Making smart choices in engineering

I What is the most important

thing that engineers do?

The answer is remarkably basic.

in engineering

his article is bared on material in Smait Choicer A

Piaitiral Guide to Making Better Decirioor by John 5. Hamrnond. Ralph t. Keeney, and Howard Raiffa (Harvard BuIiness School Prei5, Boston, 1999, 244 pp., $22.501.

is thc most important thing that cngineers do? The answer is remarkably basic. It's making decisions.

Decisions can make a world of difference, eswxial lv in our technical world. Just think of the decisions that lllM ;made i;, the infancy

of i t s PC. Rather than develop the operating system itself, IBM engaged vv Bill Gates to do so. Then, it did not require ownership of the operating system that was kcy to the development of Microsoft. What would I B M s

market position be now if it had owned or had developed the operating system, Not only did these decisions havc a profound impact on IBM, thcy shapcd the whole PC industry of today.

Likewise, RCA made an early decision to pursue a disk syrtcm for VCRs that left no possibility for home recording. RCA suffered as tape systems won the market. Then manufacturers had to choose betwccn the Bctamax and VHS tapc formats. Again, there wcrc big winners and losers.

Even though you may not makc such momentous decisions, you do makr choices that havc serinus consequenccs for your organization and that are momentous for your career, your lifc, and your family.

You makc hundreds of important dccisions throughout thc conccpto- alization, design, development, and creation of any electronic orclectrical system or product. I f you inake them WCII, the design succeeds. In nian- agement, you make many important decisions on behalf of your organization. I f you make them well, your organization thrives. If you make the decisions well and make good professional decisions about your job and career, you succeed. In fact, the only way you iiiflucnce your dcsigns, your organization, and your career i s through your decisions. So ilic ability tn make smart choices i s a fundamental professional and personal skill.

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As you are perhaps painiully aware, the dccisions you facc today are even more difficult than just a few years ago. Why? With comprcsscd development times, decisions must be made more quickly, which limits thc opportunity to leisurely contemplate the uncertaintirs and "what if's."The information revolution drowns us with facts and data, reqnir- ing even more effort to effectively sift through it. Decisions have become mare complex; the number of factors relevant to a decision and thc interdependencies among decisions has increased. And finally, the pace of change is accelerat- ing, so yesterday's assumptions, facts, and considerations may not be appropriate today. Technology is changing at incredible r a t a causing-in some cases-complete paradigm shifts, So it is clearly difficult to makc smart choices routinely i n today's environment.

The good news is that thrre is a lot you can do to help yourself. The bad news is that there is some catching up to do, since most of t is started off on the wrong foot. Considering the fundamental importance of good decision- making skills, mort of us learned in a remarkably unsystematic way. Chances are you learned by trial and error and by modeling the behavior of parents, mentors, and others, absorbing their bad habits along with the good.

However, this isn't how you lcarn most othcr skills such as circuit design, coniputer programming, tennis, or play- ing a musical insttumcnt. With thcsc you first lcarn the foun- dation elements. In tennis: the serve, forehand, hackhand, net smash, drop shot, even the grip and hall toss for thc serve. Then you practice thc elements individually and aftcr that in combination. Finally, you intcgratr all thr elrments to play a game. As a result, you rcach a higher level of achievement faster by bcing more systematic.

The samc benefits can accrue i f you master the funda~ niental elements of decision-making, practicc them individually, and then integrate them to inakc hcttcr dccisions.

Making informed decisions Vast strides have been made ovcr thc part 50 ycarc to

improvc both thc art and science of decision inaking. With our colleague Howard Raiffa, we recently combed through this material to identify the most usehil ideas. Wr looked bchind the jargon to distill the current knowledge into prac~ tical guidelines that are based on sound theory to help decision-makers make smart choices.

We identified eight key clenicnts for making smart choices [sce Iiclow]. Thc first fivc clcments: Problem, Ohjectives, Alternatives, Conscqocnccs, and Tradenifs (with the acronym PrOACT, a reminder to bc proactive) con- stitute thc core of our way of thought. The rrmaining de- ments, uncertainty, risk tolerance, and linked decisions are additional considerations when there is significant uncertainty. Also, we worked on ways to avoid or minimize the impact of some of the most important psychological traps that distort our thinking about decisions.

