STRATEGY SESSIONS #12

DIFFERENT TYPES OF DECISIONS

by Dr. Steve Payne

 

A rational decision-making process starts with defining one’s problems or needs related to one’s goals.  It next involves generating and evaluating alternatives, and then it concludes with choosing an optimal alternative.  People, though, much more often use a quite limited, rather than a perfect or even a high, degree of rationality in making their decisions.  Seldom do humans actually follow a structured, thorough, and optimizing decision making process. 

 

Even scientists who advocate a scientific-thinking process for important research projects make many decisions in their personal lives and at work that depart from a very systematic and optimizing process.  That’s because all of us face many fairly routine decisions that are made based on finding an option that merely in some way satisfies, rather than optimizes, our needs or values.  Except possibly for more important life decisions, we don’t have the time or see the reason to spend a lot of time generating as many options as possible and then carefully evaluating these for a very best choice.  Instead, we much more often think of decision options over time and evaluate these options then and there according to whether these options seem to satisfy us.  When we initially find an acceptable option, we often take that one and switch our thinking to some other concern or need.  There are many occasions in which such a satisficing, rather than an optimizing, decision approach is appropriate or necessary.   

 

For major decisions in our lives, we can benefit from being more strategic and rational in generating and evaluating alternatives.  We might particularly seek criteria or factors that seem important in evaluating decision alternatives.  In evaluating several competing job offers, for example, we might consider a number of criteria such as pay, location of this employment opportunity, reputation of the company, fringe benefits, etc. relative to our employment or career goals.  If we had several job offers or options to consider, we might evaluate each option in terms of each criterion on some scale (such as 1-5 in terms of an option’s favorability).  Since certain judgment criteria are probably more important to us than others, we could weigh these criteria according to our estimation of their importance in making our job decision (such as .4 or 40% weight in the decision for one criterion, .2 or 20% weight for another criterion, and so on).   Evaluating and selecting options according to such a framework is known as a compensatory decision approach. 

 

There are other decision approaches or rules. One approach to evaluating decision options is to choose the option that meets every criterion by at least some minimum level.  This is commonly how most companies select their employees.  Rather than evaluating each job applicant according to every employment criterion, which would be more expensive, the companies evaluate applicants in serial order.  If they meet some level of acceptance on one criterion, such as an application form or resume, the individual is asked to appear for an initial interview.  Should the applicant do well enough in the first interview, he or she is given a second interview, then possibly some job-related test, and then other criteria for employee selection might be applied, perhaps ending with a physical examination.  More costly criteria, such as health or physical examinations, appear later in this serial selection process when many initial applicants have been screened out of the decision and selection procedure. 

 

In real life, unlike in basic math textbooks, options are not all presented at one time for evaluation.  A person seeking a job might get one job offer and then go for weeks or months before obtaining another offer.  The job applicant often does not have the luxury of directly being able to compare these two job offers, or others that might come later.  Job offers are typically open for acceptance for a limited amount of time, and job applicants who receive employment offers don’t know if or when other job offers might come and how attractive these offers might be.  The four-step process that I have recommended for strategic decision making offers useful insights in such cases.  

STRATEGY SESSIONS #11

RULES, POLICIES, OR GUIDELINES FOR STRATEGC DECISIONS 

by Dr. Steve Payne

 

 

Plato, in explaining the views of Socrates, said that “… a life unexamined is not worth living.” 

 

It’s likely that we all examine, at least to some degree, our lives as reflected by our major life decisions and the consequences of these.  But by what measuring stick do we examine our major decisions and their consequences?  We examine or judge these probably based upon our life values and beliefs, our life goals, and any rules or policies that we have for living.   We’re more likely to do this examination when we perceive that our decisions or actions have produced negative consequences.  This process of self-examination, though, can often be quite casual or unstructured, and it can result in little clear feedback, learning, or change in future decision making.  Sometimes a poor decision and disastrous consequences also can leave us too shocked or hurt in the short run to be able to do much evaluation of the decision and to learn from these consequences.

 

A personal life philosophy and some decision rules or policies can shape our life or career goals and help guide us to beneficial life strategies and better decisions.  To what extent could you describe your life philosophy or begin to list the rules or policies by which you choose to lead your life?  Don’t be too alarmed or concerned if actually stating your life philosophy and listing your decision rules or policies would seem difficult to do.  For most of us, these insights and rules or policies are implicit ones that we seldom state or list.  We develop these decision guidelines, though, as a result of our early family experiences, the impact of our religious background and formal schooling, and the influences of friends and peers.   Our life philosophy and guidelines for making major decisions are largely shaped by the time of adolescent and early adulthood.  I know my own life philosophy and my guidelines for making major life and career decisions were heavily influenced by these mostly positive and helpful sources.  I can also remember reading literature, such as essays by Emerson, Thoreau, Montaigne, and many others, that influenced my own philosophy of living by age 21 or so.

