Posted on

Drucker: The Effective Decision

The effective decision
– synopsis of an article by Peter F. Drucker.

This is definitely worth re-publishing …. a classic  read.

NOTE: best practice process and tools available here

Best Practice Decision Making

While browsing through the B School library the other day, I happened across an article on decision making by Peter Drucker, originally written in 1967. Naturally as this is our business I was curious to see what one of the true masters of management had to say on the topic. Here is the synopsis together with our commentary.

Drucker commences by stating that an effective decision making process must go through some basic steps. These steps will not “make” the decision – it will always be a judgement call – but if the steps are ignored, the decision is not likely to be effective nor right. The 6 steps he recommends are: Continue reading “Drucker: The Effective Decision”

Posted on

Business intelligence for better decisions

Good business intelligence produces good decisions

If the “Second habit: actively manage knowledge” resonated with you, then you will enjoy this short blog by Strat-Wise where they discuss the next level of business intelligence which Gartner calls interactive visual analytics.  This is not simply graphical depiction of data, but rather the process of analytical reasoning using interactive visual interfaces.visual analytics

Two points in particualr that we find exciting are that

  • it is run by the user(s) of the information in real time and so must be intuitive and simple to operate. (For instance the decision making team).
  • it can link data from a variety of different sources – databases, spreadsheets, text, web, etc.

So it seems that the technology is now catching up with the business requirements: easy-to-use tools that help create insights from data and knowledge. The concept of visual analytics is based on the work by Edward Tufte (see Bloomberg article if you do not know of him), the father of simplicity in graphics. His book is now in the second edition (check out our book recommendations page).

You van find the the Strat-Wise article at this link
Strat-Wise : what is BI3.0

Whether you are a multinational or a small/medium-sized business, to discuss how Genesis Management Consulting and our partners are able to help you with the knowledge management required to support your strategic decisions, send an email to sgifford@genesis-esp.com .

 


Posted on

Before you make that strategic decision …

Harvard Business Review article: reducing behavioural problems
Kahneman, Lovello and Sibony

HBR, in conjunction with McKinsey, have published an interesting article about reducing the impact of behavioural issues in decision making.

The underlying premise is that it is very difficult for individuals to recognise their own subconscious bias – simply put: we cannot see our own blind-spots. But we are far better at identifying those of others or of groups.

They put forward a check-list of questions that should be asked when a group is putting forward a decision recommendation. We will describe that list below. But first some commentary:

What is good about the article?

  • Anything that can help us reduce the negative impact of behaviour that we are unaware of is good. As the article says: advice up to now has been more of a case of “forewarned is forearmed” which has shown to do little to have an impact on our behaviours.
  • Using an external person to question a group is also a great idea (albeit not entirely original – Genesis have been suggesting this in one form or other for years) as it is definitely easier to see someone else’s blind spots than our own.
  • Having a check-list is a good idea and forces one to go through the appropriate disciplines of asking and challenging.
What could be improved?
  • We believe that the concept of challenging behaviours is better built into the entire decision-making process – or at least at a number of check-points along the way. Waiting until the recommendation phase is fraught with obvious problems.
  • The check-list itself should be tailored to best suit the requirements of the situation and the team involved. The generic list put forward is fine, but the emphases may well be in the wrong areas.
  • Agreeing on who should play the role of  “decision-auditor” is critical. A combination of appropriate experience (in the role), expertise in the subject matter (of behaviours and the decision context), independence and authority are all important. Just as we believe the person who ultimately takes the decision should not be the person to drive the decision process (better suited to a “decision coach”), we believe that the decision leader should also not be playing this behaviour-challenge role. After all, they have their own set of behaviours, perspectives and bias to consider.
For those of you who do not want (or do not have time) to read the article itself, here is the 12 point check-list put forward (the article has more detail behind the items as well as the rationale):
  1. Is there any reason to suspect motivated errors, or errors driven by the self-interest of the recommending team?
  2.  Have the people making the recommendation fallen in love with it?
  3. Were there dissenting opinions within the recommending team?
  4. Could the diagnosis of the situation be overly influenced by salient analogies?
  5. Have credible alternatives been considered?
  6. If you had to make this decision again in a year, what information would you want, and can you get more of it now?
  7. Do you know where the numbers came from?
  8. Can you see a halo effect?
  9. Are the people making the recommendation overly attached to past decisions?
  10. Is the base case overly optimistic?
  11. Is the worst case bad enough?
  12. Is the recommending team overly cautious?
We do not wish to appear overly critical. The article is important and timely. Furthermore, we have great respect for the authors: Daniel Kahneman particularly is a world-leader in this area. Our comments are merely to assist our clients in taking this good idea into real practice. 
The original document can be found at Harvard Business Review at:  Look before you leap
And we believe there is free access up until 4th July 2010.
If you would like to discuss how we at Genesis can help to optimise the decision making process in your organisation, please contact Simon Gifford – or have a look around our web-site at
(www.genesis-esp.com).