Our bottom-line advice when you face a tough, important dccision is simple dividc and conquer. Break your decision into the elements, think about the elements and then comhinc your thoughts to makc up your mind. After an ini- tial assessment, most practical problems can be analyzed without going through the Full gamut of the eight elements. Often, clcar thinking on just one clement will resolve the dccision completely. 01 course thc clement that is key varies from situation to situation. Sometimes you just need to understand your nbjectives, or to create that "aha!" alternative, or to get your tradenffs straight, or to know what the chances of some events really are. Then you can easily make a smart choicc and move on.

Among the things that struck us as wc were pulling together our observations to writc Smart Choices (which sun i - inarizes our advice on how to make better decisions) was that too many dccisions stood on shaky ioundations. Littlc attention gets paid to the I'rOA ol PrOACT, and consc- quently the quality of the results is poor. T m e aitcr tinic pcoplc work on thc wrong decision problcni using poorly ariiculatcd or inappropriate objcciives to choose among a lousy set oialtcrnativcs. Occasionally these decisions were based on elegant quantitative analysis. Sadly, this effort was wasted, since it was all based on tlie wrong prcmises.

As cnginccrs wc may bc cvcn more pronc to this pitfall than most. We arc trained to he very analytical. Our quan- titativc skills arc wcll honed. But most af this training pre. supparer that we know what thr problem is, that we are given the objectives (osually to optimize a single variable like access time) and that the alternatives are given With this nice neat view of the world UT are able, literally, to look up the answers to, say, the odd~numbered questions in the back of thc book.

So, likc cvcrynnc, cnginccrs can improve their dccision making by working nn thc soft sidc-thc iront cnd. Hcre'r haw.

Characterizing the right decision problem You can makc a wrll-considered, wellLthought-out d e c i ~

sioii, but if you start with the wrong decision problem, you can't make a smart choice. Because tlie way you state your problem frames your decision, it greatly influences both the alternatives and objcctivcs that you consider. Posing the right problcni drives everything clsc.

A few ycan ago, cnginccrs at a large Canadian utility, con- ccrned abaut ability to mrrt peak drmand, initially poscd a decision as "whether we should add a third high-voltage, 500-kV transmission line" tn bring electricity from distant hydroelectric plants to a growing metropolitan a i m Framing the decision this way, the alternatives were to build the iiew line or iiot, the nhjectives were to maximize reliahility and to minimize cost, and there were obvious tradeoffs to be made bctwccn achicving thcsc hvo. Initially, building the ncw linc looked attractive, even though it would cost $200 niillion.

ALTERNATIVES. Create TRADEOFFS. better alternatives to Make tough choose from. corntxomises when

you can't achieve CONSEQUENCES. all vow obiectives Describe how well each alternative meets your objectives.

at Once

But, as they dug into their analysis, the engineers realized thcy had defined lheir problem too narrowly. It was really, "How do we insure we have a camfortahle inargin of safety to reliably meet peak demand?"Thcy cndedup choosing a n alternative that had both higher reliability and lower cost, namcly, executing agrremcnts with some nf their major customers to shcd loads during periods of peak demand. This example illustrates that when a prohiem definition is i n a p propriate, when i t is too narrow, it limits the alternatives. Great altcrnativcs never get considered.

You can avoid this by doing sevcral things

Avoid yeslno framing. If you pose your problem as whether or not to pursue a particular alternative (for instancc, whether to build the high-voltage transmission line), you'll tend to appraise whether the alternative is good cnough, rather than whether it is great or the best you can do. Framing your decision such that you consider more alternativcs requires a little more effort, but it enhances your thinking. And very often it leads to a much hettcr choice.

Understand what other decisions impinge on or hinge on this decision. What other decisions will affect this one? What other decisions will this one influencc? Whether your company will allocate funds for training may influencc how far afield you look for a new analytical software package. How much you spend on it may influencc what (new com- puter and telecommunications hardware your organization will be able to buy, Rarely does a decision exist in isola- tion. Thinking through the context of a decision problem will help keep you on the right track.

