Friday, April 15, 2011

More about decision making

Tom van Gelder, a 'down-under' from Melbourne, Australia--a sister city to my former residence in Melbourne, FL USA--has a nice post from last November on decision types in decision making.

By van Gelder's reckoning there are four major categories that can be distilled from a myriad of articles, papers, books, and pontifications about decision making.

I like his list because its short, simple, and appealing to my own personal experience:

Intuitive Decisions
  • They tend to be made rapidly
  • They are made by individuals deciding alone
  • There is little or no conscious reflection
  • There is little or no following of rules or procedures
  • Usually only one option is considered
  • The cognitive process is typically “recognize/act” – the decision maker recognizes the situation and immediately “knows” what an appropriate thing to do in that situation would be
2. Technical Decisions

Technical decisions are those made by following some well-defined technical procedure. Very often a spreadsheet or computer program plays a key role in the decision processing, and indeed sometimes the decision making can be largely or completely turned over to a computer.

3. Deliberative Decisions
  • Involves conscious articulation and evaluation of various options and the considerations counting for and against options
  • Takes anywhere from minutes to months
  • May be made individually, or by a group
  • Often involves discussion and debate
  • Doesn’t involve computers in any important way, since the relevant considerations are usually “informal” or qualitative cannot be rigorously specified or quantified
  • Is not governed by strict rules or procedures, though it is subject to various norms and conventions (usually unspoken or implicit)
4. Bureaucratic Decisions
  • Are important/weighty/high stakes
  • Are “standard” sorts of decisions for the organisation; hence they
  • Are made following a codified process, involving lots of steps and rules
  • Involve lots of people playing their assigned roles
  • Are based on lots of information, extensively analysed
  • Have detailed documentation

Curiously, van Gelder does not address the risks attendant with each style. Even a cursory inspection suggests the trade offs of speed, quality, consensus and participation, and quantitative back-up.

There's no 'right' answer here. "Risk is the price we pay for opportunity": thus, risk is a component of the cost to be weighed against the benefit.

Even the intuitive decision maker, making a decision  for the benefit of speed, probably has a least a fleeting sense of the risk even as all formal risk management is eschewed.

On the other had, the paralysis of risk analysis that arises because there's no real calibration of data points to drive convergence to a decision, or perhaps nearly as bad--resorting to a guess--doesn't add to the quality of the decision making either.

Conclusion: the risk management process--for which you may have defined only one in the singular RM plan--may need to become 4 processes within a risk management framework, each process tuned to the exigencies of the decision making.

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