Smart Choices: A Practical Guide to Making Better Decisions (John S. Hammond, Howard Raiffa & Ralph L Keeney, 1998)

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  • Effective decision-making process
    1. Focus on what’s important
    2. Logical & consistent
    3. Acknowledge subject and objective, blends analytical with intuitive thinking
    4. Requires only as much information and analysis as it necessary
    5. Encourages and guides the gathering of relevant information and informed opinion
    6. Straightforward, reliable, easy to use and flexible
  • Proact: PRoblem, Objectives, Alternatives, Consequences, Trade offs
  • What triggered this decision
    1. Assumption of what the decision problem is
    2. The triggering occasion
    3. The connection between the trigger and the problem
  • Identify objectives
    • Write down all the concerns to be addressed
      • A wish list
      • Possible outcome and avoidance
      • Impact on others
      • Ask people who experienced it before
      • Great alternatives
      • Explain your decision
    • Convert concerns into succinct objectives
    • Separate ends from means to establish your fundamental objectives
    • Clarify what you mean by each objective
    • Test your objectives to see if they capture your interests
  • Generating better alternatives
    • Use your objectives to ask “how”
    • Challenge constraints
    • Set high aspirations
    • Do your own thinking first
    • Learn from experience
    • Ask others for suggestions
  • Consequences table
    1. Mentally put yourself into the future
    2. Create a free-form description of the consequences of each alternative
    3. Eliminate any clearly inferior alternatives
    4. Organise descriptions of remaining alternatives into a consequences table
  • Construct risk profile
    1. Identify key uncertainties
    2. Define outcome
    3. Assign chances
    4. Clarify the consequences
  • Making decisions using Decision tree and the Desirability curve
  • Linked decisions
    1. Understand the basic decision problem
    2. Identify ways to reduce critical uncertainties
    3. Identify future decisions linked to the basic decision
    4. Understand relationships in linked decisions
    5. Decide what to do in the basic decision
  • Flexible plans
    • All-weather plan: can used for all situation
    • Short-cycle plan: to reassess that choice often
    • Option wideners: future alternatives
    • “Be prepared” plans: backup plans
  • Bad decision making
    • Working on the wrong problem
    • Failing to identify your key objectives
    • Failing to develop a range of good, creative alternatives
    • Overlooking crucial consequences of your alternatives
    • Giving inadequate thought to tradeoffs
    • Disregarding uncertainty
    • Failing to account for your risk tolerance
    • Failing to plan ahead when decisions are linked over time
  • Diagnostic questions
    • What’s my decision problem? What, broadly do I have to decide? What specific decisions do  I have to make as a part of the board decision?
    • What are my fundamental objectives? Have I asked “why” enough time to get to my bedrock wants and needs?
    • What are my alternatives? Can I think of more good ones?
    • What are the consequences of each alternative in terms of the achievement of each of my objectives? Can any alternatives be safely eliminated?
    • What are the tradeoffs among my more important objectives? Where do conflicting objectives concern me the most?
    • Do any uncertainties pose serious problems? If so, which ones? How do they impact consequences?
    • How much risk am I willing to take? How good and how bad are the various possible consequences? What are ways of reducing my risk?
    • Have I thought ahead, planning out into the future? Can I reduce my uncertainties by gathering information? What are the potential gains and the costs in time, money and effort?
    • Is the decision obvious or pretty clear at this point? What reservations do I have about deciding now? In what ways could the decision be improved by a modest amount of added time and effort?
    • What should I be working on? If the decision isn’t obvious, what do the critical issues appear to be? What facts and opinions would make my job easier?


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