Establish a sufficient but workable scope for your problem definition. Should related decisions be made part of this decision? Should part of this decision he peeled ofi and dealt with separately? You need to weigh a comprehensive, broad definition against a m o r easily tackled, narrower one. An ideal solution OT a problem that is tno narrow could bc a poor solution for a inore broadly andaccurately defined problem.

For instance, the American Conferencc ai Covernmcntal Industrial Hygienists rccently recommended that whole-body occupational exposure to 60 H z magnetic fields Iievcr excecd 10 Gauss. Framing this decision as "How to avoid cxposurc over I0 c" would force a change i n standard work practices for repairing and maintaining high-voltage lines. Workers would nccd to work with srveral-foot-long insulated sticks instcad ol bare hands (protected from shock af coursei). This in hlrn would requirr much more timc for repairs high above the ground, increasing the risk of injury or death due to falls and other accidents. The m d t would unknowingly increasc one risk rigniiicantly in order to reducc another risk by a small amount. A better framing of the dccision would include a con- sideration of all the personal risks, such as "how to minimize the occupational risk to workers from high-voltage lines."

UNCERTAINTY. Identify LINKED DECISIONS. and quantify the major uncertainties affecting effectively coordinating your decision. current and future

Plan ahead by

decisions. RISK TOLERANCE. Account for your Source Smart Cholrer A P m m d

Guide to Makrna Better Demmnr appetite f o r risk.

Seek out opportunities. Take the initiative, Create your own decision situations instead of waiting for problems, caused by others, the market, or happenstance, to come to you. Ke proactive. Take control. Suppose you are in the telecommunications business, and you realize that 90 percent ofyourprofitscome fromonly 15 pcrcentofyourcus- tomers and that yoii lose money on 30 percent of your customers. You could declarc a decision opportunity of, "How can I decrease thc chanccs ol losing any of my top cus. tomers?" This i s a decision opportunity because you are not forced by others to face it-yoo are in control. Articulate all rclcvant objective< lor this decision and creatc alternatives. Then examine all the alternatives including the status quo. You [night be able to makc big improvemcnts.

Identifying and organizing objectives Remember the old saying: "ll you don't know where yuu're

going, any route will gct you there"? Too often, derision- makers don't identify their objectives clearly and fully. As a result, thcy fail to get whcre they want to go.

This unfortunate circumstance occurs for three inain rca- sons. First, many pcople rlmd too lilile iime and on the task of ipecfyiq objectives. Thcy feel they already know what they want and need. Without further r e k c - tion, they pick a n altcrnative that ' Most of US learned seems to "solve" their problem and they miive on. Only later, when things turn out less well than antic- ipated, do thcy realizc that thcy didn't rcally understand their objectives after al l . By then, of course, it's too late.

Second,geliing it right irnfeary. Ohjcctivcs don't just pop up in nice ineat lists. While you might think you know what you nced, some of thc most important objectives may not be at all obvious. Only hard thinking, perhaps even soul- searching, will rcvral what really mattcrs. This kind oi reflective effort perplexes many people and inakes them uncomfortable. But thc more relentlessly you prohe bencath the surfacc of "obvious" objectives, the better the decisions you'll ultimately make.

Third, dccision-makers often tak too narrow afocn. Then list of objectives is limited, omitting important considerations that bccome apparent only alter they have made a decision They concentrate on the tangible and quantitative (cost, technical specs) over thc intangible and subjec- tive (features, ease of use). "Hard concerns drive out the "soft" (a particular risk for engineers who have been well schooled in quantitative analysis). In addition, they tend to stress the short term (recover investment) ovcr the long term (sustained product profitability),

Strategic thinkers sincc Benjamin Franklin in 1772 havc long emphasized the need to clarify objectives as a key step in making informed decisions. More recently, Peters and Waterman in their best-selling book in Search of Excellence refer to their "one all-purpose bit ol advice lor management" in the pursuit ol excrllence as "ligure out your value system." However, figuring out a value system rcquires more than simply listing objcctives. Identilying and organizing ohjectives is an art, but it's an art you can practice systcm~ atically by following these five steps.

