Decision Making Tools

Joseph Lewis Aguirre

3/20/2012

Strategic Planning Tools

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Summary Problem Solving Tools

Affinity Chart Bar Chart Benchmarking Brainstorming Cause-Effect Force Field Analysis Group Think Histograms Imagining Importance Weighting Pareto Chart Pie Chart Plan-Do-Check-Act Provocation Run Chart

Cause Screening
Check Sheets Criteria Matrix Control Chart Decision Tree Flow Chart Following the Rule
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Influence Diagram
Intuition Line graph Metaphorical Thinking Mind Mapping Multivoting Nominal Group Technique

Requirements Analysis
Scatter Diagram Starbusting Value Analysis Visualizing

Planning Models

SWOTT

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GEs Planning Matrix

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Ansoffs Product/Market Matrix

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Porters Generic Strategy

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Bowmans Clock

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competitive advantage in relation to cost or differentiation advantage

Window of Opportunity
Window of Opportunity when Solution remains Valid

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Benchmarking
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Benchmarking
. the process of comparing and measuring an organizations operations against those of a best-in-class performer from inside or outside its industry.

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Benchmarking is NOT!

Cheating
Unethical Illegal

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Benchmarking process
Obtain management commitment. 2. Baseline your own processes. 3. Identify your strong and weak processes and document them. 4. Select processes to be benchmarked. 5. Form benchmarking teams. 6. Research the best-in-class 7. Select candidate best-in-class benchmarking partners. 8. Form agreements with bench-marking partners. 9. Collect data. 10. Analyze data and establish the gap. 11. Plan action to close the gap/surplus. 12. Implement change. 13. Monitor. 3/20/2012 14. Update benchmarks: continue the cycle.
1.

Benchmarking drivers

Compares processes with those of a best-in-class performer Major improvements achieved quickly

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Alterantives

[Benchmarking] is the difference between teaching yourself how to hit a golf ball and taking lessons from Jack Nicklaus.
-Steven George

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Benchmarking references
American Society for Quality Control

Benchmark Application - Medical Field

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Tools and Techniques Decision Matrix

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Introduction
The Decision matrix prioritizes a list of options It helps make a tough decision based on the criteria chosen It is only used when only one decision can be reached

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Picking the criteria

The criteria must be picked on what is most important. Careful selection of the criteria can help ensure a favorable solution.

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Rating the criteria

The ratings can be assigned by a team or by an individual Guesswork is sometimes involved with rating certain criteria

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Conclusion Everything that has a beginning has an end, even a tough decision!

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Following the Rules

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Introduction
A rule is described as: A regulation A principle or condition that customarily governs behavior

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Topics of Discussion

1.

2.

Description Application Examples Sunday Rules National Association of Realtors Code of Ethics

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Conclusion

Critical Thinking provides an excellent framework for clearly and carefully evaluating whether or not we can assume a definite position and follow a rule with reliance.

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False Rules Tool

When using the False Rule method, an 3/20/2012 unrelated rule is used in a new environment.

Definition

With the False Rules method of coming up with new ideas, you take a pre-existing, not related rule and attempt to apply it in your own area of business. It requires a connecting thought between the irrelevant rule and the current business.

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Example
Keep medicine away from kids. Keep dangerous materials away from irresponsible people. Well confine and lock up our dangerous resources by eliminating irresponsible people from the area through the use of ID cards.

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False Rules/Not Always

False Rules do not come to distinct problem solving, they are used to generate new ideas.

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Analogies
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What is an Analogy
Analogies involves correlating one problem to other similar problems/solutions In business particularly, analogies are used as descriptors to show employees correlations to how others have solved problems or overcame barriers

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When to use
Used when you have a person or group that may not understand the exact process you are teaching or describing but has the ability to understand once an inference is made Can be used to clarify ones point of view

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When not to use

For a Analogy to be effective, the receptor must understand or at least partially understand (Gentner, et al, 2003) what is meant by the analogy Not to be overused with any one group or situation

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Metaphorical Thinking
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Overview of Metaphorical Thinking

Children are not taught to think metaphorically. Logical thinking cannot efficiently be used to analyze complex thoughts. Thinking Metaphorically leads to more abstract ideas. Metaphorical Thinking is comparing a subject to a completely unrelated topic.

