Integrated Decision Making Mike Allen

COMPLETE THE EXERCISE 2

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Objectives

Consensus Building

Strengths and Weaknesses

Analytical View Point & “Winning”

A Six-Step Consensus Decision Making FrameworkBy Dan McCarthy

Building Consensus4

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Consensus Building

Consensus building is hard work It takes a willingness to be open to any alternative Big egos need to be set aside The time and work invested will yield higher

quality decisions Implementation will be faster and smoother

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Consensus, What is It?

“Consensus is a decision that every member of the group has had input on, understands, and is willing to support.”

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Consensus, What is It?

Consensus doesn’t necessarily mean that everyone agrees on the decision. It does mean;

they’ve had their say, their voices were heard, they are committed to support the decision, they own the decision.

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Barriers to Consensus

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Barriers to Consensus

1. Team members think they are the smartest person in the room and don’t value the input of others.

2. Decisions need to be made quickly and team member don’t think they can take the time to involve others.

3. Team members don’t know how to involve others in a collaborative decision making process.

So you’ve been at it for a few days, how’s it going?

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Fall Back Options

Team members need to decide on a “fallback” method in case the group cannot reach a true consensus. Otherwise, in theory, if just one person is not willing to support the decision, the meeting can go on forever.

The two most common fallback options are:

1. The group votes, majority rules.2. The leader decides.

The threat of a fallback is a deterrent – it rarely has to be used, but having it will motivate a group to give and take to reach a consensus.

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The Six Steps to Consensus

6. Summarize the decision and decide on who’s going to do what by when.

5. Keep and discard.

4. Narrow down the choices.

3. Clarify alternatives.

2. Generate alternatives.

1. Frame the decision.

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Consensus Exercise

What do you agree with? What would team say? What don’t you agree with? What would your team say? What have you done with each? What will you do with each?

Strengths & Weaknesses13

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Cognitive Distortions of People Who Get Stuff Done*Personal Exceptionalism… an overall sense that your work is snowflake-special, that you are destined to have experiences outside the bounds of “normal,” but without being viewed as arrogant.Dichotomous Thinking…being extremely judgmental of people, experiences, things; highly opinionated; sees black and white with little grey.Correct Overgeneralization …making universal judgments from limited observations and being right a lot of the time. Blank-Canvas Thinking …sees their own life as a blank canvas, not paint-by-numbers.Schumpeterianism …sees creative destruction as natural, necessary, and their vocation.

*Michael Dearing, Associate Professor Stanford University

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Strengths & Weaknesses

Pattern #1: 1, 2, 4, 8, ?, ?

Pattern #2: 1, 4, 7, 10, ?, ?

We’re pretty good at finding patterns and pushing them forward

We’re pretty good at finding patterns even when there aren’t any!

We’re pretty good a finding causation even when there isn’t any!

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Strengths & Weaknesses

I’ve done this experiment for the last 9 events and so far it has turned up heads 9 times in a row…

Heads or Tails?

We’re not very good at estimating odds

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Are you a better than average driver?

• We are blindly optimistic.

Strengths & Weaknesses

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So, Bill Gates and Dwight Howard walk into this bar…

Strengths & Weaknesses

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Natural versus Artificial Distribution

Height versus Wealth versus Losses

Strengths & Weaknesses

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Strengths & Weaknesses

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Strengths & Weaknesses

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Strengths & Weaknesses

Behavioral Economics versus the Invisible Hand

Game Theory versus Homo Economus

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What is fair? A first player (the proposer) receives a sum of money and

proposes how to divide the sum between himself and another player.

The second player (the responder) chooses to either accept or reject this proposal.

If the second player accepts, the money is split according to the proposal.

If the second player rejects, neither player receives any money.

The game is typically played only once so that reciprocation is not an issue.

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Game Theory

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Anchor exercise

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Decisions and Uncertainty

We make decisions every day where the:

1. Outcomes are known2. Outcomes are unknown, but probabilities are known3. Outcomes are unknown and probabilities are unknown

We’re prepared for a world much like #2 — the world of risk, with known outcomes and probability that can be estimated, yet we live in an uncertain world with a closer resemblance to #3.References: Shane Parrish on November 24, 2013; Ignorance: Lessons from the Laboratory of Literature (Joy and Zeckhauser).

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Developing a Tolerance of Ambiguity

Being able to making decisions without a full set of information

Being able to make decisions quickly

Being able to taking measured action without understanding how everything works

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Evaluating Decisions

Good Outcome Bad Outcome

Good Process Deserved Success Bad Break

Bad Process Dumb Luck Poetic Justice

Analytical View Point & “Winning”29

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Is it the plan…

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…or the Process…

Analyze

Plan

ForecastExecute

ReviewRetail Bank

MarketSimProcess Flow

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…or both?

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The Bank and its Plan

What is more important, the numbers or the direction?

This would be a whole lot easier without customers and competitors to muck things up

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Customers

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CompetitorsHow much is too much?

How little is too little?

How much is just right?

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Competitors

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Competitors

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Pitfalls and Home Runs

The Best and Worst

Key Decisions

Critical Steps

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Balanced Scorecard Index

Becoming #1 Picking your spots Winning?

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Balanced Scorecard Index

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Winning…

Have a laser beam focus on targeted customers Lever your talents Have a plan Be aware of market position relative to competitors Align service with market needs Remember that Customers will pay for value

…Both here and back at your Bank

Riding on the Edge of a Slippery Slope… …and Loving It.

Questions and Answers43