DECISION ANALYSISFRAMEWORK

DECISION ANALYSISFRAMEWORK

“DECISION ANALYSIS”

CHOOSE A COURSE

OF ACTIONS

DECISION STATEMENTPURPOSE & LEVEL

ESTABLISH OBJECTIVES

RESULTS &

RESOURCES

CLASSIFY OBJECTIVES

MUST & WANT

GENERATE ALTERNATIVES

NUMBER & RANGE

ADVERSE CONSEQUENCES

THE THINKING PATTERN FOR MAKING CHOICESTHE THINKING PATTERN FOR MAKING CHOICES

• We appreciate the fact that a choice must be made

• We consider the specific factors that must be satisfied if the choice is to succeed

• We decide what kind of action will best satisfy these factors

• We consider what risks may be attached to our final choice of action that could jeopardize its safety and success

• We appreciate the fact that a choice must be made

• We consider the specific factors that must be satisfied if the choice is to succeed

• We decide what kind of action will best satisfy these factors

• We consider what risks may be attached to our final choice of action that could jeopardize its safety and success

Good decision making, like good problem solving, depends heavily on experience

and judgment

Good decision making, like good problem solving, depends heavily on experience

and judgment

THE ELEMENTS OF A GOOD CHOICETHE ELEMENTS OF A GOOD CHOICE

• The quality of our definition of specific factors that must be satisfied

• The quality of our evaluation of the available alternatives

• The quality of our understanding of what those alternatives can produce – for better or worse

• The quality of our definition of specific factors that must be satisfied

• The quality of our evaluation of the available alternatives

• The quality of our understanding of what those alternatives can produce – for better or worse

THE MAJOR ELEMENTS OF DECISION ANALYSISTHE MAJOR ELEMENTS OF DECISION ANALYSIS

1. THE DECISION STATEMENT2. THE OBJECTIVES FOR THE DECISION3. ALTERNATIVES4. THE CONSEQUENCES OF THE CHOICE

(POTENTIAL RISKS)

1. THE DECISION STATEMENT2. THE OBJECTIVES FOR THE DECISION3. ALTERNATIVES4. THE CONSEQUENCES OF THE CHOICE

(POTENTIAL RISKS)

1. THE DECISION STATEMENT1. THE DECISION STATEMENT

• We begin with decision statement or name of the decision

• In decision analysis, resolution will consist of an answer to the questions “to what purpose?”, “which?” and “how?”

• The way it is worded deserves careful attention

• A decision statement always indicates some kind of action and its intended result. It also indicates the level at which the decision is to be made.

• We begin with decision statement or name of the decision

• In decision analysis, resolution will consist of an answer to the questions “to what purpose?”, “which?” and “how?”

• The way it is worded deserves careful attention

• A decision statement always indicates some kind of action and its intended result. It also indicates the level at which the decision is to be made.

2. THE OBJECTIVES FOR THE DECISION2. THE OBJECTIVES FOR THE DECISION

• Objectives are the criteria for the decision – the specific details of what the decision is to accomplish.

• Decision Analysis is the antithesis of identifying a course of action and then building a case to support it.

• Objectives are clear measures of the ends we want to achieve, for only with clear measures can we make reasoned choices.

• Objectives are the criteria for the decision – the specific details of what the decision is to accomplish.

• Decision Analysis is the antithesis of identifying a course of action and then building a case to support it.

• Objectives are clear measures of the ends we want to achieve, for only with clear measures can we make reasoned choices.

MUSTS & WANTSMUSTS & WANTS

• The MUST objectives are mandatory: they must be achieved to guarantee a successful decision. These objectives must be measurable because they function as a screen to eliminate failure-prone alternatives.

• The WANT objective may be mandatory but cannot be classified as a MUST for 2 reasons:1. It may not be measurable2. We may not want a ‘yes-no’ judgment

• A WANT objective is not necessarily less important than a MUST; it simply serves a different purpose.

• “The MUSTS decide who gets to play, but the WANTS decide who wins”

• The MUST objectives are mandatory: they must be achieved to guarantee a successful decision. These objectives must be measurable because they function as a screen to eliminate failure-prone alternatives.

• The WANT objective may be mandatory but cannot be classified as a MUST for 2 reasons:1. It may not be measurable2. We may not want a ‘yes-no’ judgment

• A WANT objective is not necessarily less important than a MUST; it simply serves a different purpose.

