Is your Organization Making the Right Decisions?

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Is your Organization Making the Right Decisions?

We make hundreds of decisions everyday in our lives – for example should I eat fries with my burger?

Daily decision making

(Photo Courtesy of Amber on Flickr)

Eating a few fries this one time will not increase risks of a heart attack. Plus I like the fries from this joint. I’m ready to order!!

That was a relatively easy decision; however, there are certain decisions that are more complex and may have significant implications to your organization’s future including organizational safety.

For example, if your organization is deciding on future investments or acquisitions. One would think that the basis for such complex decisions would be financial metrics – return on investment (ROI), life-cycle analysis, Net present value (NPV). Clearly these economic figures incorporate cost-benefit analysis. However, in a real world situation one cannot mitigate all the risks in an investment and therefore some of the most complex decisions are influenced by various other factors – internal politics, stakeholder interests, lack of complete knowledge. How can we bring rationale to such decisions?

Group Decisions

Group decisions in particular are prone to be influenced by emotions rather than logic. It is therefore necessary that everyone in the group understands the basis of decision and agrees to conclusions being reached. Group decision situations can be very effectively dealt with using Multi-attribute decision analysis (MADA).

Let me give you a simple example. Say you are in the market looking for a car, first you have to decide upon criteria for buying decision. You come up with three main attributes you would want in your new car – price, mileage and safety. But which of these three is more important to you? Would you be willing to sacrifice safety for price? So you want to prioritize attributes. Then you go from one dealer to other and compare different models. Come decision time what you are doing is mentally creating a scorecards for cars you have looked at and figure out the winner based on price, mileage and safety.

The same thought process can be duplicated for group decisions. What attributes to select? How to weigh the attributes? All these decisions are taken by the group and thus the end result represents “Wisdom of the Crowds”.

Of course to do this methodically I recommend using Analytical Hierarchical Processing (AHP) to select attributes, decide their weights and then final outcome. If you need further information on this topic please contact me.

When Should you Consider Group Decision Methods?

I recommend one should look into group decisions when considering investment of $5-million or more when you are trying to answer one of the following questions:

  • Which projects to fund and to what extent?
  • How to adjust operations and maintenance resources?
  • How to adjust funding levels as resource constraints change?
  • What acquisitions best fit with organizations mission/goals?
  • How to create an investment risk portfolio based on available knowledge?

Group decisions using MADA are an effective way of creating transparent decisions by efficiently capturing ideas of all stakeholders and providing a common decision platform.

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