 

Unfortunately, many young Americans do not have strongly positive or healthy role models within their families and among peers.  Many also have received limited positive learning impacts from religious, school, or reading experiences.  Children and adolescents are also more exposed than those in earlier generations to questionable or negative influences from mass communication and information sources.  Violent computer games, internet pornography, and other information sources often find business profit from shaping young audiences to consumption values and addictions that are clearly not in the long-term best interest of these youth.  Such media influence is hardly new.  Remember how early TV and film noir helped to make smoking seem a macho or stylish choice.   Recent decades have seen much more media influence toward certain lifestyle choices and values, and these messages and others that Americans receive can make it more difficult to develop healthy living philosophies and guidelines for making major decisions.     

      

Although policies, rules, or philosophies for living are often implicit and not stated or listed ones, there can be at least a few times when these decision guidelines could be made more explicit.  Trying to develop a more strategic approach for making a major career or life decision is one of these times.  Life or career goals should connect naturally to these life philosophies and guidelines.  Decision options might well need to be expanded or reduced when initially identified options strongly conflict with personal philosophies, policies, or guidelines.   Consequences of decisions can be evaluated in terms of whether these seem to further progress toward life or career goals and whether these consequences fit well into one’s philosophy, values, and guidelines for living.

 

Philosophies, values, and rules or guidelines for living then need to be somewhat specific for strategic decisions.  If these are so “mushy” or general that almost everyone would share the same ones, these are probably not as helpful as possible in offering strategic decision guidance.  

STRATEGY SESSIONS  #10
 
MAKING THE DECISION

by Dr. Steve Payne

I have spent considerable column space already discussing the first and second steps in a strategic process for making key career and life decisions.  It seems time to introduce the very important third step of actually making these decisions.  I’ll start with some tips, and things to avoid, in strategic decision making. 

 

Strategy implementation is critical to a choice of strategies. Depending upon actually how one might be able to undertake a strategy, even what might seem to be an outstanding strategic option could be a poor choice.  Knowledge of personal interests and skills, and the interests and skills of those who might be recruited to support or supplement your efforts, should inform strategic choice.  What might at first appear in strategic analysis to be a good choice as a strategy might not fully capture one’s personal enthusiasm or passion, or those of others involved, in implementing this choice.  Participant motivation or enthusiasm for alternatives should be strongly factored into strategic choice.  Obtaining accurate knowledge of personal goals, values, and characteristics (Step 1) informs better choice of strategies (Step 3).   

 

Strategic decisions are subject to perceptual and decision making biases of individuals.  Strategic choices can turn out to be poor ones due to common perceptual biases or flaws that almost everyone can make occasionally.  For example, a common perceptual bias is an “actor-observer” bias.  The same event or result can be perceived quite differently in terms of its strategic significance depending upon whether one is directly involved with an event versus someone who is an observer only of that same event.   

 

There are other types of perceptual and decision biases flaws that can also be committed.  One type of bias is known as escalation of commitment.  It occurs when an option that has been selected in a past decision continues to be evaluated highly and is chosen in a later decision even when recent events or information make this option less than the best one.  Emotional commitment, and perhaps an unwillingness to admit a mistake, can cause many people to continue to endorse a decision option that is no longer a good choice.   

 

Among personal characteristics that affect strategic choice, one of the more important is an individual’s risk propensity.  Some people are “risk seekers” who tend to minimize or dismiss the possibility of negatives associated with a decision option and/or they can exaggerate or magnify the possibility or the amount of benefits of an option.   There are also “risk avoiders” who have the completely opposite orientation toward risk.  Certain checks or controls, such as avoiding a rush to judgment as well as decision review by others who are knowledgeable, can help reduce perceptual and decision biases in strategic choice. 

 

Strategies should not be set in concrete.  A strategy provides some needed direction or guidance for individuals based upon an assessment of internal and external realities.  However, realities change over time, and our assessments of these influences certainly are often far from perfectly accurate.  When conditions shift significantly, then strategies need to be re-examined and shifted as well.  One example of this is what many have observed in pro or college football games.  A coach develops a game strategy based upon assessment of team strengths and weaknesses, as well as evaluation of perceived threats and opportunities from observing what the opponent possesses and has done previously.  Through the early part of the game, this coach’s strategy is carried out and it is also being evaluated.  Perhaps the strategy is working well as the team is successfully implementing these plans, and this strategy is continued then through the later stages of the game.  It is also possible that the game strategy is not that successful, perhaps because the other team acts or reacts in ways that weren’t anticipated.  Often we hear that a coach during halftime changes parts of the game strategy to fit better the actual conditions that exist and the consequences that have occurred.        

Strategic choice and its implementation deserve much more discussion than just this introduction and a few basic tips.  Both this third step and a key final step in a strategic process for making career and life decisions will be topics in future columns.