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The Metaphorical Thinking Process Consists of Using the Imagination to View Ideas or Objects in a Different Way

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The Logically Thinking Business Mind

The Manager The Manager

Input

Output

A Rubber Ball

A Rubber Ball

The Logically Thinking Mind Sees No Correlation Between the Manager and a Rubber Ball 3/20/2012and Therefore the Output is the Same as the Input When Asked to Compare Them

The Metaphorically Thinking Business Mind

The Manager The Manager A Rubber Ball

+
Input Output
Globally Thinking

Well Rounded
A Rubber Ball
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Flexible
Compare the Manager to a Rubber Ball

The Metaphorically Thinking Mind Uses Metaphors to

Metaphorical Thinking and the English Language

Thinking metaphorically allows the thinker to use a more extensive tool set to describe a condition Metaphors are used to provide a better understanding of an idea by relating it to a completely unrelated topic. Metaphors for this reason are used often in the media to more clearly present information to the average reader without losing them in minute details

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Metaphorical Thinking
Ignites imagination and allows individuals to think beyond the logical and rational. Metaphors seek to substitute A for B, stating that A is B, as in A woman is a delicate rose Tetrium comparison: Only similarities in above is that the two are live organisms. Similies explain(explicit), Metaphors implies (implicit)

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Metaphorical -Types
Synectics - creates connections by making the unfamiliar seem familiar and vice-versa. Proprietary . Conceptual Metaphor- bursting with flavor Tetrium comparison: Only similarities in above is that the two are live organisms. Similies explain(explicit), Metaphors implies (implicit)

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Examples of Metaphors
Fuzzy logic is a term meaning the logic in a statement is intentionally left vague. There was a scandal involving Iran and the Contras that was dubbed Contra-gate. Terms in football use metaphors to describe plays such as the Flea Flicker or the Statue of Liberty Wine tasting uses metaphors such as Fruity, bouquet, baked, dry and

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Improving the Critical Thinking Proces

Metaphorical Thinking expands the horizon of the thinking realm. Using shades to describe things allows for a more granular view also expanding the tools used in description. Metaphors can be used during problem solving to describe particular situations in more detail and in ways.

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Summary

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Metaphorical Thinking is a powerful tool that can be used in the decision making process. Metaphors are used in the English language to supplement explanations or to provide more colorful descriptions. Metaphors are used to compare an entity unknown to the listener to a known entity. Thinking in an abstract way by using metaphoric thinking enables the thinker to identify certain aspects of a problem with an unrelated topic.

Tools and Techniques: The Decision Tree Analysis

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Decision Tree Analysis

How to draw
Begin

with a decision Draw lines from the decision

Lines

represent solutions
a square or a circle

At

the end of each line

Draw

Squares represent more decisions Circles represent uncertain outcomes

Continue
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until you can go no further

Decision Tree Analysis

How to evaluate
Assign

a value to possible outcomes Assign a probability to each outcome

How to calculate
Value

of uncertain outcomes

Multiply

the value of the outcome by the probability

Value

of decisions

Subtract
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the cost from the outcome value to get benefit

Decision Tree Analysis

Benefits
Shows

all possible outcomes Shows risks and rewards Allows decisions to be made based on what you know

Drawbacks
Time

consuming

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Decision Tree Analysis

References
(2006).

Decision tree analysis: choosing between options by projecting likely outcomes. Retrieved April 8, 2006 from http://www.mindtools.com/dectree/ html

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Linda Birnbaum

Influence Diagram: A Decision Making Tool

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What is an Influence Diagram?

