All 19 entries tagged Rdm

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April 20, 2013

RDM: Group versus individual decision–making

For our presentation, we all worked together in teams and made decisions collectively. However, there is an age old debate about the relative effectiveness of group and individual decision-making.

Since, decision-making is such an important part of life and businesses nowadays, I feel that it is important to address these two types of decision-making.

Individual decision-making: This can perhaps be thought of as the traditional way of making decisions. An example can be a manager making important decisions by him/herself. It is widely believed that when there is only a single person involved, making a decision can be relatively quick and easy. However, I believe that it should only be made when the decision does not affect anyone else (otherwise, it is likely to be met with resistance).

Group decision-making: This is more of a collaborative effort. It can be done either via consensus or consultation. Consensus means that the most popular choice is selected, whilst consultation refers to a person (e.g. manager) asking others for their opinions when making a decision.

As the saying goes "Two heads (or more) are better than one", I believe that group-decision making (if done properly) can actually lead to a more robust decision. This is because input from all members is considered. Moreover, different stakeholders will be able to have their say in the criteria selection. Also, they will bring their individual expertise to the table and so more accurate assumptions can be used to reach the decision. In addition, there is a possibility of coming up with many alternative approaches to the problem. In order to make sure that these benefits are realized, we have to make sure though that there is no one person dominating others and that issues such as group think and social pressures are avoided. Only then, an effective decision can be made.

April 19, 2013

RDM: Important factors to consider

In order to make a robust decision, we first need to know which factors have an impact on the quality of a decision. After learning more about decision making, I now understand that there are at least four things which decision makers should do to make more effective decisions. Please note that this is not an exhaustive list and it only represents my humble opinion:

1) Ensure that almost all suitable criterions are considered.

2) Develop a wide-ranging list of alternatives (avoid a scenerio where only well-known options are chosen).

3) Make sure that both advantages and disadvantages are considered for each option (often biases creep in and disadvantages are ignored).

4) Keep looking for any information that can better inform the decision (this is important since new information can sometimes completely change the outlook of a decision. The purpose is to better inform the decision and not to justify a choice, so one should always avoid confirmation bias).

April 17, 2013

RDM: Groupthink

During the RDM module, we did a worksheet on groupthink, where we had to match its symptoms (such as rationalization and belief in group morality) with the given statements. At the time, I found it slightly similar to the concept of establishing rules when brainstorming as a group. More specifically, the suggestions that ideas should not be criticized at the outset and that one person should not dominate the proceedings so much so that he/she steers the group towards his/her personal perspective.

In the post module period, I have been motivated to learn more about groupthink. For example, I have learnt that the proposition of groupthink was developed by Irving Janis in 1972. The underlying idea is that groupthink usually happens when there is an autocratic leader and when the team is restricted from accessing contrary perspectives. It can have a number of drawbacks in terms of the decision making process. For instance, the option that is favored by the majority can be accepted without a challenge, the team can suffer from overconfidence, and other more viable alternatives may be ignored all together.

These drawbacks can be avoided, however, by a few simple steps such as: ensuring everyone critically evaluates the decisions, dividing into subgroups, inviting group members to throw fresh ideas and encouraging at least one person to play the role of the devil's advocate. All of these should be important considerations for us in any next decision making process that we undertake.

April 16, 2013

RDM: Correlation vs Causation

When making a decision, we should always ensure that we are not confusing correlation with causation. This happens more often that we think it does, and even some newspapers are susceptible to interchanging the two in their articles. This, in some cases, can be extremely controversial, as we don't know their underlying motives. For example, many newspapers have written about studies that apparently show people who eat breakfast are less obese. This essentially points towards causation, however, it is more likely that in the given sample, this was just a mere correlation between the two things. Informed readers always think critically, and they might identify this as a deliberate ploy from the breakfast cereal companies in getting more people to buy their product.

The most that such articles can do is state that they found a correlation between eating breakfast and less obesity. And that even though, they APPEAR to be related, we cannot be sure. Hence, the statement that "people who eat breakfast are less obese" might be true or it might not be. We simply don't have enough information to be able to confidently support or reject that assertion.

The significance of this is that we should always be careful in judging whether there is a causal relationship between two things or whether its just simple correlation before making a decision based on it. In the case of a confirmation bias, this becomes even more important. We have to resist from blindly using data that confirms our idea, as it may only be showing the correlation between two completely unrelated things.

RDM: Confirmation Bias

In my last blog, I wrote about some of the biases that affect decision-making. In addition, I stated that improved self-awareness can minimize the effects of different biases. However, it is also important to note that a well thought out decision-making process can equally have a positive effect of reducing the overall bias.

From my experience of the presentation, I have learnt that we should always have strategies in place that help us avoid any bias in the future. These, in most cases, need not be complicated. For example, in order to avoid availability bias, we should consciously check that we are not solely relying on memory and try to get any data that could be relevant. Similarly, to counter anchoring bias, I have learnt that we should always try to examine the problem from a number of perspectives. By analyzing the differences, we will become relatively more objective in our decision making.

However, there is one bias that I would like to highlight specifically. That is the confirmation bias. As students, we can recall falling in this trap a number of times. For example, we often think of something really clever to write in our assignments. Then, as soon as we find studies that even partly supports our proposition..we use it and portray it as solid evidence that proves or justifies our point. Whilst this sort of practice has a comparatively low risk attached to it in our academic lifes, I strongly believe that this sort of behaviour can lead to drastic consequences in the professional world. Companies can really end up making huge losses and it could lead to many employees losing their jobs. Hence, we should be particularly careful about our motives. We should always use data or any other evidence to better inform us rather than justify what we believe. We should also not stop gathering information that may or may not support our plan. This would ensure that we don't fall victim to the confirmation bias.

