Making Decisions – Vol. I: Introduction and Terminology

     Given the importance of decision-making in our personal and professional lives, the topic receives shockingly little attention.  The potential consequences of low-quality decisions warrant extensive courses to build critical skills, yet few of us ever receive significant instruction in decision-making during formal education, as part of on-the-job training, or from mentors.  It is even under the radar of many conscientious autodidacts.  The “Making Decisions” series of “The Third Degree” aims to raise the profile of this critical skillset and provide sufficient information to improve readers’ decision-making prowess.
     It is helpful, when beginning to study a new topic, to familiarize oneself with some of the unique terminology that will be encountered.  This installment of “Making Decisions” will serve as a glossary for reference throughout the series.  It also provides a preview of the series content and a directory of published volumes.

Glossary
active postponement:  intentional delay of a decision or action in order to gather additional information, accommodate changing circumstances, etc.; delay defined in time, scope, and purpose.
analysis paralysis:  a condition in which an individual or group feels overwhelmed by the information presented, is incapable of processing it fully or filtering the irrelevant, resulting in the inability to reach a conclusion or make a decision.  Also paralysis by analysis.
Analytic Hierarchy Process (AHP):  a method of multi-criteria analysis that uses pairwise comparisons and weighting of criteria to quantify alternative preferences.
Arrow’s Impossibility Theorem:  economist Kenneth Arrow concluded that no voting system exists that satisfies all fairness criteria.
Bain’s RAPID Framework:  a tool developed by the Bain & Company consulting firm to assist decision-making groups in assigning roles to its members.  RAPID is an acronym for these roles:  Recommend, Agree, Perform, Input, and Decide.
bounded rationality:  limits on the ability to be rational, as defined by a decision-maker’s cognitive ability and applicable experience, available information, and time constraints.
brainstorm:  conduct an idea-generation exercise within a group that prohibits criticism and encourages creativity.
cardinal ranking:  ordering items – alternatives, criteria, etc. – by preference or importance, identifying the magnitude, or degree, of preferences.  Item A is 1.5x better than item B or item C is much more important than item D, for example.
compensatory assessment:  a technique used to assess alternatives in which lower performance on one criterion can be offset by higher performance on one or more criteria.
Condorcet winner:  a candidate that wins pairwise elections versus all other candidates.
consensus:  the state reached by a group in which all members have committed to implement a decision, though disagreement about some aspects may remain; the goal of a compromise.
consequence table:  See performance matrix.
cost/benefit analysis:  a method of assessing a course of action based on the ratio of the cost to implement to the benefits expected to result from implementation.
cost-effectiveness analysis:  a method of comparing alternative courses of action, each achieving the same objective, based on the relative costs of implementation of each.
decision:  a clearly pronounced choice of action or behavior.
decision environment:  the circumstances under which a decision is to be made; the aggregate of objectives, preferences, alternatives, and information available to the decision-maker.
decision-making:  the act or process of choosing among alternatives, whether individually or in a group.
decision quality:  the extent to which relevant information and alternatives have been considered and the influence of such on the decision rendered; the extent to which a decision achieves expected outcomes.
decision rights:  authority to make a decision on a specific matter.
decision rule:  definition of how a final decision will be reached, including voting or decision rights of group members and number or percentage of voting members that must agree to implement a decision.  Examples include unilateral (leader decides), plurality (highest number of votes), simple majority (more than half of votes), and unanimity (all in agreement).
decision theory:  prediction of behavior that will result in best outcome, often by assigning probabilities and numerical values to possible outcomes.
decision tree:  a graphical representation of choices (decisions), chance (probabilities), and expected payoffs for a series of events.
devil’s advocate:  an individual tasked with raising questions about a proposed solution to ensure that it is fully vetted before selection and implementation.
dispersion of responsibility/accountability:  a characteristic of group decision-making that requires members to share responsibility for a decision and accountability for consequences of that decision, theoretically reducing the individual burden of each member.
dominant (alternative):  an alternative that is rated higher than (is preferred to) another on at least one criterion and at least as high (indifferent or preferred) on all other criteria.
expected utility:  the product of an outcome’s utility and its probability of occurrence; the sum of the expected utilities of all possible outcomes defined for a decision.
fairness criteria:  standards against which voting systems are evaluated.
financial analysis:  assessment of revenues and costs resulting, or expected to result, from the implementation of a decision.
framing:  the way in which a question is asked, a problem is defined, or a situation is described, for example, to present a leading question, create a positive impression, or to discourage a particular course of action, decision, etc.
group decision-making:  any decision-making process for which two or more people share responsibility for collecting and analyzing information, developing alternatives, selecting and implementing a solution.
groupthink:  a condition in which group members stop critically analyzing alternatives or information provided to the group for purposes of decision-making; becoming highly agreeable without rational justification.
heuristic:  “rule of thumb” or other shortcut to a conclusion without thorough analysis.
Hoy-Tarter Model:  a tool used to aid selection of members to a decision-making group.  Each candidate is categorized in a 2 x 2 matrix by assessing his/her expertise and the likely impact of the decision to be made on his/her area of responsibility.
illusion of agreement:  the erroneous perception of group members, or its leader, that there is concurrence among members, usually occurring when members stop offering countervailing arguments because they have deemed it futile or professionally perilous to do so.
irrational decision:  a decision made using extraneous information, such as personal, political, or social considerations.
manipulation:  a practice of strategic voting in which voters rank candidates differently than their true preferences in an attempt to bias the election toward their first-choice candidate.
multi-criteria analysis (MCA):  a set of decision-making tools used when a decision involves multiple, often competing or contradictory, objectives.
mutual independence:  a condition in which all criteria preferences can be rated without knowledge of any other criteria preference ratings; i.e. the rating of one criterion does not depend upon or influence the rating of any other.
non-compensatory assessment:  a technique used to assess alternatives in which tradeoffs in performance among criteria are not allowed; i.e. each alternative must exceed a minimum threshold level of performance to be considered.
ordinal ranking:  ordering items – alternatives, criteria, etc. – by preference or importance without reference to the magnitude, or degree, of preferences.  Items may be identified as first, second, third, and so on.
paralysis by analysis:  See analysis paralysis.
passive postponement:  undefined delay in decision or action caused by lack of focus or commitment to action.
performance matrix:  a table comparing, in absolute terms, the characteristics of alternatives; information presented may include quantitative measurements, qualitative assessments, and binary conditions (e.g. existence of a specific feature).  Also, consequence table.
preference ballot:  record of a voter’s ranked preferences of alternatives; may indicate ordinal or cardinal rankings.
preference profile:  voters’ ranked preferences, ordinal or cardinal.
probability:  the likelihood that an event or outcome will occur, often expressed in percentage terms, from 0% (impossible) to 100% (certain).
rank reversal:  a condition that arises, particularly in AHP, when adding an alternative to the analysis causes the order of preference of two other alternatives to reverse, or flip.
rational:  based on relevant information and objective analysis.
satisfice:  choose the first acceptable option encountered.
shadow decision:  a decision made, from an observer’s perspective, with little or no relevant information available or considered.
spoiler:  a candidate with little chance to win that performs well enough to diminish another’s chance to win; a candidate that splits the vote, causing an otherwise likely winner to lose.
utility:  a numerical representation of the desirability of an outcome.
voting method:  See voting system.
voting system:  set of rules that defines how votes will be cast, counted, transferred, etc.  Also, voting method.
voting technology:  aids to collecting and counting ballots and applying rules of the voting system.