A visual representation of a decision problem Method of identifying and displaying

Decisions Uncertainties

Objectives
How

they influence each other

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Node Shapes
Decision
Variable

the decision maker has the power to control

Chance
Variable

Variable
the decision maker cannot directly control

Objective General Arrow

Variable

Quantitative

criterion decision maker is trying to maximize or minimize

Variable
by the quantities it depends on

Determined

(arc)
influence

Signifies

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Influence Diagrams are best used for:

Sensitivity analysis Mathematical modeling Model fidelity Improvement initiatives Quantifying risk Quantifying uncertainties

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Sample Application
Marketing Budget Costs Market Size Unit Sales Market Share Revenues Profit

Product Price

Marketing

budget and product price influence expectations associated

with market size and market share Market size and market share influence costs and revenues Costs and revenues influence profits
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Planning, Tools and Descriptions

It is not the plan that matters, Its the planning. -General Dwight D. Eisenhower
Graphical Diagrams do not constitute a specification.nothing replaces clear, concise text.
- David A. Ruble

At a recent study, I commented at one point in our deliberations that we had spent more time on wordsmithing than we had on considering the substance of our report. -Robert W. Lucky, VP for Applied Research at Telecordia. NJ

It seems to me language by its very nature is imprecise. I think of each word as inhabiting a fuzzy ball of uncertain semantic meaning. Robert W. Lucky 3/20/2012

Decision Making Framework

GOALS OPPORTUNITIES OBJECTIVES PROBLEMS

EVALUATION

IMPLEMENTATION OPTIONS

RELATIVE TIME SPAN

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Dashboard - PM KBI
03/04/2001 11/28/2001

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Decision Tree - Invest or no

1.

Test market $75K

3

Alternative 1 Stop $0
2 n
n 4

Decision Probability Terminal

Test fail 70%

Success 30% Increment, $100K Large $300K 9

12 11

No comp. 60%
6

Comp 40%
10

Expand

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No expansion, $0

No comp. 60% Comp 40%

Suffer the slings and arrows of outrageous fortune A To Be

To be or not to Be of time Bear whips and scorns

oppressors wrong proud mans contumely pangs of disprizd love laws delay insolence of office spurns that patient merit of the unworthy takes End the heartache and the thousand natural shocks that flesh is heir to: a consummation devoutly to be wished

B Not Dream

Not To Be
Dream
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Ills we know not of

Mind Mapping

Business Trip

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Mind Mapping

Preparing Travel

Business Trip

Recreation Business

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Suit from cleaners

Mind Mapping
Money Photo ID Tickets Hotel Out of office message on phone & computer

Travel kit

Preparing Travel
Clothes

Business items

Business Trip

Rental Car

Food School items

Recreation Business
Golf

presentation

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Sales samples

Business cards

Casino

Pool

Suit from cleaners

New razor

Mind Mapping
Money Photo ID Tickets Hotel Out of office message on phone & computer

Travel kit

Tums

Preparing Travel

Clothes
Swimsuit
Golf shoes

Phone card

Business items
Laptop Cell phone

Business Trip

Rental Car

Food

School items
Syllabus & notes

Recreation Business
Golf Business cards

Seafood

presentation

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Sales samples

Casino

Pool
reservations

Analytic Hierarchy Process

Joseph Lewis Aguirre

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AHP

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AHP

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AHP

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AHP

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AHP

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AHP

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AHP

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AHP

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AHP

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AHP

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Eigen Vector Summary

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Force Field Analysis

COTO DE CAZA FORCE FIELD ANALYS Vision: Public Safety, Accountability, Transparency Driving Forces Varo Mezger Hill Keystone Harkins Consultants
ARC/Landscaping Committees
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Restraining Forces

Yocham Zipperman

Force Field Analysis

CDC COMMUNITY FORCE FIELD ANALYS Vision: Public Safety, Accountability, Transparency Driving Forces Varo Mezger Hill Keystone Harkins Consultants
ARC/Landscaping Committees
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Restraining Forces

Yocham Zipperman

Radar Charts
Logical Instrumentalism Planning Political

Ecological

Cultural

Visionary

Allows a visual comparison between several quantitative or qualitative aspects of a situation

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Ishikawa Diagram
Finance Quality
Process Penalties Lost sales Training Communication Components Training Cost of models

Deliver No time Prototypes Lack of resources

No credibility

Management

Technical

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Criteria Matrix
SOLUTIONS A B 1 0 + + + + + 2 + ? 0 0 0 3 + + + + 4 + + + + + + + 5 ? + ? + 0 0