• “The MUSTS decide who gets to play, but the WANTS decide who wins”

WEIGHTING THE OBJECTIVESWEIGHTING THE OBJECTIVES

• All other objectives are weighted in comparison with the first, from 10 (equally important) down to a possible 1 (not very important)

• The purpose of the 10-1 weighting scale was simply to make visible the relationships among these objectives: What mattered most? What could be done without, if necessary?

• All other objectives are weighted in comparison with the first, from 10 (equally important) down to a possible 1 (not very important)

• The purpose of the 10-1 weighting scale was simply to make visible the relationships among these objectives: What mattered most? What could be done without, if necessary?

3. ALTERNATIVES3. ALTERNATIVES

• We will have to decide which one will best fulfill our objectives with the smallest acceptable risk. We try to make a balanced choice.

• If there is only one alternative, we must decide whether it is good enough to accept.

• If we must choose between a current and a proposed course of action, then we consider both to be alternatives.

• If, in the absence of any alternative, we must create something new, we can usually build an alternative from available components.

• We will have to decide which one will best fulfill our objectives with the smallest acceptable risk. We try to make a balanced choice.

• If there is only one alternative, we must decide whether it is good enough to accept.

• If we must choose between a current and a proposed course of action, then we consider both to be alternatives.

• If, in the absence of any alternative, we must create something new, we can usually build an alternative from available components.

GENERATING AND EVALUATING ALTERNATIVES GENERATING AND EVALUATING ALTERNATIVES

• EVALUATION OF ALTERNATIVES AGAINST MUST OBJECTIVES: “GO” or “NO GO”

• EVALUATION OF ALTERNATIVES AGAINST WANT OBJECTIVES: scoring using judgment

• WEIGHTING THE SCORES OF ALTERNATIVES: computing the weighted scores of each alternative (weighted score: the score of an alternative multiplied by the weight of the objective to which the score refers)

• THE TENTATIVE CHOICE: the total weighted score gives us a tool for selecting a tentative choice. We should explore the potential risks involved.

• EVALUATION OF ALTERNATIVES AGAINST MUST OBJECTIVES: “GO” or “NO GO”

• EVALUATION OF ALTERNATIVES AGAINST WANT OBJECTIVES: scoring using judgment

• WEIGHTING THE SCORES OF ALTERNATIVES: computing the weighted scores of each alternative (weighted score: the score of an alternative multiplied by the weight of the objective to which the score refers)

• THE TENTATIVE CHOICE: the total weighted score gives us a tool for selecting a tentative choice. We should explore the potential risks involved.

4. THE CONSEQUENCES OF THE ALTERNATIVES4. THE CONSEQUENCES OF THE ALTERNATIVES

• The final step in Decision Analysis is the search for possible adverse consequences of all feasible alternatives.

• Overlooking factors that make a choice unworkable is a fundamental mistake.

• Decision Analysis is a methodical, systematic process. But it is also as creative and innovative a process as its users choose to make it.

• The final step in Decision Analysis is the search for possible adverse consequences of all feasible alternatives.

• Overlooking factors that make a choice unworkable is a fundamental mistake.

• Decision Analysis is a methodical, systematic process. But it is also as creative and innovative a process as its users choose to make it.

ANSWERING 5 QUESTIONSANSWERING 5 QUESTIONS

1. What requirements for success have we missed in the previous stages of this analysis?

2. What factors within the organization, based on our experience, could harm its acceptance or its implementation?

3. What kind of changes within organization could harm its long-range of success?

4. What kind of external changes could harm its long-range success?

5. What kind of things tend to cause problems in implementing this type of decision?

1. What requirements for success have we missed in the previous stages of this analysis?

2. What factors within the organization, based on our experience, could harm its acceptance or its implementation?

3. What kind of changes within organization could harm its long-range of success?

4. What kind of external changes could harm its long-range success?

5. What kind of things tend to cause problems in implementing this type of decision?

PROBABILITY & SERIOUSNESSPROBABILITY & SERIOUSNESS

• What is the probability that this adverse consequence will occur? If it does occur, how serious will it be?

• Use ratings of HIGH – MEDIUM – LOW or a scale of 10 (highly probable / very serious) to 1 (unlikely / not at all serious)

• We can stretch our imaginations beyond the body of facts we have amassed and ask “what did we miss?”

• What is the probability that this adverse consequence will occur? If it does occur, how serious will it be?

