more effective decision making
TRANSCRIPT
Decision Making
Bob Frisch
Part 1
Structuring Decisions
A Couple Wants to Go on
Vacation...
Have Fun
Only Have
Five Days
Have $3000
To Spend
What Are You Trying To
Achieve?
Have FunObjective
What Will Limit Your Options?
$30005 days Have Fun
What Will Limit Your Options?
$30005 days Have FunConstraint
What Does ‘Have Fun’ Mean?
Relaxing In
The Spa
Swim and
Cocktails on
the Beach
Enjoying
Wonderful
Dinners
Together
Looking At A
Beautiful Ocean
View From Our
Room
Playing Golf
Criteria
The Criteria Are The Things
That Define ‘Having Fun’
Have Fun
$30005 days
Golf
Spa
Ocean View
Fine Dining
Beach
Big ‘Aha’ #1
Put The Criteria Into Three
Buckets
Should DoMust Do Nice To Do
What Makes a Fun Vacation?
Playing Golf
Relaxing In
The Spa
Swim and
Cocktails on
the Beach
Enjoying
Wonderful
Dinners
Together
Looking At A
Beautiful Ocean
View From Our
Room
‘Must Do’
Should DoMust Do Nice To Do
Golf
Spa
Beach
‘Should Do’
Should DoMust Do Nice To Do
Golf
Spa
Beach
Ocean View
Fine Dining
‘Nice To Do’
Should DoMust Do Nice To Do
Golf
Spa
Beach Ocean View Fine Dining
Have Fun
5 days
Golf
Spa
Ocean View
Fine Dining
Must Do
Beach
Should Do
Nice To Do
Big ‘Aha’ #2
Test the ‘Walls & Fences’
Check that your assumptions are
valid.
Is it an immovable wall or a
moveable fence?
Golf
Spa
Beach
Sunset CocktailsLate Day Swim
?
Must Do
Must Do Should Do
Have Fun
5 days
Golf
Spa
Ocean View
Fine Dining
Must Do
Late Day Swim
Should Do
Nice To Do
Sunset Cocktails
Five Parts to Defining a Decision
1) Objective - What are you trying to achieve?
2) Constraints - What limits your options?
3) Criteria - What will accomplish your objective?
4) ‘Bucket’ the criteria - Must Do, Should Do, and
Nice to Do
5) Test assumptions - Are they moveable fences
or immovable walls?
Have Fun
5 days
Golf
Spa
Ocean View
Fine Dining
Must Do
Late Day Swim
Should Do
Nice To Do
Sunset Cocktails
Objective
Constraints
Criteria
Test Assumptions
‘Bucket’ Criteria
Have Fun
Five Days
$3000
Have Fun
5 days
Golf
Spa
Ocean View
Fine Dining
Must Do
Late Day Swim
Should Do
Nice To Do
Sunset Cocktails
Synagogue
Expansion Example
A Building That
Meets Our
Needs For The
Next 20 Years
Meet
Codes
$4.5
Million
Availabl
e
A Building That
Meets Our
Needs For The
Next 20 Years
Meet
Codes
$4.5
Million
Availabl
e
Renovate Sanctuary
Update Utilities
New Library
Weddings & Events
Build Pre-School Wing
Should DoMust Do Nice To Do
Renovate Sanctuary
Update Utilities
New LibraryWeddings & Events Build Pre-School Wing
A Building That
Meets Our
Needs For The
Next 20 Years
Meet
Codes
$4.5
Million
Availabl
e
Renovate Sanctuary
Update Utilities
Build Pre-School Wing
Must Do
Weddings and Events
Should Do
Nice To Do
New Library
Should DoMust Do Nice To Do
Renovate Sanctuary
Update Utilities
New LibraryWeddings & Events Build Pre-School Wing
Should DoMust Do Nice To Do
Renovate Sanctuary
Update Utilities
Weddings of 300 PeopleEvents of 225 People Build Pre-School Wing
New Library
Should DoMust Do Nice To Do
Renovate Sanctuary
Update Utilities
Weddings of 300 PeopleEvents of 225 People Build Pre-School Wing
New Library
A Building That
Meets Our
Needs For The
Next 20 Years
Meet
Codes
$4.5
Million
Availabl
e
Renovate Sanctuary
Update Utilities
Build Pre-School Wing
New Library
Must Do
Events of 225 people
Should Do
Nice To Do
Weddings of 300 people
Five Parts to Defining a Decision
1) Objective - What are you trying to accomplish?
2) Constraints - What will limit your options?
3) Criteria (or Options) - What will accomplish your
objectives?
4) ‘Bucket’ the criteria - Must Do, Should Do, and
Nice to Do
5) Test assumptions - Are they moveable fences
or immovable walls?