"Must" Criteria
C D e "Want" Criteria f g
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Weighted Matrix
Criteria Weight Project 1 Project 2 Project 3 Project 4 Supports key business objectives 25% 90 90 50 20 Has strong internal sponsor 15% 70 90 50 20 Has strong customer support 15% 50 90 50 20 Realistic level of technology 10% 25 90 50 70 Can be implemented in one year or less 5% 20 20 50 90 Provides positive NPV 20% 50 70 50 50 Has low risk in meeting scope, time, and cost goals 20 10% 50 50 90 Weighted Project Scores 100% 56 78.5 50 41.5

Weighted Score by Project

Project 4

Project 3

Project 2

Project 1

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20

40

60

80

100

Affinity Charts

Cluster qualitative data and come up with a consensus view on a subject.

Aid to stimulate debate.
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Yield Management Model

Full fare passenger arrives = Full fare

Do not sell at discount

No full fare passenger = zero revenue

Decision
Sell discount

Price of discount ticket

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Influence Diagram & Decision Tree

Decisions
Uncertainties Final Outcome

Outcome 1

Decision

Outcome 2

Outcome n
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Decision Tree
1.

Test market $75K

3

Alternative 1 Stop $0
2 n
n 4

Decision Probability Terminal

Test fail 70%

Success 30% Increment, $100K Large $300K 9

12 11

No comp. 60%
6

Comp 40%
10

Expand

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No expansion, $0

No comp. 60% Comp 40%

To develop or Not
Nodes

New product

Uncertainty circle

Decision
Consolidate

Keep adding outcomes and probabilities for the decision

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To Develop or Not
Capital .25 Low Volume .50 base vol. .25 high vol Do Seismic .65 poor prospect .15 inconclusive Dry Hole .25 low price $6 million $8 million $12 million Expected Value
Vol x price capital x .25 $312,500

.50 base price .25 high price

$7.5 million (1) $15 million

.25 good prospect

Do you spend $800,000 on seismic to clarify how good the prospect is?

Sell

-1.2 million
$400,000

Low vol = 500,000 bbls, base = 1,000,000, high = 2,000,000 low price = 12.50 per bbls, base = 21.00, high = 30.00 (1) Volume x price capital x .50 = 7.5 million The only guaranteed expected value is the sell price of $400,000 you have been offered. 3/20/2012

What if
What-if analysis Observing how changes to selected variables affect other variables What if we cut advertising by 10%. What happens to sales? Sensitivity Analysis: Observing how repeated changes to a single variable affect other variables Lets cut advertising by $100 repeatedly so we can see its relationship to sales Goals Seeking Analysis Making repeated changes to selected variables until a chosen variable reaches a target value Lets try to increase stock videos until we reach $3000 in revenue Optimization Analysis Finding an optimal value for selected variables given certain constraints 3/20/2012

Group Decision Support Strategies

Brainstorming Nominal group technique Delphi technique Computer assisted decision making

GDSS

= Group Decision Support System CSCW = Computer Supported Collaborative Work

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Brainstorming

Group process for gathering ideas pertaining a solution to a problem

Developed by Alex F Osborne to increase individuals synthesis capabilities Panel format
Leader: maintains a rapid flow of ideas Recorder: lists the ideas as they are presented Variable number of panel members (optimum 12)

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30 min sessions ideally

Brainstorming
Step 1: Preliminary notice

Objectives to the participants at least a day before the session time for individual idea generation The leader reviews the objectives and the rules of the session The leader calls for spontaneous ideas Brief responses, no negative ideas or criticism All ideas are listed To stimulate the flow of ideas the leader may

Step 2: Introduction

Step 3: Ideation

Ask stimulating questions Introduce related areas of discussion Use key words, random inputs

Step 4: Review and evaluation

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A list of ideas is sent to the panel members for further study

Brainstorming
+ Large number of ideas in a short time period + Simple, no special expertise or knowledge required from the facilitator
- Credit for another persons ideas may impede participation Works best when participants come from a wide range of disciplines

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NGT

Organised group meetings for problem identification, problem solving, program planning
Used to eliminate the problems encountered in small group meetings

