Atop the Information Mountain
- By Errol Wirasinghe, Ph.D.
- Apr 01, 2003
DECISION-making embraces every facet of your life. Whether you are in sales,
education, health care, energy, finance, marketing, pharmaceuticals, or
politics, you will be required to make crucial decisions.
Following the Information Technology revolution, today's managers receive
real-time data on manpower, sales, budgets, cash flow, financing, inventory,
supplies, transport and distribution, share prices, market saturation, future
pricing, currency fluctuations, geopolitical and regulatory issues, and more.
They face multi-dimensional problems and must integrate mountains of information
into the decision-making process. Unfortunately, the more information and the
more choices we have, the more difficult decision-making is. The sheer volume of
information overwhelms individual decision-makers and makes previous
decision-making methods ineffective and obsolete.
Because of these factors, we now have a decision-making crisis in the
business world--there has not been a substantial improvement in the
decision-making process itself, and managers are saddled with slow, cumbersome,
outdated decision-making tools.
When it comes to decision-making, common sense and experience are vital
tools; however, they alone are not enough. Psychologists have proven that the
human mind can process only about seven bits of information at one time.
However, today's managers must process much more than that; management needs new
training and the tools to make reliable and consistent decisions while
maintaining control of the process.
How do you make tough decisions, such as which candidate to hire, which
marketing plan to roll out, or even where to locate the next branch office? How
do you know when you've made a right decision? Do you only know when you've made
a bad decision because of the negative consequences you experience? Before you
make another decision, fine-tune your decision making process with the following
1. Study the problem and define your objective.
We often believe
we have a good idea of the problem at hand (the decision to make), but
understanding the problem is not the same as understanding the objective. As you
review the problem and decide your course of action, you need to determine what
your ultimate goal is. For example, if a drop in sales revenue is negatively
affecting bottom-line profits, the natural reaction is to push for an increase
in sales. But increasing sales is not the only option. How about reducing costs,
seeking new markets, product diversifying, acquiring a competitor, etc.? By
looking at the big picture, you can devise an unambiguous objective and make
your decision easier.
In order to uncover your objective, ask yourself the following questions:
- What is the problem?
- Is this a problem?
- Why is a solution required?
- Who is affected?
- How does it manifest?
- When did it first manifest?
- What are the consequences?
- Is it a transient or recurring problem?
- Under what conditions does it occur?
- Are there obvious causes?
- Is a solution worth the cost/effort?
2. Identify all relevant criteria (factors) that affect your problem.
The criteria relating to your decision are all of the circumstances that
could be contributing to the problem. For example, in the sales revenue drop
example presented earlier, some factors that may affect the problem include the
economy, the sales literature, the marketing campaign, the product design, an
aggressive competitor or the merger of two competitors, changes in consumption
patterns, technology, etc.
As you consider your criteria, pay attention to two main issues. The first is
to select the most appropriate criteria. This is vital to making the best
decision; too often decision-makers take a lighthearted view of this step and
pay a very dear price later on. Too many or too few factors will compromise your
Contrary to popular belief, all identified factors do not have the same
significance or importance. Thus, the second issue is to determine how important
each criterion is (assign weights) compared to the others. Because your final
decision will depend heavily on the relative value you place on your factors,
the weights you assign to each should truly represent your desires. Of course,
you can do this using common sense and experience, but that defeats the
I recommend the pairwise comparison technique, which consists of comparing
the criteria against each other, in pairs. This process will also help you
identify prerequisites, obligatory criteria, and desirable criteria.
3. Creatively identify the candidates (all available options or
After identifying criteria, list all of your available
options, from the ones that seem the most logical to those that seem ridiculous.
Remember, you're not deciding at this point; you're simply listing your
possibilities, so write down everything you can think of. Whatever you do, do
not jump to conclusions and think, "My options are obvious." Many experts who
claim to have the answers have been proven wrong.
