Streamline Training & Documentation: Decision-Making Taxonomies

Thursday, January 18, 2007

Decision-Making Taxonomies

The Foundation Coalition provides a useful taxonomy of seven team decision-making processes at their website. In a compact format, the FC lists strengths and weaknesses of each method and identifies the situations in which each method is most appropriate.

The seven methods are:

Decision made by a person with authority without group discussion.

Decision made by an expert.

Decision made by averaging individuals' opinions (in my experience, the least desirable approach).

Decision made by a person with authority after group discussion.

Decision by a minority.

Decision by majority vote.

Decision by consensus.

For a particularly clear explanation of decision-making methods, you can have a look at a 40-page guidebook (pdf) developed for the US Department of Energy. After laying out a straightforward eight-step general decision-making process,¹ the guidebook describes these decision-making methods:

Analysis of pros and cons — The preferred alternative is the one with the strongest pros and the weakest cons.

Kepner-Tregoe decision analysis — Experts weight the individual evaluation criteria, and then score the alternatives under consideration against the criteria. The preferred solution is the one with the highest score.

Analytic hierarchy process — A scoring method that is particularly useful when there are multiple criteria (more than about seven) to evaluate. Pairwise comparisons are used to establish the relative importance of the evaluation criteria, and then to assess the relative ability of each alternative under consideration to satisfy the criteria. (The term "hierarchy" refers to the use of relative, rather than absolute, comparisons.)

Multi-attribute utility theory analysis — A method that enables quantitative comparison of costs, risks, and benefits that are measured in different units (e.g., dollars, miles per gallon, and inches of legroom), while taking into account the preferences of individuals and stakeholders (hence the term "utility").

Cost-benefit analysis — All costs and benefits associated with each alternative under consideration are estimated in dollar terms. The alternative with the greatest excess of benefits over costs is selected. (If no alternative has benefits in excess of costs, it will probably be necessary to reconsider the list of alternatives. It may even be necessary to revisit the problem statement itself.)

Custom-tailored tools — Used when complex behavior within a system must be analyzed.

Part of the beauty of the guidebook is that it provides a clear example of each of the above methods. The guidebook also describes aids for carrying out each of the eight steps in the general problem-solving process.

For a more comprehensive list of decision-making methods, you can see the "Decision making in business and management" section of the Wikipedia entry for Decision-making.

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¹ 1) Define the problem. 2) Determine the requirements that the solution to the problem must meet. 3) Establish goals that solving the problem should accomplish. 4) Identify alternatives that will solve the problem. 5) Develop evaluation criteria based on the goals. 6) Select a decision-making tool. 7) Apply the tool to select a preferred alternative. 8) Check the answer to make sure it solves the problem.

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Labels: Decision-making

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