Balances interests Increases participation

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2-3 hours sessions

6-12 members

Larger groups divided in subgroups

NGT
Step 1: Silent generation of ideas

The leader presents questions to the group Individual responses in written format (5 min) Group work not allowed

Step 2: Recorded round-robin listing of ideas

Each member presents an idea in turn All ideas are listed on a flip chart

Step 3: Brief discussion of ideas on the chart

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Clarifies the ideas common understanding of the problem Max 40 min

NGT
Step 4: Preliminary vote on priorities

Each member ranks 5 to 7 most important ideas from the flip chart and records them on separate cards The leader counts the votes on the cards and writes them on the chart

Step 5: Break
Step 6: Discussion of the vote

Examination of inconsistent voting patterns

Step 7: Final vote

More sophisticated voting procedures may be used here

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Step 8: Listing and agreement on the prioritised items

NGT

Best for small group meetings

Fact finding Idea generation Search of problem or solution

Not suitable for

Routine business Bargaining Problems with predetermined outcomes Settings where consensus is required

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Delphi Technique

Group process to generate consensus when decisive factors may be subjective Used to produce numerical estimates, forecasts on a given problem Utilises written responses instead of brining people together Developed by RAND Corporation in the late 1950s First use in military applications Later several applications in a number of areas

Setting environmental standards Technology foresight Project prioritisation

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A Delphi forecast by Gordon and Helmer

Delphi
Characteristics:

Panel of experts Facilitator who leads the process Anonymous participation

Easier to express and change opinion Interaction with questionnaires Same arguments are not repeated All opinions and reasoning are presented by the panel

Iterative processing of the responses in several rounds

Statistical interpretation of the forecasts

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Delphi
First round

Panel members are asked to list trends and issues that are likely to be important in the future Facilitator organises the responses
Similar opinions are combined Minor, marginal issues are eliminated Arguments are elaborated

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Questionnaire for the second round

Delphi
Second round

Summary of the predictions is sent to the panel members Members are asked the state the realisation times Facilitator makes a statistical summary of the responses (median, quartiles, medium)

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Delphi
Third round

Results from the second round are sent to the panel members Members are asked for new forecasts

They may change their opinions

Reasoning required for the forecasts in upper or lower quartiles A statistical summary of the responses (facilitator)

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Delphi
Fourth round

Results from the third round are sent to the panel members Panel members are asked for new forecasts

A reasoning is required if the opinion differs from the general view

Facilitator summarises the results

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Forecast = median from the fourth round Uncertainty = difference between the upper and lower quartile

Delphi

Most applicable when an expert panel and judgemental data is required

Causal

models not possible The problem is complex, large, multidisciplinary Uncertainties due to fast development, or large time scale Opinions required from a large group Anonymity is required
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Delphi
+ Maintain attention directly on the issue + Allow diverse background and remote locations + Produce precise documents - Laborious, expensive, time-consuming - Lack of commitment

Partly due the anonymity Discounting the future (current happenings seen as more important) Illusory expertise (expert may be poor forecasters) Vague questions and ambiguous responses Simplification urge Desired events are seen as more likely Experts too homogeneous skewed data

- Systematic errors

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Groupware

A large number software packages available for

Decision analysis Group decision making Voting

Web based applications Interfaces to standard software; Excel, Access Advantages

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Graphical support for problem structuring, value and probability elicitation Facilitate changes to models relatively easily Easy to conduct sensitivity analysis Analysis of complex value and probability structures Allow distributed locations

Multivoting

In democracy most decisions are made in groups or by the community Voting is a possible way to make the decisions
Allows large number of decision makers All DMs are not necessarily satisfied with the result

The size of the group doesnt guarantee the quality of the decision

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Suppose 800 randomly selected persons deciding on the materials used in a spacecraft

Multivoting as a social issue

N alternatives x1, x2, , xn K decision makers DM1, DM2, , DMk Each DM has preferences for the alternatives Which alternative the group should choose?

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Plurality Voting

Each voter has one vote The alternative that receives the most votes is the winner Run-off technique
The winner must get over 50% of the votes If the condition is not met eliminate the alternatives with the lowest number of votes and repeat the voting Continue until the condition is met

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Plurality Voting
Suppose, there are three alternatives A, B, C, and 9 voters.