For example, the commissioner (1844) and the director (1899) of the United
States Patent Office recommended that the patent office be closed down. They
reasoned that everything that could be invented had been invented, and there was
no longer any real need for such an office. Many people gave credence to this
recommendation because it came from people who supposedly knew the most about
the patenting business. Today we know just how wrong they were. The point: Don't
limit your options. List and analyze everything.
In the early 1990s, Brother (a Japanese typewriter company) started taking
away market share from Smith-Corona, which had been the undisputed leader since
1886. Smith-Corona concluded the problem was low-cost Asian labor, and hence
moved manufacturing to Mexico. Brother moved its manufacturing from Japan to the
United States. Same problem, same timeframe, different decisions. Shortly
thereafter, Smith-Corona filed for bankruptcy protection.
The aim-preset© technique is used to identify all possible solutions. This
stands for: Accept, Isolate, Modify, Problem, Replace, External, Sacrifice,
Environment, and Time. When you go through these steps, you will explore all
A--Can I simply accept the problem and learn to live with it?
isolate the product/system from the influence?
M--Can I modify the product
or the system?
P--Is it possible the solution might be in the problem?
R--Can I degrade the product and replace it?
E--Can I eliminate or
mitigate the external cause of the problem?
S--Can I use direct or indirect
E--Can I change the environment in which the problem
T--Will the passage of time resolve the problem?
4. Gather information pertaining to your options and include any new
factors you may have discovered.
Begin by looking at each of your
proposed solutions and develop the pros and cons as they apply to each. Be
descriptive in each of your pro/con judgments. Depending on the pros and cons
you list, you may have to gather additional information. If so, question the
information being provided to you.
Questions to ask include:
- Is the source of the information legal, moral, and ethical?
- Are the measurements credible?
- Is the source/person reliable?
- Does the provider have a conflict of interest?
- Will the information be valid for the period under consideration?
- Is the problem serious enough to merit further verification of information?
- Is the information relevant to the objective under consideration?
Beware of eyewitness accounts or "I heard this from a reliable source." Seek
definitive proof wherever possible. When did a jury accept an eyewitness account
over a laboratory report?
Often during the information-gathering phase, you will identify new criteria
you need to consider. Add these to your original list. Finally, do not cut
corners as you evaluate your options, especially if a bad decision is likely to
have serious consequences.
5. Rank your options and make your decision.
With your solutions
spelled out on paper and the pros and cons of each listed, you can analyze your
options and identify the best route to take. Use the pairwise technique to rank
your options: Consider one criterion at a time, and then compare each candidate
against the others, in pairs, and assign points. Once you have exhausted all
criteria and candidates, multiply the points assigned to each candidate with the
corresponding criteria weights to determine its rank. When you make your final
decision, based on the information you have uncovered, do not second-guess it.
It is your decision and you need to develop faith in it and be in harmony with
As you execute your decision, keep in mind the timing of your decision. For
example, if you decide to approach your supervisor for a favor, you would
intuitively wait for a moment when he/she is not under pressure and is in a good
mood. Yet, when it comes to implementing a well-thought-out strategy, many
people completely forget how critical timing is. They become emotionally
attached to the decision and try to execute it immediately.
It is also important to be aware that what is urgent might not necessarily be
what is important. Urgency is time-related; it requires immediate action.
Importance is driven by values. If ignored, important items could turn into
urgent items. Finally, do not forget the perishable nature of the information
used to arrive at the decision. Sometimes the solution can become obsolete by
the time you are ready to make your decision, or the selected option is no
longer viable by the time you are ready to execute it.
Just because today's business world is complicated
doesn't mean that decision-making must be complicated, too. Take a systematic
approach to all your daily decisions to ease the stress and frustration
decision-making brings on. The optimal decision depends on how you assign
weights to the criteria and how you assign points to the candidates. It is
strongly recommended you do this using the pairwise technique.
By following the process discussed above, you'll make more reliable and
consistent decisions that positively affect your company's growth and
This article originally appeared in the April 2003 issue of Occupational Health & Safety.