Series Preview
     There are several topics under the umbrella of decision-making to be discussed.  A straightforward, sequential process will be described to provide a foundation of logic and consistency.  Various models of decision-making will be presented to reflect the differences in thought processes and circumstances for which they may be best suited.  Specific tools and techniques will be explained, allowing practitioners to quickly apply them to important decisions.  Techniques used to facilitate decision-making by groups, as well as individuals, will be explored.
     The range of topics related to effective decision-making is extensive; the broad categories mentioned above provide only a hint.  Thus, a variety of topics deemed relevant and useful will be covered, including decision-making techniques for both generic and specific, narrow applications.
     One option that will often not be expressed explicitly, but must always be considered, is to do nothing.  It is possible, in some circumstances, for all alternatives under consideration to be less desirable than the status quo.  Decision-makers must resist calls to “do something” until this option has been evaluated, no matter what method or tools are used to aid the decision.  The best action may, in fact, be inaction.
 
     Readers can submit questions about decision-making, suggest topics of particular interest for future installments, or provide other feedback in the comments section or on the Contact page.  JayWink is ready to help you and your organization perform by providing training, materials, or other guidance.  Don’t hesitate to reach out if we can be of assistance.
 
References
[Link] “Guidelines for applying multi-criteria analysis to the assessment of criteria and indicators.”
[Link] “Multi-criteria analysis:  a manual.”  Department for Communities and Local Government, London, January 2009.
[Link] Decision-Making:  Creativity, Judgment, and Systems.  Henry S. Brinkers, Ed.  Ohio State University Press, 1972.
 
Jody W. Phelps, MSc, PMP®, MBA
Principal Consultant
JayWink Solutions, LLC
jody@jaywink.com
 
Directory of “Making Decisions” entries on “The Third Degree.”
Vol. I:  Introduction and Terminology (8Apr2020)
Vol. II:  The Rational Model (22Apr2020)
Vol. III:  Analytic Hierarchy Process (6May2020)
Vol. IV:  Fundamentals of Group Decision-Making (20May2020)
Vol. V:  Group Techniques (3Jun2020)
Vol. VI:  Get Out the Vote (17Jun2020)
Vol. VII:  Perils and Predicaments (18Nov2020)