4 states that A > B > C

3 states that B > C > A 2 states that C > B > A Plurality voting 4 votes for A 3 votes for B 2 votes for C A is the winner B is the winner

Run-off
4 votes for A 3+2 = 5 votes for B

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Condorcet

Each pair of alternatives is compared. The alternative which is the best in most comparisons is the winner. There may be no solution.

Consider alternatives A, B, C, 33 voters and the following voting result

A B C A B 18,15 C 18,15 C got least votes (15+1=16), thus it cannot be winner eliminate

15,18
15,18

1,32

32,1
-

A is better than B by 18:15

A is the Condorcet winner Similarly, C is the Condorcet loser

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Borda

Each DM gives n-1 points to the most preferred alternative, n-2 points to the second most preferred, , and 0 points to the least preferred alternative. The alternative with the highest total number of points is the winner. An example: 3 alternatives, 9 voters
4 states that A > B > C 3 states that B > C > A 2 states that C > B > A B is the winner A : 42 + 30 + 20 = 8 votes B : 41 + 32 + 21 = 12 votes C : 40 + 31 + 22 = 7 votes

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Approval Voting

Each voter cast one vote for each alternative she / he approves of The alternative with the highest number of votes is the winner An example: 3 alternatives, 9 voters

DM1 DM2 DM3 DM4 DM5 DM6 DM7 DM8 DM9 total A B X X X X X X X X X X X 4 7

the winner!

C
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Codorcet Paradox
Consider the following comparison of the three alternatives
DM1 1 2 3 DM2 3 1 2 DM3 2 3 1 A B C Every alternative has a supporter!

Paired A is B is C is
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comparisons: preferred to B (2-1) preferred to C (2-1) preferred to A (2-1)

Condorcet Paradox
Three voting orders:
A DM1 DM2 DM3

1) (A-B) A wins, (A-C) C is the winner B 2 C 3 2) (B-C) B wins, (B-A) A is the winner 3) (A-C) C wins, (C-B) B is the winner

3
1 2

2
3 1

The voting result depends on the voting order! There is no socially best alternative*.
* Irrespective of the choice the majority of voters would prefer another alternative.
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Strategic Voting

DM1 knows the preferences of the other voters and the voting order (A-B, B-C, AC) Her favourite A cannot win* If she votes for B instead of A in the first round

B is the winner She avoids the least preferred alternative C

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* If DM2 and DM3 vote according to their preferences

Coalitions

If the voting procedure is known voters may form coalitions that serve their purposes
Eliminate

an undesired alternative Support a commonly agreed alternative

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Weak Preference Order

The opinion of the DMi about two alternatives is called a weak preference order Ri:
The DMi thinks that x is at least as good as y x Ri y

How the collective preference R should be determined when there are k decision makers? What is the social choice function f that gives R=f(R1,,Rk)?

Voting procedures are potential choices for social choice functions. 3/20/2012

Social Choice Function Requirements

1) Non trivial
There are at least two DMs and three alternatives

2) Complete and transitive Ri:s

If x y x Ri y y Ri x (i.e. all DMs have an opinion) If x Ri y y Ri z x Ri z The group has a well defined preference relation, regardless of what the individual preferences are

3) f is defined for all Ri:s

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Social Choice Function Requirements

4) Independence of irrelevant alternatives
The groups choice doesnt change if we add an alternative that is

Considered inferior to all other alternatives by all DMs, or Is a copy of an existing alternative

5) Pareto principle
If all group members prefer x to y, the group should choose the alternative x
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6) Non dictatorship
There is no DMi such that x Ri y x R y

Arrows theorem

There is no complete and transitive f satisfying the conditions 1-6

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Arrows Theorem
Borda criterion:
DM1
x1 x2 x3 x4 3 2 1 0

DM2
3 2 1 0

DM3
1 3 2 0

DM4
2 1 0 3

DM5
1 3 0 2

total
10 11 4 5

Alternative x2 is the winner!

Suppose that DMs preferences do not change. A ballot between the alternatives 1 and 2 gives
DM1 x1 x2 1 0 DM2 1 0 DM3 0 1 DM4 1 0 DM5 0 1 total 3 2

Alternative x1 is the winner!

