Article 'Deciding How to Decide' opine that most companies over rely on basic tools like

discounted cash flow analysis or very simple quantitative scenario testing even when they are
facing highly complex, uncertain contexts. Do you agree with the statement? Justify.

Yes, I comply with the authors of the article and believe that most top-executives do rely on
the basic and the most commonly used tools for even complex strategic decision making.
While their jobs depend upon the outcomes, they still take risks to stick to already proven
tools and techniques whether they match with the current problem or not. In figure associated
with second part of question, End 1 is where most of such top-executives reach.

They are sometimes so anxious to try-out new improved methods or do not invest
significant time to deep dive into the overall toolbox to fetch what matches the situation best?
They either dont even have enough knowledge on the applicability of the tools or they get
lost in the big sea of thousands of tools meant for various types of Decision Support where at
least 10 fit in one particular scenario.

No matter what task comes in hand, a particular top-executive opens his small
customized tool box and fits the problem into the available tools instead of applying the tools
on the problem itself.

If it was not the case, how would many companies fell into the bottom from the top
with change in economy, market or even the decision making personnel? People who use
same tools for all problems would be successful only when all the problems are of same
category and the tools applied suites them best.

A seasonal top executive would be the one who has a clear idea on all the available
tools and their applicability. Only he can make his own decision on choosing the tools. In the
article, the authors have explained the same point on the basis of a couple of scenarios and
dividing the business problems into their generalized categories to reach up to the correct tool
to be applied as depicted in Ends 1-2-3 in figure in second part.

I feel that the real tool box is just so big and the article is only the real big and best
step to start with. If we closely understand there would be more questions and scenarios to
reach up to more ends as various other tools.

The authors also suggest use of three questions while choosing a decision support tool.
Analyze a decision taken by you or by your organization, based on these three questions. Use
the flowchart on 'Diagnosing Your Decision' for this purpose, making changes in the
flowchart wherever necessary.

I can fit one scenario from the IT organization I work for, in the flow chart and the three
questions the article emphasized on. I believe the flow-char fits best for the situation without
any modifications. Somehow I have done some cosmetic changes in the model a little to
explain the scenario and also first part of the question.



The three questions mentioned in the article are below
Is Full Casual Model known to me? (Encircled in red in figure)
Can I predict the outcome(s)? (Encircled in orange in figure)
Do I have centralized and relevant Information or I need to aggregate it? (Encircled in
yellow in figure)

Scenario
My organization had technology wise verticals and any assignment would fall in any
of the technologies would go to respective vertical. Sometimes back to back same
vertical would get the project and the vertical would end up hiring resources from
outside and at the same time one vertical would run out of the projects and most of its
resource would sit ideal. Top management decided to lend resources from one vertical
to another and pull the resources back when needed. This strategy did not work as a
senior specialist would have to work on cross technology and when his vertical would
get project, his vertical would hire from outside as the resource is preoccupied in
another vertical.
In this scenario, full casual model was known to the top management about the
upcoming resource requirement and ongoing resource allocation in existing projects
across the verticals. Even the cost of hiring resources from outside and internally
imparting training was known.
Decision outcome was also at least predictable only market conditions were not, i.e.
top management understood that a vertical might want its resources back if need be
so. It also knew cost of keeping resources with no project for long would impact
companys revenue up to some extent.
Instead of reaching to End 2 and applying Quantitative Multiple Scenario Tools, top
management reached to End 1 and applied Conventional Capital Budgeting tool.

The result
The conventional Budgeting tool suggested that companys capital could be utilized
to create a mix-technology new vertical which had mix of resources from within the
company and hired from outside. This mix of technology resources were supposed to
be ready to work on any tools and had to go through cross vertical training in their
free time. Soon all projects started falling into that group as the teams and
management was more competent there. My company had to close one vertical in
core technology and another is about to close too.

Had my company used Quantitative Multiple Scenario Tools with Real Options, there
was no need of a separate vertical with mix of existing vertical fortes rather the
scheme of proper lending and benefits to a vertical on lending (like resource getting
additional perks and manager who lends getting some billing for his vertical too)
would have helped the organization more. As lent resources would be costlier but
readily available on need, they would be released when their verticals would need
them and the outside hiring would take lace only when inside organization, all are
occupied with work.