!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Strict//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd"> Streamline Training & Documentation: Carl Spetzler on Decision-Making

Thursday, June 11, 2009

Carl Spetzler on Decision-Making

For a quick discussion of what goes into good decision-making, you could do worse than reading Kim Girard's piece on Carl Spetzler's approach that bnet.com published on May 4.

Spetzler is CEO of Strategic Decisions Group, a consultancy that, among other things, collaborates with the Center for Professional Development at Stanford to offer a certificate program in strategic decision-making and risk management.

Girard explains that Spetzler distinguishes three types of decisions:
  • Strategic decisions — "... very important, involve significant uncertainty and complexity, and are hard to think through."

  • Typical decisions — ".. can have a big impact, but they are frequently tactical in nature and arrived at through a collaborative process."

  • On-the-fly decisions — The decision-maker uses "a different part of the brain that emphasizes rapid pattern recognition. Beginning with limited or incomplete information" the decision-maker tries to relate the current issue to similar situations he or she has encountered in the past.
Spetzler argues that there are six elements to get right if one wants to arrive at a good decision:
  • The frame, i.e., the definition of the problem you are trying to solve.

  • Clarity about what outcome you're seeking. "For example, are you trying to maximize shareholder value or just trying to stay alive and minimize damage?"

  • Creative alternatives.

  • Relevant information, including information on the uncertainties you are facing.

  • Reasoning, taking into account both what you know and what you don't know.

  • Commitment to implementing the chosen solution.
Girard concludes her piece by asking Spetzler how he evaluates the success of his decision-making framework. His reply:
We take a decision and try to document what people would have done otherwise, which is called the momentum strategy. Then we compare the best choice they make with us to the momentum strategy they would have used. We can now say pretty clearly that our approach avoids lots of downside errors. It avoids value destruction and creates a lot of value. Most people leave a lot of value on the table when they make intuitive decisions.
For an example of Spetzler's decision-making framework in action, you can see this article by Richard Luecke, which describes how General Motors used the Strategic Decision Group's dialogue decision process to determine whether and how to roll-out GM's OnStar system. Luecke also describes the training in decision methods that Chevron uses.