The fourth criterion is not satisfied!

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Value Aggregation
Theorem (Harsanyi 1955, Keeney 1975): Let vi() be a measurable value function describing the preferences of DMi. There exists a k-dimensional differentiable function vg() with positive partial derivatives describing group preferences >g in the definition space such that

a >gb vg[v1(a),,vk(a)] vg[v1(b),,vk(b)]

and conditions 1-6 are satisfied.
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Value Aggregation

In addition to the weak preference order also a scale describing the strength of the preferences is> required DM1: beer > wine tea DM1: tea > wine > beer
Value
1 1

Value

beer

wine

tea

beer

wine

tea

Value function describes also the strength of 3/20/2012 the preferences

Value Aggregationdownside

There is a function describing group preferences but it may be difficult to define in practice Comparing the values of different DMs is not straightforward Solution:

Each DM defines her/his own value function Group preferences are calculated as a weighted sum of the individual preferences
Should the chairman get a higher weight Group members can weight each others expertise Defining the weight is likely to be politically difficult

Unequal or equal weights?

How to ensure that the DMs do not cheat? 3/20/2012 See value aggregation with value trees

Problem Identification Process

The problem identification process

Types of thinking used in problem recognition processes.

Examine various forces affecting problem framing.

Effectiveness of problem solving techniques.

Resources in terms of their usefulness for problem solving in various organizational scenarios.

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Problem Identification Gap Analysis

Issue
Descriptive Issues: What, where, when, how

Prescriptive Issues: What should be

Conclusion

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Problem Identification

Inference

This because of That

This Conclusion That Support of conclusion

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Problem Identification Inference

We oppose a mandatory retirement age. We believe that age is an inappropriate and unreasonable basis for determining whether an individual can do a job

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Finding Nemo
1: What is the issue? 2. Indicators

3. Look in likely locations

4. A Conclusion is not

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Reasons
Reasons are beliefs, evidence, metaphors, analogies, and other statements offered to support or justify conclusions.
Reasons are explanations or rationales for why we should believe a particular conclusion. They are what is offered as a basis for why we should accept the conclusion.

Evidence

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Argument
Reasons + Conclusion = Argument

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Questioning Process
why question

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Questioning Process
Is the cost of hospital care outrageous? A recent survey by the American Association of Retired Persons offers reliable evidence on this issue. Independent audits of the bills of 2,000 patients found that hospitals overcharge their patients by an average of 15 percent. In addition, exit interviews with 400 patients revealed high amounts of dismay and anger when the patients were informed about the size of their total hospital bill. In short, the costs of hospital care are higher than the services provided warrant.
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Questioning Process
Euthanasia is detrimental to the welfare of society because it destroys man's ideas of sacrifice, loyalty, and courage in bearing pain. Some dying persons accept their suffering as a way of paying for their sins. These people should be permitted to die as they wishwithout help from any other person in speeding up the dying process.

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Equity Premium Dilemma

Risky assets (stocks) outperform safe assets (fixed returns)

Why do people invest so much in safer stocks?

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Loss aversion Myopia

Bernatzi/Thaler

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Wheel of Logic
2. Conclusion

1. Observation

3. Prediction

4. Verification
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Scientific Method

Groupthink Symptoms

1. Illusion of Invulnerability: 2. Belief in Inherent Morality of the Group: 3. "Hear no evil, see no evil, speak no evil". 4. What other people think of the group. 5. Self-Censorship: Gloss over the bad. 6. Illusion of Unanimity: 7. Direct Pressure on Dissenters: 8. Self-Appointed Mind Guards: Mindguards protect a leader from assault by troublesome ideas

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Source: Irvin Janus

Groupthink Examples

Pearl harbor Kennedys Bay of Pigs fiasco Johnsons escalation of the Vietnam war Nixons Watergate break in Reagans Iran Contra scandal cover ups Clintons approval on the Waco Texas raid.

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Misc terms

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Decision Making Strategy Satisficing

Sensible decision procedures given the constraints

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Bounded Rationality
Because of computational limits and cost of deliberation, we use decision heuristics, rules of thumb.

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