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Winning Decisions: Getting It Right the First Timeby Paul J.H. Schoemaker
Synopses & Reviews
Setting the Course
Nothing is as frightening as ignorance in action. -Goethe
Let's begin with a quick experiment. You'll soon find that we, as educators and researchers, have a fondness for experiments. We encourage you to try these simple exercises whenever they appear. You'll learn more quickly the general principles we're trying to convey. More important, you'll learn about yourself and how you make decisions. Armed with that knowledge, you can better choose whether to replace your habitual approach to decision-making with some of the ones we suggest. And whatever the outcome of the tests...we promise: no grades.
Imagine you have in front of you two coins. Both are biased: coin #1 has a 55 percent probability of turning up heads; coin #2, a 45 percent probability of yielding heads. The coin you select will be flipped only once. If the head appears, you get $10,000 tax-free. If the tail turns up, you get nothing.
Coin #1: 55% chance of heads Coin #2: 45% chance of heads
Playing the odds, you choose coin #1. It's flipped... and lands tails up. You get no money. Curious to see what would have happened with the second coin, you flip it. It lands heads up.
Using a scale of 1 to 7 (where 1 is "clearly made a wrong decision" and 7 is "clearly made a right decision"), how good was your decision to choose coin #1? Answer:
Consider a second situation. You are the CEO and sole proprietor of a small company faced with the choice of promoting only one of two new products. Product 1 has a 55 percent chance of success, and a corresponding 45 percent chance of failure. Product 2 has a 45 percent chance of success, with a 55 percent chance of failure. If the product succeeds, you will personally receive an after-tax net profit of $10,000. If it fails, you receive nothing. Note that these probability estimates capture all the information that can be reasonably known at this time. They are based on market research, past experience with similar products, specific marketing plans for each product, a realistic estimate of the quality of the execution of those marketing plans, and a thorough consideration of such external factors as competitors' responses, the chance of an unexpected competitive entry, and so on.
You choose Product #1. It fails. However, Product #2, unexpectedly launched by your closest competitor, succeeds.
Using a scale of 1 to 7 (where 1 is "clearly made a wrong decision" and 7 is "clearly made a right decision", how good was your decision to choose product #1? Answer:
Did you give your decisions a score of 7, indicating that you made the best possible decision given the information you had? (You should have.) Or did the unsatisfactory outcomes sour your assessment? How you answered the questions above tells you an important characteristic of your decision-making. It reveals whether you evaluate the quality of your decisions primarily in terms of the process you used to weigh the alternatives and come to a conclusion or on the basis of the result you obtained.
When we ask this question in our executive education seminars, most people will agree that choosing coin #1 was the right decision, based on mathematical probabilities. But a considerable number refuse to rate the decision as 7 (excellent) or even 6, and some insist it was the totally wrong decision. They ca
Two renowned business advisors, leaders in behavioral decision studies, present an in-depth and innovative guide to making effective business decisions that is filled with worksheets, questionnaires, case studies, and proven techniques that will assist all levels of management in addressing problems, making informed decisions amidst uncertainty, converting opinions into vital insights, and more.
Business revolves around making decisions, often risky decisions, usually with incomplete information and too often in less time than we need. Executives at every level, in every industry, are confronted with information overload, less leeway for mistakes, and a business environment that changes rapidly. In light of this increased pressure and volatility, the old-fashioned ways of making decisions–depending on intuition, common sense, and specialized expertise–are simply no longer sufficient. Distilling over thirty years of groundbreaking research, Winning Decisions, written by two seasoned business advisers and world leaders in behavioral decision studies, is a comprehensive, one-of-a-kind guide to the proven methods of making critical business decisions confidently, quickly–and correctly.
Decision-making is a business skill which managers often take for granted in themselves and others–but it's not as easy as some might think. The authors, whose expertise has been sought out by over a hundred companies, including Arthur Andersen, Hewlett-Packard, IBM, and Unilever, contend that decision-making, like any other skill, must be developed and honed if it is to be used effectively. Winning Decisions offers step-by-step analyses of how people typically make decisions, and provides invaluable advice on how to improve your chances of getting your next big decision right the first time. The book is packed with worksheets, tools, questionnaires, case studies, and anecdotes analyzing major decisions made by organizations like British Airways, NASA, Shell Oil, and Pepsi. Some of the proven, straightforward techniques covered in Winning Decisions include how to:
Reframe issues to ensure that the real problem is being addressedImprove the quality and quantity of your options
Convert expert yet conflicting opinions into useful insights
Make diversity of views and conflict work to your advantage
Foster efficient and effective group decision-making
Learn from past decisions--your own and those of others
With Winning Decisions, managers and other professionals now have access to a proven set of skills and strategies they need for making the right decision, right away.
From the eBook edition.
About the Author
\J. EDWARD RUSSO, PH.D., is a Professor of Marketing and Behavior Science at Cornell University’s Johnson Graduate School of Management. He has served as an adviser to such companies as Boeing, Eli Lilly, General Motors, Harris Bank, and SmithKline Beecham. Russo is also actively involved in the study and application of leading-edge decision technologies to real-world problems and is a frequent speaker in executive decision programs. He is the co-author, with Paul Schoemaker, of Decision Traps. He lives with his family in Ithaca, New York.
PAUL J. H. SCHOEMAKER, PH.D., is the founder and Chairman of Decision Strategies International and Research Director of the Mack Center for Technology and Innovation at the Wharton School. He has consulted with about a hundred organizations, including a two-year sabbatical with Royal Dutch/Shell’s scenario planning group in London. Schoemaker has been a professor at the University of Chicago and the Wharton School, and a frequent speaker in various executive programs, including those at Berkeley and Cedep at Insead. He lives with his family in Villanova, Pennsylvania.
Table of Contents
Introduction: Decision-Making in the Real World — Ch. 1. Setting the Course — Phase I. Decision-Framing — Ch. 2. Power of Frames — Ch. 3. Creating Winning Frames — Interlude A: Improving Your Options — Phase II. Gathering Intelligence — Ch. 4. Avoiding Distortion and Bias — Ch. 5. Intelligence in the Face of Uncertainty — Interlude B: Technologies for Aiding Decisions — Phase III. Coming to Conclusions — Ch. 6. Choosing: A Pyramid of Approaches — Ch. 7. Managing Group Decisions — Interlude C: Implementing Your Chosen Option — Phase IV. Learning from Experience — Ch. 8. Personal Challenges of Learning — Ch. 9. Learning in Organizations — Ch. 10. Bringing It All Home: The Decisions of RealHome.com — Epilogue: Learning into Action — App. A. Decision Audits — App. B. Organizational Challenges in Decision-Making.
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