Friday, March 9, 2007


"Our decisions shape our lives. Made consciously or unconsciously, with good or bad consequences, our decisions represent the choices we make in facing the opportunities, challenges, and uncertainties of life."

What makes you effective at your job? Consistently accomplishing desirable results, perhaps?

A manager, much less a leader, is measured by his results. And results are a consequence of the decisions that the person made.

Make a good decision and you can reasonably expect a good result.

Making good decisions is an important life skill. Your decisions shape the course of your professional career and the quality of your personal life.

Many of the thoughts being shared here came from two excellent books, some wise advice, and the hard knocks of my own experiences.

The two reference books are: “Smart Choices” by Hammond, Keeney, and Raiffa (1999) and “How Great Decisions get made” by Maruska (2004).

Both books receive 4.5 stars out of 5.0 in Amazon user reviews.

Smart Choices touts itself as a practical guide to making better decisions and it does a great job of it.

The authors advocate the use of the PrOACT approach, so named for the eight elements that comprise a smart decision. These are:
  1. Problem
  2. Objectives
  3. Alternatives
  4. Consequences
  5. Trade-offs
  6. Uncertainty
  7. Risk Tolerance
  8. Linked Decisions
Notice that the acronym only uses the letters of the first five elements.

The PrOACT approach shows you how to make a best choice among several alternatives. It won’t make hard decisions easy, the authors warn. Hard decisions are difficult because their circumstances are complex and you can ‘t wish these complexities away. The approach should help you handle the complexity sensibly by tackling each complex factor one by one.

That one-by-one process is the way the PrOACT approach works. The first five constitute the core and apply to virtually any decision. The acronym, PrOACT, was chosen to remind us that we should be proactive about making a decision otherwise someone else will decide for us. The remaining three elements—uncertainty, risk tolerance, and linked decisions—help clarify decisions that need to be made in volatile or evolving environments.

The essence of PrOACT is to divide and conquer. To resolve a complex situation, you break it into these elements and think systematically about each one. Focus on those factors that are key to the particular situation. Finally, assemble your analysis and think about the big picture. This method, the authors contend, will increase the chances of making the smart choice. Furthermore, while PrOACT will not make a hard decision easy, it will certainly make it easier.


Pr is for Problem. Define the problem correctly. What must you decide? Framing the decision that you have to make can make all the difference.

O is for Objectives. Specify your objectives. Your decision should get you to where you want to go. A decision is a means to an end. What, therefore, do you want your decision to accomplish?

A is for alternatives. Create alternatives or alternate paths towards achieving your objectives. If there are multiple objectives, select and focus on the most important ones. The axiom for objectives is true for alternatives. Are alternatives necessary? Definitely. If you didn’t have alternatives, then you don’t need to make a decision. Be careful about generating your list of alternatives. Your decision can be no better than your best alternative!

C is for Consequences. Understand the consequences of your alternatives.

T is for Trade-offs. Objectives frequently conflict with one another and that forces you to compromise or seek a balance. In most complex decisions, there is no one perfect alternative. Different alternatives fulfill different sets of objectives. You want to choose the best alternative among the less-than-perfect possibilities. To do so, you need to prioritize the trade-offs between competing alternatives and their consequent objectives.

Now here are the remaining three aspects to consider.

Uncertainties. Uncertainty is risk. Uncertainty complicates decisions but effective decision-making requires that you confront probabilities and possible fall-back alternatives.

Risk tolerance. You should account for your willingness to accept risk, i.e., your risk tolerance. You have to be consciously aware of it. It will help you select the alternative with the risk level that you can accept.

Linked decisions. Your decision today will influence your choices tomorrow. The goals you set for tomorrow will influence your choices today. This means that many important decisions are linked over time. The key to dealing effectively with linked decisions is to isolate and resolve near-term issues while gathering the information needed to resolve those that will arise later. Act in sequence to exploit what you learn along the way so that you can incorporate the lessons you learn as you make choices in the future.

Our decisions shape our lives. Made consciously or unconsciously, with good or bad consequences, our decisions represent the choices we make in facing the opportunities, challenges, and uncertainties of life.
  • Should I go to college? If so, where? To study what?
  • What career should I pursue? What job should I take?
  • Should I get married now, or wait? Should I have children? If so, when and how many?
  • Where should I live? Should I trade up to a larger house? What can I contribute to my community?
  • Which job candidate should I hire? What strategy should I recommend for my company?
  • Should I change jobs? Go back to school?
  • How should I invest my savings? When should I retire? To do what? Where?
Questions mark the progress of our lives and our careers and the way we answer them determines to a large extent our place in society and in the world. Our success in all the roles we play—student, worker, boss, citizen, spouse, parent, individual—turns on the decisions we make.

Some decisions will be fairly obvious. Your bank account is low and you have a two-week vacation coming up. Will you accept your in-laws’ offer of free use of their beachfront condo? Sure. You like your employer and feel ready to move forward in your career. Will you step in for your boss for three weeks while she attends a professional development seminar? Of course.

But the no-brainers are the exceptions. Most of the important decisions you’ll face in life are tough and complex with no easy or obvious solutions. And they probably won’t affect you alone. They’ll affect your family, your friends, and many other known and unknown. Making good decisions is thus one of the most important factors that will determine how well you meet your responsibilities and achieve your personal and professional goals.

The ability to make smart choices is a fundamental life skill.

Most of us dread making hard decisions. By definition, tough choices have high stakes and serious consequences. They involve numerous and complex considerations. They expose us to the judgments of others. The need to make a difficult decision puts us at risk of anxiety, confusion, doubt, error, regret, embarrassment, loss. That’s why it is so hard to settle down and make a decision.

When we make a major decision, we suffer periods of alternating self-doubt and overconfidence. Our discomfort often leads us to make decisions too quickly, or too slowly, or too arbitrarily. We may flip a coin, toss a dart, or let someone else—or time—decide. The result is a mediocre choice that depends heavily on luck for success. It’s only afterwards that we realize we could have made a smarter choice. But by then, it’s too late.

Why do we have such trouble? It’s simple. We don’t know how to make decisions well. Despite the importance of decision making to our lives, few of us ever receive any training in it. We are left to learn from experience. But experience is a costly and inefficient teacher. It also teaches us bad habits along with good ones. Because decision situations vary so markedly, the experience of making one important decision of seems of little use when facing the next. How is deciding what job to take or what house to buy similar to deciding what school to send your children to, or what medical treatment to pursue?

The connection among the decisions you make lies not in what you’re deciding but in how you decide. The only way to really improve your odds of making a good decision is to learn to use a good decision-making process—one that gets you to the best solution with a minimal loss of time, energy, money, and composure.

An effective decision-making process fulfills these six criteria:
  1. It focuses on what’s important.
  2. It is logical and consistent.
  3. It acknowledges both subjective and objective factors and blends analytical with intuitive thinking.
  4. It requires only as much information and analysis as is necessary to resolve a particular dilemma.
  5. It encourages and guides the gathering of relevant information and informed opinion.
  6. It is straightforward, reliable, easy to use, and flexible.
You can practice this approach on decisions major and minor. And the more you such an approach, the more efficient and effective it will become. As you grow more skilled and your confidence grows, making decisions will become second nature to you.

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