Back to School Day, Sept. 2010 “Facilitating High-quality Conversations about Decision Situations” Opening session by Professor Patrick S. Noonan [email protected]y.edu Back to School Day, Sept. 24, 2010 Understanding Decision Making Facilitating High-Quality Conversations about Decision Situations
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Back to School Day, Sept. 2010“Facilitating High-quality Conversations about Decision Situations” Opening session by Professor Patrick S. Noonan [email protected].
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Back to School Day, Sept. 2010 “Facilitating High-quality Conversations about Decision Situations”
Back to School Day, Sept. 2010 “Facilitating High-quality Conversations about Decision Situations”
Where am I coming from?The Decision-Centric Worldview
In a few hundred years, when the history of our time will be written from a long-term perspective, it is likely that the most important event historians will see is not technology, not the Internet, not e-commerce.
It is an unprecedented change in the human condition. For the first time -- literally -- substantial and rapidly growing numbers of people have choices. For the first time, they will have to manage themselves.
And society is totally unprepared for it.-- Peter Drucker
The only way that individuals can purposely exercise any control over their lives, their careers, or their surroundings it through their decision making.
Back to School Day, Sept. 2010 “Facilitating High-quality Conversations about Decision Situations”
High Points… continued“Who the hell wants to hear actors talk?” -- H.M.Warner, Warner Brothers, 1927
“Everything that can be invented has been invented.” -- Charles H. Duell, Commissioner, US Patent Office, 1899 [disputed]
“Pasteur’s theory of germs is ridiculous fiction.” -- Pierre Pachet, Professor of Physiology, , 1872
“Heavier than air flying machines are impossible.” -- Lord Kelvin, c. 1895
“No flying machine will ever fly from New York to Paris.”
“Man will not fly for 50 years.” [1901]
-- Orville Wright, co-inventor of airplane.
“Prof. Goddard does not know the relation between action and reaction and the need to have something better than a vacuum against which to react. He seems to lack the basic knowledge ladled out daily in high schools.”
-- 1921 New York Times editorial about rocket pioneer Robert Goddard’s work
Back to School Day, Sept. 2010 “Facilitating High-quality Conversations about Decision Situations”
High Points… continued
“Airplanes are interesting toys but of no military value.” -- Marechal Ferdinand Foch, Professor, École Superieure de Guerre, c. 1904
“That idea is so damned nonsensical & impossible that I’m willing to stand on the bridge of a battle-ship while that nitwit tries to hit it from the air!”
-- Newton Baker, US Sec. of War, 1921 (on Gen. Billy Mitchell’s claim that airplanes could sink battleships by dropping bombs on them)
“They couldn’t hit an elephant at this dist- ...” -- Last words, Union Army Gen. John Sedgwick (Battle of Spotsylvania, 1864)
“The radio craze will die out in time.” -- Thomas Edison, 1922
"640k of memory ought to be enough for anybody.” -- Bill Gates
Back to School Day, Sept. 2010 “Facilitating High-quality Conversations about Decision Situations”
“What are some limits on my intuition?”• Experiments reveal important insights about the mental
operating system (OS) of humans• Intuition & expertise have important roles…
– …but also some limitations.
• The human OS displays systematic weaknesses…– … but that’s actually good news!
The brain is a machine assembled to survive.-- Edward O. Wilson
This view of mind suggests that the liberal arts are those modes of reasoning needed in civilized society that are not innate because they had no survival value on the savanna.
Back to School Day, Sept. 2010 “Facilitating High-quality Conversations about Decision Situations”
Russo & Schoemaker’s “Decision Traps”
Source: Decision Traps, Russo & Schoemaker (1989)
• Most common organizational decision-making dysfunctions:1. Plunging In2. Frame Blindness3. Lack of Frame Control4. Overconfidence5. Shortsighted Shortcuts6. Shooting from the Hip7. Group Failure8. Fooling oneself about Feedback9. Not Keeping Track10. Failure to Audit the Decision Process
Back to School Day, Sept. 2010 “Facilitating High-quality Conversations about Decision Situations”
More Metadecision Questions• Must this decision actually be made? • Should I make the decision along, with
others, or delegate it?• How much time should it take?• Must the decision be made now?
If not, when should it be made?• Are the constraints and deadlines real?• Should I move sequentially in the
process, or back and forth?
Source: Decision Traps, Russo & Schoemaker (1989)
The most basic of all decisions is who shall decide. This is easily lost sight of in discussions that proceed directly to the merits of particular issues, as if they could be judged from a unitary, of God's eye, viewpoint.A more human perspective must recognize the respective advantages and disadvantages of different decision making processes, include their widely varying costs of knowledge, which is a central consideration often overlooked in analyses which proceed as if knowledge were either complete, costless, or of a 'given' quantity.
Back to School Day, Sept. 2010 “Facilitating High-quality Conversations about Decision Situations”
The Value of Value-Focused ThinkingReasonable men adapt themselves to the world. Unreasonable men adapt the world to themselves.That’s why all progress depends on unreasonable men.
--George Bernard Shaw
A wise man will make more opportunities than he finds.
-- Sir Francis Bacon
The people who get on in this world are the people who get up and look for the circumstances they want, and if they can't find them, make them.
Back to School Day, Sept. 2010 “Facilitating High-quality Conversations about Decision Situations”
Step Four: Testing the Analysis“Which of my assumptions are most crucial?”
It is fashionable today to assume that any figures about the future are better than none.
To produce figures about the unknown, the current method is to make a guess about something or other -- called an "assumption" -- and to derive an estimate from it by subtle calculation. The estimate is then presented as the result of scientific reasoning, something far superior to mere guesswork.
This is a pernicious practice that can only lead to the most colossal planning errors, because it offers a bogus answer where, in fact, an entrepreneurial judgment is required.
Back to School Day, Sept. 2010 “Facilitating High-quality Conversations about Decision Situations”
“What can I learn from sensitivity analysis?”• How confident are we about our preliminary recommendation?• If we’re a little off in our estimates, what difference does it make
to our decision strategy?• How far wrong could we be on our assumptions before our
optimal strategy is no longer the best?• What other decision strategies might be optimal, under slightly
different values of the problem parameters, or different structural assumptions?
• Within the members of our team, we can’t get complete agreement on some assumptions. Does it matter?
• We have limited time and money available for refining our assumptions. Which ones should have top priority for getting our managerial attention?