging from a simple list of the pros and cons, to sophisticated computer programmes that use probability and other techniques to assess choices. Having weighed up the different alternatives, the next step is making the choice. This is the point in the process that most people think of as the actual decision-making. As we have seen, though, this is only one step along the way, not an event.

The more thoroughly the earlier stages have been performed, the easier it usually becomes to make the final decision. Thoroughness does not mean you have all the information necessary to make the best choice, or that the objectives are all crystal clear and quantified. Often choices must be made on limited data and using over-simplified criteria for appraising alternatives.

Undertaking each of the above stages systematically can provide more confidence about the final choice. Ultimately, it is about using judgement, even when a computer apparently decides as, for instance, with certain schemes for buying and selling shares. Somebody had to decide the rules for the computer to use in the first place.

Implement

The final stage in the decision framework is taking action of some kind, based on the choice that has been made. This may involve no action at all, but that too becomes a decision.

Implementation is the 'Achilles heel' of many companies. While great effort goes into the earlier stages of the decision process it is often assumed that executing the decision will happen fairly easily. In practice it usually requires even more thoroughness and follow through.

When we implement a decision we also want to know if it has produced the results we wanted. This is a hidden, ninth stage of the framework which is not shown in the chart. It involves checking on what is happening, often called:

• MONITORING

Monitoring needs to happen throughout the decision-making process, not just at the end when we are implementing a choice.

Style and Intuition

Personality and style play a big part in decision making. This is not always fully accepted; instead there is often a smoke screen of claims about the importance of rational decision-making and so on.

In business, the 'rational' approach is strongly favoured at the expense of feelings or instinct. This explains why so many managers remain weak in decision-making.

Closely following an objective, logical approach may kill intuition and creativity. It may also breed frustration about the decision making process itself.

Successful decision-making means being reasoned and systematic, while still feeling free to use our 'gut' instincts:

• Use instinct creatively, do not minimise or eliminate it

Neither approach is better than the other one. It is a matter of using both to full advantage. It may be interesting to see which style you prefer:

Systematic Approach

A systematic approach is one where you:

• Use a clear set of steps to make choices
• Are aware of both process and method
• Justify solutions by your methods
• Define constraints early in the process
• Discard alternatives after careful consideration
• Keep refining the decision situation
• Search systematically for extra information

Intuitive Approach

An intuitive approach would be one in which you:

• Keep in mind the overall decision situation, avoiding excessive focus on specifics
• Continuously redefine the problem or decision
• Simultaneously consider various alternatives and options
• Jump from one step to another in the analysis, then back again
• Explore and drop alternatives quickly

There are also hidden forces affecting decision making, such as:

• Fear - we may become over cautious and unwilling to pursue new or creative alternatives
• Self-interest - we may make choices that seem better for us than they really are
• Personality clashes - we may discount other people's input or reject their opinions through taking a dislike to them personally

Indecisiveness

Are you a ditherer? At times we may be all be terribly undecided and it may not matter a bit. If you vacillate over whether to have tea or coffee, so what? Real indecisiveness is when we face important choices and either delay too long in making one or avoid it altogether.

There are also real obstacles to being decisive. For example:

• Fear of repeating past mistakes
• Too much or too little information
• Too much consultation
• Uncertainty
• Role confusion
• Inertia
• Time pressures
• Fear of the effect of our action