STEP 1. Write down all the concerns, considerations, and criteria you went to address through your decision. In [making your list, don't worry about including major considerations with ones that scem trivial. This

decision-making skills in a remarkably Unsystematic Way.'

73 I IAMMONI> B KEENI!Y - MAKING ShIART CHOICE IN CNC.IN1:LRINC;

Fund am en t 8 I Minimize:

-

* Product cost * Tax cost

Shipping cost * Internet cost

Travel cost

Shipping time *Dispatch time

* Effort of shopping *Personal hassle

* Delivery time

objective Maximize

Other

* Ensure quality of product Get the best product for the buck

~

-

-

* Provide quality after- sales service

*Assure an easy return policy

Avoid electronic mailing lists

product quality

Minimize cost

Purchase time Processing time Payment time Queuing time

* Time to find product * Communication time

Search time *Time to order product *Time to gather information .Time to select a product

worry Regret Disappointment

9 Risk of product use

Pollution

Minimize time t o receive product

Maximize convenience

-

Make shopping a social

Inspire customers Enhance user productivity (get ideas that you wouldn't have had otherwise)

event

-

Reduce environmental damages

Minimize time spent

Maximize shopping enjoyment

Maximize safety

Minimize environmental impact

Maximize:

* Product value (price-quality

* Functionality of purchased it€ relationship)

- Purchasing convenience Time flexibility in purchasin Ease of finding oroduct Privacy

Customer confidence

* Driving safety

Components of objective I

Source: Ralph 1. Keeney, "The Value of Internet Commerce to the Curtorneb'' Management Science, Vol. 45, No. 4. April 1999 pp. 533-42.

early in the procrss, too much orderliness wil l only inhibit your creativity.

Also, it is a l l right to say the same thing in different ways. Rephrasing the same concern may help you uncover important nuances. Use as many ways as you caii think of 10 jog your mind about present, future, and evcii hidden considerations. Expand your list by trying some nt thcrc techniques:

rainpoira wish liri. Ilescribc as completely as you caii cvcry~ thing that you could ever want from t h i s decision What would makc the results of your decision really wondrrhd?

Think iibaut the u)orit possible outcome. What do you mort waiit to avoid?

Ginsider a great-vw Ifiinfrariblr-alieriiarive. Whali so good about it?

74

Consider a terrible aliemaiive. What imakcs it so bad? Think abont bo1vyoii ~uoiild explaiii yoar cbasra aliernaIive to

ioiiieone elrc. How would you jiistiiy it? Ask pop l r who Iiai~eJ'aced siiniiar riiiiaiians iulmi ihey coiisidereil

when iiiolzing heir deciiioirr. When lacing a group decision, first have each person

involved follow the above suggestions individually. Then combine the lists, using thc varied perspectives to expand and refine first-take ideas. Ily initially irceing each pcrson to search his or her mind without being limited by oher< thoughts, you'll gct a more comprrhensive list that more accurately rcilectr rvciyonek concerns.

Using tlirsc techniques and otlirrs o l your owr devis- ing, yodll accumulate pages of notes describing what you

l1.i.k S l~ l :< :T l~ l lh~ l NLIVLUlllR l l l n

most care about in the decision you face. I f you were assigned to design a Web site to sell your company's consumer electronic products, your list might include words like "security," "cost: "attractive," "easy to use," "no credit card fraud," "good information," and so on. (See Table 1 , "How to maximize customer satisfaction with Web site purchases.")

W STEP 2. Convert your general concerns into succinct objectives and organize them. The clearest and most easily communicated form for objectives is a short phrase con- sisting of a verb and an object. In our Web site example, "good information" becomes "provide good information," "security" becomes "assure system security", and "cost" becomes "minimize cost."

At this stage, there will likely be a long list of objectives. You need to organize them by combining similar objectives into categories. There arc, for instance, many components of the objective "minimize cost."These include product cost, taxes, shipping cost, cost of using the Internet, travel cost, and so forth. All of these can be categorized as part of a general objective "minimize cost."