April 15, 2013

RDM: Bias

There is one common phrase we hear all the time when decisions go wrong. It goes something along the lines of "I'm only human". The implication being that humans are prone to making mistakes. I don't want to debate this point as it is not this statement per se that is important. What's more important is the understanding of biases and how they can affect our judgement. And this was another great learning point from the RDM module.

There are many different types of biases present in any given decision making process. By their very nature, they can be very hard to identify as they directly relate to a person's feelings and perception. Groups and organizations try their utmost to eliminate any such bias (e.g. from the recruitment process) but sometimes, it can be near impossible to eradicate all bias from a decision. Hence, when things go wrong, we resort to phrases such as "we're only human".

During the in-module work, we came across a number of biases, for example, overconfidence bias, hindsight bias, social (group) bias, availability bias (where we recall things that are easy for us and make decisions that we are already familiar with) and anchoring bias (where we limit our analysis of the information and base our decision on an irrelevant information).

I hope to use this information that I have learnt in any future decision making. Whilst it will not get rid of every possible bias, the increased awareness will certainly help me be as objective as possible and make a more robust choice.

April 13, 2013

RDM: some very bad decisions II

Another poor decision that is closely related to the marketing aspect that we covered in our presentation is the decision by the owners of M&M's and Mars to not let Steven Spielberg use their product in his famous film "ET The Extra-Terrestrial". By doing so, they missed out on a major marketing coup and instead the universal studios went to a competing candy manufacturer (Hershey's), who benefited significantly from having their product in the then top-grossing movie. Hershey's not only generated publicity but also tripled their sales. I don't know the particular reasons why the mars brothers rejected spielberg's approach, but they would have increased their chances of making the right call if only they had used some of the tools that we covered in RDM.

Other notable bad decisions include: Henry Ford's decision to stick with the Model T and not introducing a new car for years; and Ross Perot's decision to not agree to Bill gates pretty modest demand of 40 million dollars in return for Microsoft.

If nothing else, this indicates the huge importance of making robust decisions in the professional world. I have only used business examples, but it is clear that there are also other life decisions that we can certainly improve by minimizing our biases; by recognizing the presence of uncertainty; and by having a thorough decision-making process with appropriate tools.

RDM: some very bad decisions

The module on robust decision making has certainly increased my awareness, in terms of reflecting on some of the major decisions that are taken in this country and across the world. I now appreciate much more how one can increase the robustness of their decision. It is also very interesting to notice how people have made some bad decisions over the years and then work out what could I have done differently with the knowledge I have gained from RDM.

For example, let's consider Apple's decision to replace google maps(which had been very reliable). I think we can safely say that it was one of the worst decisions Apple has made in recent years. It probably indicates a case of egocentrism and ego based bias that we came across in the lectures. They could have made a better decision by having a well constructed decision process with tools such as trade off analysis and plus minus implications analysis.

April 12, 2013

RDM: Is there actually such a thing as a right decision?

Throughout our academic lifes, we have essentially been trying to find the right answer. This is particularly true for me, since my first degree was in mathematics, where there most definitely is one right solution. However, it was interesting that for our RDM presentation, we were told that that there is no right answer (in other words, there is no right decision). I know that all the groups went for lymington, but this was probably due to an over reliance on financial figures.

Strangely enough, even in many life experiences, there aren't many right answers. For example, deciding which car to purchase or which house to buy. These are important decisions. Nonetheless, it can be argued that there is no one right answer. For example, you can't say (in a matter of fact sort of way that) mercedez is the best car or this house will be the best to live in. The best you can do is make a good decision. This is where the decision making criteria comes in. By deciding which factors are the most important to you, you can make the most suitable decision. However, there is no reason why these factors that are used to evaluate the potential solutions can't change or evolve over time. A decision that was made some time back may not be the most apt choice now.

This is the essence of making a robust decision- i.e. the one that has the greatest chance of standing the test of time. We should remember that there will always be an element of uncertainty in any decision. In many cases (such as the in module work), we will have incomplete information. We have to manage that appropriately. Finally, we can only truly determine whether the decision we made was good after it has been implemented. Sadly, there is no way of ever really knowing if lymington or the chosen marketing mediums were the right choice. Nonetheless, we can definitely learn from our decision making process and next time make the most of any information we get.

March 11, 2013

Robust Decision Making: Some thoughts

After studying robust decision making, I have become increasingly aware of the importance of making effective decisions. I have learnt that good decision making involves putting together all the relevant information in a timely and useful manner. Sometimes, there is a need for quick decisions while other times, particularly if there are high stakes involved and time is available, one can deliberate more on the issue and assess the different alternatives. Moreover, I have learnt how bad we can sometimes be in making decisions but I have also been encouraged to see how the use of some tools can greatly assist us in the decision-making process. In addition, I now appreciate the judgement bias that exists in almost all tools much more than I used to before. However, this begs the question: How do you know if you are making a foolproof decision that guarentees good results? Can you ever be sure that your decision is going to work? I guess there will always be some uncertainty. The moment you delve into the world of probability and likelihood, you can never be certain if you have made the right call. Does this mean that making a robust decision, i.e. one that is immune and unaffected by circumstances and uncertainty, is impossible? I would leave that one open to debate, however, I would argue that it is besides the point anyway and we shouldn't be too critical of ourselves. At least, by developing an understanding of these tools and using them effectively, we can certainly increase our chances of making a decision as robust as possible.

Hence, it is important that we should not be quick to point fingers at the tools if the decision goes wrong. We should simply assess the outcome and try to analyze why the decision didn't work. It could be that we used an inappropriate tool or maybe we didn't apply it properly so it could be an error in our application of the tool.

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