• Use ratings of HIGH – MEDIUM – LOW or a scale of 10 (highly probable / very serious) to 1 (unlikely / not at all serious)

• We can stretch our imaginations beyond the body of facts we have amassed and ask “what did we miss?”

The power of the process lies in the ability it gives to make productive use

of all available information and judgments

The power of the process lies in the ability it gives to make productive use

of all available information and judgments

casecase

“COMPANY X: CHOOSE THE EVENT PROPOSAL”

“COMPANY X: CHOOSE THE EVENT PROPOSAL”

ALTERNATIVESALTERNATIVES• MUSIC CONCERT: ARCTIC MONKEYS

Venue: JCCEO: Buena ProductionBudget: Rp. 3 MPackages: main sponsor (banner, posters, booth, backdrop, press release, TV campaign, radio, magazine)

• INTERNATIONAL SEMINAR: MALCOLM GLADWELL Venue: Shangrila HotelEO: Dyandra PromosindoBudget: Rp. 2.5 MPackages: main sponsor (banner, booth, backdrop, TV campaign, magazine)

• MUSIC CONCERT: ARCTIC MONKEYSVenue: JCCEO: Buena ProductionBudget: Rp. 3 MPackages: main sponsor (banner, posters, booth, backdrop, press release, TV campaign, radio, magazine)

• INTERNATIONAL SEMINAR: MALCOLM GLADWELL Venue: Shangrila HotelEO: Dyandra PromosindoBudget: Rp. 2.5 MPackages: main sponsor (banner, booth, backdrop, TV campaign, magazine)

WHAT YOU SHOULD DO:WHAT YOU SHOULD DO:

1. DECISION STATEMENT2. OBJECTIVES: MUST & WANT

(WEIGHT)3. EVALUATING THE ALTERNATIVES:

WEIGHT & SCORE4. POTENTIAL RISKS: PROBABILITY &

SERIOUSNESS

1. DECISION STATEMENT2. OBJECTIVES: MUST & WANT

(WEIGHT)3. EVALUATING THE ALTERNATIVES:

WEIGHT & SCORE4. POTENTIAL RISKS: PROBABILITY &

SERIOUSNESS

1. DECISION STATEMENT1. DECISION STATEMENT

To decide the event proposal that will increase the company’s imageTo decide the event proposal that will increase the company’s image

2. OBJECTIVES2. OBJECTIVES

MUST OBJECTIVES:• The event is suitable for company’s

target market• Suitable for the budget allocation (less

than 4 million rupiah)• Held in December 2007

MUST OBJECTIVES:• The event is suitable for company’s

target market• Suitable for the budget allocation (less

than 4 million rupiah)• Held in December 2007

WANT OBJECTIVES:WANT OBJECTIVES:

Want Objectives Weight

1 Event will increase the company’s image 10

2 Qualified Event Organizer 9

3 Benefited sponsorship packaged 8

4 Types of the event is “on the line” (trend) 8

5 Venue will increase the company’s image 8

6 Event will create positive continuity effect 8

7 Event has social contribution to the community 7

8 Optimizing the advantages of the event than the effort that have to be done

7

9 Possibilities to open booth in venue 5

10 Publication area target 5

3. ALTERNATIVES3. ALTERNATIVESWant Objectives

Weight Arctic Monkeys Malcolm Gladwell

Info Score Total Info Score Total

1. Image 10 Yes – world artist

8 80 Yes – best seller

10 100

2. EO 9 Yes – often 10 90 Local event 8 72

3. Packages 8 Yes 10 80 No Radio 7 56

4. Trend 8 Yes 9 72 Yes 10 80

5. Venue 8 Yes 10 80 Yes 9 72

6. Effect 8 New 8 64 Topic is headline

10 80

7. Contrib. 7 Entertainment

6 42 Knowledge 10 70

8. Value 7 Many personnel

8 56 More efficient

10 70

9. Booth 5 More audiences

10 50 Limited audiences

9 45

10. Public. 5 Unlimited 10 50 Segmented 8 40

TOTAL 664 685

4. ADVERSE CONSEQUENCES4. ADVERSE CONSEQUENCES

Arctic Monkeys

Probability Seriousness

Unable to come because of the security issue

MEDIUM HIGH

Chaos possibilities by the audiences

MEDIUM HIGH

Malcolm Gladwell

Probability Seriousness

Unable to come because of the security issue

MEDIUM HIGH

Chaos possibilities by the audiences

LOW HIGH

and the decision is?and the decision is?