STEP 3. Separate ends from means to establish your fundamental objectives. Once objectives arc categorized, the challenge is to distinguish between objectives that are means to an end (discouraging hackers) io-cal led means objectives-and those that are ends in themselves (maxi- mizing system security)-so-called ends objectives. Separating means from ends is like peeling an onion. Each new layer looks different.

The best way to do it is to follow the advice of the common Japanese saying, 'You don't really undentand something until you ask five times 'Why?"' Simply ask"Why?" and keep asking it until you can't go any further. You say you want to "avoid electronic mailing lists." Why? To "minimize misuse of personal information." Why? To "maximize privacy." Why? Because inaximizing privacy is an end in itself, a fundamental objective.

Separating means and fundamental objectives is critical because both kinds of objectives play important, but different, roles in the decision-making process. Each means objective can serve as a stimulus for generating alternatives (see next section) and can deepen your understanding of the decision problem. However, you should only use fundamental objectives to evaluate and compare alternatives. Sure you want to do better in terms of your means objectives. But why? Only to do better in terms of your fundamental objectives. If you use a fundamental objective and its supporting means objectives to evaluate decision alternatives, you will give too much weight to that particular fundamental objective in your final choice.

W STEP 4. Clarify what you mean by each objective. You shouldat this point have a solid list of all relevant objectives. Now, for each objective, ask, 'What do 1 really mean by this?" Asking "What?" enables you to identify the components of your objective and better understand it. This in turn will help you to state the objective more precisely and see more clearly how to better achieve it.

A fundamental Web site objective is "maximize convenience for the customer." But what docs this entail? It might include such things as time flexibility in making a purchase, ease in finding the product or in getting after-sales sewice, and an easy return policy. Having a list of fundamental objectives that indicates component objectives under the corresponding general objective clearly specifies its logical parts and leads to better decisions.

HAMMONI) L KEENEY ~ MAKING SMART CHOICES IN ENGINEERING

H STEP 5. Test your objectives to see if they capture your interests. Having clarified and organized your objectives, it's time to test them. Use your list to evaluate several potential alternatives, asking yourself if you would be comfortable living with the resulting choices. If not, you'may have over- looked or misstated some objectives. Reexamine them.

Also, see i f your objectives would help you explain a prospective decision to someone else. If using your objectives as reasons and explanations would be difficult, you probably need to spend more time refining the objectives. What's unclear? W h a h missing?

Creating alternatives Your alternatives represent the range of potential choices

you'll have for pursuing your objectives. Because of their cen- tral importance, you need to establish a very high standard for generating alternatives. Two important points should be kept in mind. First, you can never cboorr an alteniaiive you bavrnt consided A new fuel cell using a difficult electrochemical process may provide 30 percent more current, but if you're unaware of that fuel cell, your design will never benefit from that extra current. Second, no niatter how niany alternaiivrr you have, your cborm altemaiivr can hrno brttrriban ihr brrtofibr lot. Thus, the payoff from seeking good, new, creative alternatives can be enormous.

Engineers, like everyone, often don't think enough about their decision alternatives. They just assume that they know the oDtions available. As a result. too manv decisions arc made from a poor set of alternatives. While the com- ' If you start with mon denominator in all these . cases is lack of thought, the essential problem can take 1~

the wrong decision many forms. problem, you can't

One of the most common pitfalls is business as urtiaI. Because many decision prob-

make a smart choice.' lems are similar to others that have come before, choosing the same alternative beckons as the easy course. You have been scheduling your electronic assembly using the same software for five years. It's very likely that there's a newly available system that is considerably better. Do you stop and consider it? Probably not; it's easy to just keep using the old system. Business as usual results from laziness and an over-reliance on habit. With only a modest amount of effort, attractive new alternatives might be found.

But sometimes so-called new alternatives represent noth- ing more than incrrmrntalizing-making small and sometimes meaningless changes to previously devised alternatives. This year's research budget may differ from last year's, but by only a few percentage points for each major project. Don't just tweak the status quo. Step back and develop alternatives that reflect original thinking and different perspectives.

