You can learn to be a smart decision-maker

When I was in government, one of the most common questions folks in Washington, D.C., and those back home in Cambridge, Mass., asked me was, "What's the biggest difference between being in government and being in academia?" Without hesitation, I always answered, "In government, I make more decisions in a day than I made at Harvard in six months."

In an area as fluid as information technology, the need to make decisions is especially demanding because you cannot rely as much on standard operating procedures and rules of thumb the way you might in a field where change is slower.

The ability to make intelligent decisions is a skill that can be consciously cultivated. As a guide, three of the leading academic experts on managerial decision-making—John Hammond, Ralph Keeney and my Harvard colleague, Howard Raiffa—have written a book to teach you how to make better decisions.

Smart Choices (Harvard Business School Press, 1999) is a quick read, written for a non-academic audience and filled with examples. The essential technique the authors recommend for making good decisions is "divide and conquer." The more complex a problem is, the more daunting it seems and the more important it is to break the problem into its elements and think systematically about each element.

The basic elements of any problem are the objectives you seek, the alternatives you can imagine for solving the problem, the consequences of the alternatives, the trade-offs among the consequences in terms of your objectives and how much you're willing to accept risk. Your goal should be to make the choice that does the most to achieve your set of objectives, taken as a whole. (Of course, you might want to make a choice with a lower payoff but lower risk, such as an off-the-shelf vs. custom IT solution.)

Here are a few highlights of Smart Choices.

The authors argue that most people spend too little time thinking through the objectives they seek. "Only later," they write, "when things turn out less well than anticipated, do they realize that they didn't really understand their objectives after all. By then, of course, it's too late."

To get good lists of objectives, they suggest that you consider a terrible decision alternative and ask yourself what makes it so bad. Then you'll better realize what objectives such a decision fails to serve.

They recommend a similar approach to thinking about decision alternatives. Most people, they argue, are trapped by a business-as-usual attitude into not thinking widely enough about alternatives. The authors give an example of the happily employed person who gets a call for an attractive job offer. Most people "choose between the current job and the proposal, both of which have been shaped or presented by others. But if you are willing to consider leaving your current job, why not actively seek still other alternatives?"

Decisions are so hard to make because we cannot have our cake and eat it too. A decision that is better at achieving one objective (encouraging easy public access to government information about oneself) creates problems for another objective (privacy protection against third-party access to personal information).

A crucial step in evaluating alternatives is to make value trade-offs among conflicting objectives. In complex decision problems, however, there are large numbers of objectives and trade-offs.

One of the most immediately practical techniques the authors present is the "even-swaps method," adapted from Ben Franklin, who was the first to write about it. Franklin wrote that he made lists of the various consequences of alternatives he was considering. "When I them all together in one view," Franklin wrote, "where I find two, one on each side, that seem equal, I strike them both out. If I find a reason pro equal to two reasons con, I strike out the three." When all the even swaps are struck, you are left either with a clear choice or, more likely, with a decision that is still tough but has been simplified to its essence.

In their final chapter, the authors distinguish between making a smart individual decision and being a smart decision-maker. They remind us that "procrastination is the bane of good decision-making" because not deciding means deciding to do nothing, without considering whether doing nothing is a good idea.

The authors urge people to concentrate on what's important by asking themselves, "Why can't I just decide now?" and note that "the answer will indicate where you need to focus your attention."

--Kelman was the administrator of the Office of Federal Procurement Policy from 1993 to 1997. He is now Weatherhead Professor of Public Management at Harvard's Kennedy School of Government.


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