Pres 131 carl spetzler july 27 2016

www.sdg.com© 2015 by Strategic Decisions Group International LLC. All rights reserved.

DQDecision Quality

ISSIP Service Innovation Weekly Speaker SeriesJuly 27, 2016

Carl Spetzler

DQ for Leaders Page 2© 2015 by Strategic Decisions Group. All rights reserved. www.sdg.com

Decision Quality: Value Creation

from Better Business Decisions

By Carl Spetzler, Hannah Winter, and Jennifer Meyer (Wiley 2016)

Dedication:To the many DQ champions who share our passion for making the common sense of

decision quality truly common.

Carl Spetzler

CEO, Strategic Decisions Group

Program Director, Stanford SDRM


MakingGood

Decisions

Visioning

Tone Setting

Communi-cating

CoachingFeedback

RelationshpBuilding

Teaching

Motivating

Peter Drucker

The core function

of Leaders and

Executives is

Decision Making.

MakingGood

Decisions

To win followers

and achieve

success Leaders

must do many

things …

But


Why do smart people make poor decisions?

Here are just a few reasons:

• They frame the problem incorrectly and end up addressing the wrong

problem.

• The “good enough” syndrome encourages decision makers to latch on

to the first or second option that comes their way when, with a bit more

effort, they might find alternatives with much greater value.

• The decision is based on irrelevant, unreliable or inadequate

information.

• Biases and false assumptions subvert rational thinking and analysis.

• They have received extensive training in many areas, but rarely explicitly

in the art and science of decision making.

• Executives are sold an idea by a convincing advocate, instead of

choosing among alternatives.


Confusing decisions and outcomes is endemic in

most organizations.

• We emphasize accountability and results, and we consider “good

decision/bad outcome” as a lame excuse.

• Accounting and incentive systems are usually backward-looking and

only include outcomes.

• When we have bad outcomes, we especially tend to confuse decisions

and outcomes.

– “I can’t remember someone claiming to have been lucky when they

had a good outcome.”

• Many organizations think clearly about decisions versus outcomes in

some parts of their business (e.g., R&D, exploration), but then miss the

distinction in the rest of their business.

We need to carefully distinguish the quality of decisions and outcomes and track

the quality of decisions.


A good decision never turns into

a bad decision, and a bad

decision never turns into a good decision.

Professor Ron Howard,

Stanford University

We must build quality into our decisions

and our decision making processes.


The challenge to good decision-making is overcoming

organizational and analytical complexities.

High

Low

Low HighAnalytical Complexity

Organizational Complexity

• Uncertainty

• Dynamics; Options

• Many interrelatedimportant variables

• Many parties in conflict

• Individual and organizational differences in:

- Values, desires, and motivation

- Initial convictions

- Fundamentally different frames

- Personalities and competencies

- Degrees of power and resource availability

• Group dynamics—human nature in groups

Decision

Analysis

Facilitative

Leadership

Common

sense &

rules of

thumb

Skill to Judge

DQ

• Many alternatives

• Multiple interrelated decision criteria

• Multiple players in competition -- gaming

Rigorous

DQ

Process

Skill to

demand

DQ


Five megabiases are the primary cause of

dysfunctional decision-making in organizations.

• Narrow Framing

• Agreement Trap

• Illusion of DQ

• Comfort Zone Megabias

• Advocacy/Approval Myth


To reach DQ, we must meet six requirements.

Requirements

for Decision

Quality

Relevant and Reliable

Information

ClearValues and

Tradeoffs

SoundReasoning

Commitmentto Action

AppropriateFrame

CreativeAlternatives

Like a chain, overall quality is no stronger than the weakest link.


When it is not worth additional effort or delay to

improve quality, we have reached 100%.

Appropriate Frame

Creative Alternatives

Relevant and Reliable Information

Clear Values and Tradeoffs

Sound Reasoning

Commitment to Action

0% 50% 100%

0% 50% 100%

0% 50% 100%

0% 50% 100%

0% 50% 100%

0% 50% 100%

DQ

1

2

3

4

5

6


Achieving DQ in simpler decisions starts with defining

a good frame, includes iteration, and ends with

commitment to action.

Decision

1

2

3

4

5

6

Appropriate Frame





Sound Reasoning

Tackling the requirements in one sequential pass is inefficient and a formula for failure.


Conduct a quick once-through to identify weak links

and then dedicate a focused effort to strengthen them.

Appropriate Frame




Sound Reasoning


0% 50% 100%

0% 50% 100%

0% 50% 100%

0% 50% 100%

0% 50% 100%

0% 50% 100%

1

2

3

4

5

6 1

2

3


Decision-makers and decision staff interact via the

Dialogue Decision Process (DDP).

Decision Board

Project Team

Project Team

Decision Board


DecisionBoard

ProjectTeam

Recog-

nize

Situation

Assess

Situation

Frame

Agree on

Frame

Develop

Alternatives

Alternatives

Agree on

Alternatives

Evaluate

Alternatives

EvaluatedAlternatives

Make

Decision

Plan for

Implementation

EvaluatedAlternatives

Plan

Agree on

Plan

DQ

For difficult strategic decisions, reaching DQ requires

the Dialogue Decision Process (DDP).

Dialogue Decision Process


The DQ body of knowledge and practice is a major

improvement on common practice.

• Maximize Value Potential – not just improve or fix a few decision traps.

• A clear destination – 100 % DQ on the six elements of DQ – at the time

of decision.

• Incorporates uncertainty and other complexities – clear distinction

between a good decision and a good outcome.

• Recognition of biases and human nature – use of processes and tools to

avoid decision traps.

• Iteration is efficient and avoids the comfort zone bias.

• Shift from the advocacy/approval process to DDP results in clarity of

roles and a collaborative search for maximum value.

• Applying DQ generates immense value potential: ROIs – like 600:1

Presentations & Public Speaking

Pres 131 carl spetzler july 27 2016