Thought of the Day - Complex Decision Making

I just read an article in the 'Boss' supplement from The Australian Financial Review which was a reprint from the Harvard Business Review (June 2006). It concerns something that i have given a fair amount of thought to but never really considered from this angle; how to get a group to decide between many options.

In the past i have largely focused on tools like; the Pugh Matrix, Analytic Hierarchy Process, Impact-Effort Matrix and simple voting. While these techniques result in a decision, what i failed to consider is that just because an option is selected doesn't mean that there is broad agreement with the decision. The article focused on the CEO/Leader as a deadlock breaker and the negative aspect that they become a 'dictator by default' and while i suspect that is a frequent occurrence, the problem is equally valid in groups of peers.

The crux of the problem is summed up in this quote; "majority wishes can clash when a group of three or more people attempt to set priorities among three or more items ... different subsets of the group can generate conflicting majorities for all possible alternatives". E.g. Persons 1 and 2 agree on option A but persons 2 and 3 also agree on option C, by selecting option A you satisfy 1 and 2 but C would have been an equally valid choice as you satisfy 2 and 3.

Once you accept that point, it suggests that it is impossible to resolve this conflict. However this assumes that there are only fixed options, the article advises that you carry out the following steps to come to a better solution:
1) Articulate clearly what outcome you are seeking - Classic problem solving, you can't solve a problem until there is a common understanding of what the problem is.
2) Provide a range of options for achieving the outcome - Again classic problem solving, brainstorm as many solutions as possible.
3) Surface preferences early - There is no point wasting time on options that no-one has any interest in, by eliminating them you don't waste time on pointless debate. This step can be done through voting, possibly weighted, or other techniques.
4) State each option's pros and cons - See the good and bad on both sides, in the article it is recommended for someone to present the pros and another person to present the cons, one may have to play devils advocate.
5) Devise new options with the best features of existing ones - Again classic problem solving technique, synthesize new options by combing the best parts of old ones.

While these steps don't solve the decision making dilemma they will help. I think most important of all is to acknowledge that this problem exists, preferably within the group making the decision, so that you know the pitfalls while you are making the choice.

Book Notes - The Art Of War For Managers

The Art Of War For Managers by Gerald A Michaelson [2001]

Summary:
“Know the enemy and know yourself and you will never be defeated.”
Interplay of strategy and tactics; strategy is the plan, tactics are the implementation.
Information and speed are the key to winning.
Attacking head-on is rarely the best approach, find your niche and expand from there.

Notes:
Page 3: A plan that is not written down is no plan at all, a simple written plan is best.
Page 4: Unlike Tzu’s constant factors for the battlefield in business they are much simpler, you must study:
1. The ‘mission’ of the company.
2. The outside factors (industry/economic trends etc).
3. The marketplace.
4. The leaders.
5. The guiding principles.
Page 13: It is important to for start-ups to have sufficient reserves to ride-out downturns and to tide them over between launch and profitability. As they say; “Profit is king, but cash rules” you can survive without profit but you can’t survive without cash.
Page 27: Have two types of edict; instructions and orders. Instructions are issued as guidelines, to be followed if practical. Orders are to be followed immediately and to the letter but can only be given by someone on the ground in the situation. This prevents stupid decisions being made above.
Page 29: Fundamental principles of business:
1. Organize Intelligence
2. Maintain Objectives
3. Establish A Secure Position
4. Keep On The Offensive
5. Plan Surprise
6. Think Manoeuvre
7. Concentrate Resources
8. Practice Economy Of Force
9. Keep It Simple
Page 31: Strategy always comes before tactics, while a good strategy might succeed even with poor tactical execution, a poor strategy even with superlative tactics will almost never succeed. It is therefore important to make sure that you are heading in the right strategic direction before you determine tactics.
Page 32: “Boil the ocean” appears to be a reference to one strategist’s suggestion for how to get rid of German u-boats in the second world war.
Page 38: Customer input is a vital operational measure, it is key to improved performance and winning. Use of balanced scorecard suggested to keep track of financial and non-financial, lagging and leading measures.
Page 44: The use of extraordinary force to ensure victory, this can be applied on a macro level; a company focusing all efforts to ensure that they take a market or on the micro level; a person focusing all of their effort on a particular task.
Page 51: Keep your products secret until the last minute, it removes the ability of your competitors to plan a response. Apple does this particularly well.
Page 63: Reference to Tyco going from $2b to $30b in 6 years, ironically it was under the CEO who ended up in jail. Book probably written before those events.
Page 67: The rule of three: never make more than 3 points in any one communication, if you make more some of the points are likely to be forgotten. Keep it simple and direct.
Page 77: 5 faults of leadership:
1. Recklessness, which leads to destruction,
2. Cowardice, which leads to capture,
3. A hasty temper, which can be provoked by insults,
4. A delicacy of honour, which is sensitive to shame,
5. Over-solicitude for his men, which exposes him to worry and trouble.
Page 91: Acknowledging the role of known standards of performance so that the leader can be perceived as impartial and can set discipline to achieve standards.
Page 93: The importance of going to the gemba for managers to inform their intuition and knowledge of the real situation.
Page 95: It is important to have direct communication with the people on the ground, often information is filtered as it goes up the chain which means you might not be getting all pertinent information. Create relationships with a select few people further down the chain so that you can get direct information.
Page 110: Information on personal survival and career paths.
Page 169: Summary of key concepts.

Quotes:
Page 6: “If the only tool you have is a hammer, everything will look like a nail.”
Page 14: “While we have heard of stupid haste in war, we have not yet seen a clever operation that was prolonged.”
Page 22: “To subdue the enemy without fighting is supreme excellence.”
Page 39: “Where everyone decides everything, no one decides anything.”
Page 65: “Do not do what your enemy wants, if for no other reason than he wants it.”
Page 72: “The key to success is what the customer wants, not what you can do.”
Page 78: “When was the last time anyone said; ‘I wish I had waited 6 months longer to fire that guy’” – Jack Welch
Page 81: “Logic sounds most convincing to the presenter; it is in the emotions of the receiver that positions are changed.”
Page 101: “Know the enemy and know yourself and you will never be defeated.”
Page 112: “Too often, the absence of conflict is not harmony, it’s apathy.”
Page 116: “When you can win and retain good relationships, only then can you become strong.”

Thought of the Day - TOC For R&D

While reading It's Not Luck (see notes below) it occurred to me that Goldratt has tackled a lot of topics; Production, Marketing, Project Management and ERP systems. He has probably tackled even more in his ancillary books, but to my knowledge he has never applied TOC (Theory of Constraints) to R&D (Research and Development) or NPD (New Product Development).

You could argue that the marketing covered in It's Not Luck is all about NPD. You are devising new offerings for the market, but it's scope is restricted by the assumptions that: a) There is no money to make physical changes to the product and b) Provided you modify the existing offer to suit the customer that you can fulfil their requirements. What about situations where the existing product, regardless of how the offer is packaged does not sufficiently satisfy the customer?

I suspect there is an answer somewhere in his books and i can see how you could relax the constraints on the methods to construct 'unrefusable offers' to create 'unrefusable products' but i wonder if that is sufficient to cover the full spectrum of R&D. While i'm sure it would help you with re-engineering of existing products to better meet customer requirements and could even enable you to create new products from the ground up to optimally meet these needs, i fear it lacks the potential to imagine new products to meet needs customers do not even know they have.

In other words is there a way to apply TOC to the creative process and is it possibly linked with TRIZ? It might just be a coincidence but both are obsessed with conflicts, breaking assumptions and in love with simple solutions ...