Smart Choices. Howard Raiffa

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Smart Choices - Howard  Raiffa


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manufacturing companies discovered the bright side of decision problems when they were forced by law to eliminate environmentally harmful materials from their operating processes. At first, the companies saw only the negatives—disruptions, higher costs, more paperwork. But then some of them began to see opportunities. Instead of viewing the problem in its narrow and obvious form—How can we get rid of the harmful materials?—they redefined it more broadly: How can we produce our product in the best and most efficient way? As a result, they made breakthroughs in their operations that have actually enabled them to have lower production costs without toxic materials than with them. By changing a problem into an opportunity, they gained an important advantage over their less-savvy competitors.

      In this case, the law acted as a trigger. Every decision problem has a trigger—the initiating force behind it. Triggers take many forms. Your boss asks you to choose a new mailing-list software package. A chat with your spouse about ways to use your backyard gives you an idea about new lawn furniture. A friend’s heart attack makes you realize that it’s finally time to get in shape.

      Most triggers come from others (your boss) or from circumstances beyond your control (new regulations affecting your business). Because they’re imposed on you from the outside, you may not like the resulting decision problems. But there’s no law that says you have to wait for a decision to be forced on you. You can take the initiative. In fact, creating decision situations for yourself is a great way to create new opportunities before a problem even arises. You can, for example, review your career path on a regular basis, seeing if you want to move in a new direction. You don’t have to wait until you get a lousy raise or your employer runs into trouble or you get a new boss whom you don’t get along with. Be proactive. Seek decision opportunities everywhere.

       Define the Decision Problem

      So what’s the best method for defining—or redefining—your decision problem? Start by writing down your initial assessment of the basic problem, then question it, test it, hone it.

      Ask what triggered this decision. Why am I even considering it? The trigger is a good place to start because it is your link to the essential problem. State the trigger as clearly as you can. Include

1. Your assumption of what the decision problem is.We need new lawn furniture.
2. The triggering occasion.Chat with spouse.
3. The connection between the trigger and the problem.How to use our yard.

      As you explore the trigger, beware! Triggers can bias your thinking. They can trap you into viewing the problem only in the way it first occurred to you. When your boss asks you to choose a new mailing-list software package, for instance, the problem might not actually be: What’s the best package to buy? The real problem may be: What’s the best way to manage our company’s direct-mail program? You may find that you don’t need new software at all. You need to contract with an outside company to take over the mailing effort.

      Question the constraints in your problem statement. Problem definitions usually include constraints that narrow the range of alternatives you consider. For example, the problem definition ‘‘When should we conduct the three-month market test of our new credit card offering in the Midwest?’’ assumes (1) that there will be a market test, (2) that it will last three months, and (3) that it will be in the Midwest. Often, such constraints are useful— they focus your choice and prevent you from wasting time wrestling with irrelevant options. Sometimes, though, they put blinders on you, preventing you from seeing the best options. As the following example demonstrates, identifying and challenging the constraints can lead you to better problem definitions and better solutions.

       Questioning Constraints: The Berkeley Meeting

      A West Coast snowboard manufacturer was getting ready to make a big push into the northeastern U.S. market. To craft its strategy, it appointed a team of three people—one from its headquarters in Berkeley, California; one from its manufacturing plant in Vancouver, British Columbia; and one from its sales office in Denver, Colorado. The vice president of marketing in Berkeley, the head of the team, suggested they get together for a three-day meeting to pull together the final strategy, and he asked his executive assistant to schedule the meeting in Berkeley as soon as possible. After many telephone calls and e-mails, however, the assistant could find no good dates for a three-day meeting any time in the next two months.

      Unable to schedule the meeting, the assistant started asking some questions. Was a three-day meeting really necessary, or would two days do? Were all three individuals needed for the entire time? But even scheduling everyone for at least one day proved difficult.

      The vice president went back to basics, asking himself and his colleagues, ‘‘Why are we considering a meeting at all?’’ Simple: to complete the strategy. He then asked, ‘‘How else can we get the work done?’’—in effect recasting the decision problem from ‘‘When do we meet?’’ to ‘‘How can we finish the strategy?’’

      The team came up with a new plan of action. The vice president would outline the steps needed to complete the strategy and would then assign tasks to himself and his two associates. Using e-mail, the team members would update one another on the outcomes of the tasks. Then they would hold three two-hour conference calls over the next two weeks to bring it all together.

      The plan worked, and the strategy was solid within three weeks.

      Identify the essential elements of the problem. If you’re an actor and you need to choose your next role, the elements of your decision problem might include any or all of the following: What role will gain me the most exposure? How much money do I need to earn? What’s the best way to develop my skills? What are the limits on my time and travel? Should I wait for more options to open up, or should I concentrate on what’s available now? By first breaking a problem down into its component pieces, you can be sure that your problem statement is focused on the right goal.

      Understand what other decisions impinge on or hinge on this decision. What other decisions will affect this one? What other decisions will this one influence? Whether your company will allocate funds for training may influence how far afield you look for a new word processing package. How much you spend on it may influence what new computer and telecommunications hardware your organization will be able to buy. Rarely does a decision exist in isolation. Thinking through the context of a decision problem will help keep you on the right track.

      Establish a sufficient but workable scope for your problem definition. Should related decisions be made part of this decision? Should part of this decision be peeled off and dealt with separately? You need to weigh a comprehensive, broad definition against a more easily tackled, narrower one. An ideal solution for a problem that is too narrow could be a poor solution for a more broadly and accurately defined problem. If you’re looking to minimize gasoline costs, you might overinflate your tires to reduce road friction. But if your real problem is cutting your overall automobile operating expenses, this might be a very poor decision. The money you save on gas may be more than offset by the cost of having to replace your tires sooner.

      Gain fresh insights by asking others how they see the situation. After you’ve asked, answered, and reviewed all of the above questions to your satisfaction, get some other perspectives. Depending on the nature of the problem, you might seek advice from a family member, a knowledgeable friend, an acquaintance who has faced a similar problem, or a professional in a relevant field. Their ideas will help you see your problem in a new light, perhaps revealing new opportunities or exposing unnecessary, self-imposed constraints. If you can’t actually talk to anyone, it can even be worthwhile to imagine how others might think. Ask, for example: How would my accountant see this problem? How would my boss look at it? Don’t be afraid to be creative. If you’re a politician, you might want to imagine how Harry Truman or Winston Churchill would have thought about the problem you’re facing.

       Reexamine Your Problem Definition as You Go

      Obviously, you will want to create the best possible problem


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