Difficult Decisions
Sell Car
Borrow
Money from
Relatives
Move to
Cheaper
Apartment
Define the Objective
Sell Car
Borrow
Money from
Relatives
Move to
Cheaper
Apartment
Get My Debt
Situation Behind
Me Quickly
Minimize the
Impact of my
Current Lifestyle
Big Aha #3
If you have no options, there’s
no decision to make
Discussion
Part 2
Selecting Among
Alternatives
Three Options for a Fun
Vacation
Have
Fun
5 days
Golf
Spa
Ocean View
Fine Dining
Must Do
Late Day Swim
Should Do
Nice To Do
Sunset Cocktails
Ritz Carlton Hotel
Naples, FL
Sanctuary Resort
Kiawah Island, SC
Grove Park Inn
Ashville, NC
Golf
Spa
Ocean View
Fine Dining
Late Day Swim
Sunset Cocktails
Ritz Carlton
Naples
Sanctuary
ResortGrove Park Inn
Must
Do
Must
Do
Must
Do
Should
Do
Should
Do
Nice To
Do
Mapping the Criteria Against the
Options
Weighting the Criteria
The Poker Chip Game
Must Do Spouse 1 Spouse 2
Golf 5 3
Spa 4 3
Late Day Swim 1 2
Should Do
Ocean View 0 2
Sunset Cocktails 0 0
Nice to Do
Fine Dining 0 0
Pairwise Comparisons
• Sometimes the best way to make a
decision among a large number of
options is to decide among pairs
Which Ride to Visit First at
Disney?Dumbo
Haunted
Mansion
Haunted Mansion
Haunted Mansion
Space Mountain
Space Mountain
Peter Pan
Haunted Mansion
Small World
Alice
Alice
Flying Carpet
Jungle Cruise
Flying Carpet
Flying Carpet
CautionThis doesn’t result in a ranking. It’s
designed to pick the top one.Dumbo
Haunted
Mansion
Haunted Mansion
Haunted Mansion
Space Mountain
Space Mountain
Peter Pan
Haunted Mansion
Small World
Alice
Alice
Flying Carpet
Jungle Cruise
Flying Carpet
Flying Carpet
Three Tools to Help Make
Choices
• Mapping criteria against options
• Poker chip game to set priorities
among the criteria
• Pairwise ranking to force choices
among a large set of options
How Precise do you Need to
Be?
• What’s the cost of a bad decision?
• What’s the cost of not making a
decision?
• Is the decision reversible?
• Can you ‘buy an option’?
Part 3
Decisions in Groups
Bob’s Magic Trick
What Type of Car Should We All
Drive?
1/3 1/31/3
Boss Picks Mercedes
2/3 Prefer Lexus to Mercedes
1 - Lexus
2 - Mercedes
3 - BMW
1 - Mercedes
2 - BMW
3 - Lexus
1 - BMW
2 - Lexus
3 - Mercedes
Boss Picks Lexus
2/3 Prefer BMW to Lexus
1 - Lexus
2 - Mercedes
3 - BMW
1 - Mercedes
2 - BMW
3 - Lexus
1 - BMW
2 - Lexus
3 - Mercedes
Boss Picks BMW
2/3 Prefer Mercedes to BMW
1 - Lexus
2 - Mercedes
3 - BMW
1 - Mercedes
2 - BMW
3 - Lexus
1 - BMW
2 - Lexus
3 - Mercedes
Boss Picks Mercedes
No Matter What Car the Boss
Picks, 2/3 of the Group Thinks
There’s a Better Option
No Matter What Car the Boss
Picks, 2/3 of the Group Thinks
There’s a Better Option
The Boss is Always Wrong
The Transitive Principle
A > B
B > C
A > C
If
And
Then
The Transitive Principle
A > B
B > C
A > C
If
And
Then
The Marquis de Condorcet
Condorcet
Arrow
Groups and Decisions
• The Transitive Principle Does Not
Necessarily Apply to Groups
• No Voting Mechanism Can Overcome
Condorcet’s Paradox
• What Would Be Irrational in an
Individual or a Pair Is Completely
Normal in a Group
Groups and Decisions
• The Transitive Principle Does Not
Necessarily Apply to Groups
• No Voting Mechanism Can Overcome
Condorcet’s Paradox
• What Would Be Irrational in an
Individual or a Pair Is Completely
Normal in a Group
The Group Isn’t Crazy – It’s The Math That’s
Broken!
Groups Are Poor at Making
Decisions
• Condorcet’s Paradox
• Mission Control vs Knights of the Round
Table
• House vs Senate
Big Aha #5
• A Group Needs a ‘Closure Mechanism’
in Case They Can’t Decide
Part 4
Review
Five Parts to Defining a Decision
1) Objective - What are you trying to achieve?
2) Constraints - What limits your options?
3) Criteria (or Options) - What will accomplish your
objective?
4) ‘Bucket’ the criteria - Must Do, Should Do, and
Nice to Do
5) Test assumptions - Are they moveable fences
or immovable walls?
3 Ways to Evaluate Choices
• Weight the Criteria - Poker Chip Game
• Map the Criteria Against the Options
• Use Pairwise Comparisons
1. Define Your Objectives
2. Look at Criteria in Buckets
3. Test Walls & Fences
4. No Choices Means No Decision
5. Groups Need a Closure Mechanism
Five Aha’s For This Evening
Discussion
Who’s In the Room?
How Great Leaders Structure and
Manage the Teams Around Them
Jossey-Bass/Wiley, Publishers
www.WhosInTheRoom.com