Many poorchoices result from falling back on adpfaulialter- naiive. You aren't particularly satisfied with your supplier for semiconductors in one of your major products. Off and on you have been searching for alternatives, but you're busy. You know that the current supplier will continue to be there. As a result, you continue with the current supplier by default. Remember, every decision problem has multiple alternatives, even if it doesn't seem so at first. What people really mean when they say they have "no alternatives" is "no alternatives better than the default option-yei." Creating fresh altcrna- tives requires some focused thinking.

Choosing the first borsible solution is another pitfall. Suppose you've experienced significant problems meeting deadlines on upgrading the hard drives that you market. It

7 5

A story-perhaps apocryphal-about the training of new hires at General Electric a century ago illustrates this, Part of the training was to teach young engineers to deal with the h s - trations that an engineer often faces. Each was assigned a task thought to be impossible: frost the inside of a light bulb, Assigning that task was standard practice until one young engineer succeeded. Where there is a will, there i s a way, and set- ting high aspirations is putting the will in place.

Do your own thinking first. Before consulting others about alternatives, give your own mind free rein. Some of your most original ideas may be suppressed if exposed to others' ideas and judgments before they have been fully formed. Sometimes igno- rance is bliss, so let loose your own creativity for a while. Once you buy into another person's line of thinking, especially someone expert in the matter at hand, your own thoughts may be prematurely knocked out of the running. Noted Massachusetts Institute of Technology professor Norbert Wiener, one of the most creative geniuses of the twentieth century, always spent time thinking through a new scientific problem on his own before reading the existing technical literature.

Learn from experience. You shouldn't let yourself be con- strained by histoly, but you should certainly try to learn from it. Find out what others have done iii similar situations, and, i f you have faced similar decisions before, consider again the alternatives you devised then. Don't, however, l imit your alternatives to those previously considered-you don't want to fal l into the "business as usualii trap.

Make a habit of making smart choices Making smart choices is clearly a skill worth honing. Treating

decision-making like any other skill is a key to making smart choices a habit. You need to understand each of the elements of decision-making, be able to take into account their relevance to each decision you face, and systematically apply available data, common sense, and your professional judgment.

The foundations underpinning every good decision are to choose the right decision problem, identify and organize your objectives, and create a rich set of alternatives. When these elements are well considered, many decisions can be effectively resolved with little or no analysis. In other cases, these three elements indicate what analysis is worthwhile of the other elements to select an appropriate alternative.

Dividing and conquering makes tough decisions more man- ageable. Focusing on one element at a time is much more effec- tive than thinking about everything at once. It also helps with gathering and using information because you know better what you need and where i t all fits. When you do divide and conquer, you usually discover that only one or two elements turn out be pivotal in a particular decision, so you can focus your attention where it matters most. You'll be rewarded by better decisions. +

To probe further An earlier article discussing decision making can be found in "The Hidden Traps in Decision-Making" by J. 5. Hammond. R. L. Keeney, and H. Raiffa in the HarvardBurrners Review, September-October 1998. pp. 47-50, which was followed up the next year with Smart Choicer.

Techniques and procedures to identify and organize objectives and to create new alter- naativei are presented in Vaiue-Focused

Thinking, A Path to Creative Decision-Making by R.L. Keeney (Harvard University Press. Cambridge, Mars., 1992).

About the authors John S. Hammond is a management consultant bared in Lincoln. Mass., and a former profer- sor a t the Harvard Business School, Boston. Earlier he was an electronics engineer at NCR and published in IEEE Transactions on Eiectronic Cornputerr. He hoidsone US. patent. His e-mall address is [email protected].

Ralph L. Keeney is a professor in the depart- ment of industrial and systems engineering and in the Marshall School of Business and is affil- iated with the Center for TeieEommunications Management at the University of Southern California, Los Angeles. A member of the Na- tional Academy of Engineering, he may be reached a t [email protected].

Spectrum editor: Alfred Rorenblatt

7 6 IEEE SI'ICrRUM NOVEMUEK 1900

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Making smart choices in engineering