All 11 entries tagged Rdm

Rewarding Bad Decisions?

I came across some literature earlier, where the author argued that there should be separation between the decision-making process, and the outcome of the decision, when it comes to rewarding decision makers for their work. I think that this makes sense in principle, as his argument for this was that there are many other factors that can affect an outcome, which are far beyond the decision maker's control.

This got me thinking about investment banking, and the high-profile that bankers' bonuses have received in the last few years especially. Bankers seem to receive a bonus regardless of how their decisions have played out. But is this because their decision processes are being measured and rewarded, and these are generally robust and deserving, or is it only due to the culture of greed and not linked to them having a good process? I don't know much about the activities of investment bankers to be honest.

Perhaps there is a case that there should be a transition to this system, if it is not being practiced. I think the public who have been forced to bail-out banks around the world would appreciate this, knowing that at least the practices of the bankers were worth rewarding. I appreciate that investment banking is fast-moving, and the methods we have learnt about might not always be appropriate for that, but it might be a good step to restoring public confidence in them.

: 01 May 2011 15:10 |  Tags: Decisions Mbe Performance Process Rdm Rewards |  Comments (5) |  Close comments |  Report a problem

This is extended self–assessment

I've come to the realisation that this PMA is nothing more than an extended self-assessment. What we are doing is critiquing our own and our team's work, evaluating it all against what academics consider the best practice. I know that a lot of people (including myself) have been having difficulty with approaching the task. Perhaps viewing it this way might help you the way it has helped me; the task seems less complex this way.

In fact, it has also been helpful to me to look back at the self-assessment forms we filled in for the in-module work, to see what our thoughts were immediately after we had spent so much time immersed in the task. It is also interesting to compare these thoughts with the things I am able to notice now, having stepped back from the work after six weeks away from it. It makes it a lot easier to understand the system in which we operated in, the roles different people played in the team, the errors in the process that we made (see Ponthy's blog on bias for an example).

This highlights the importance of reflection as a final part of any decision-making process, extracting lessons learned both individually, and as a team, so that we can improve our own construct of the situation, and learn from each others'. Perhaps it would have been useful to have had a final team meeting in the run-up to this PMA submission, or soon after, so team members could discuss what they had found from their work? Maybe that is something that should be implemented in organisational decision-making processes: a longer-term self-assessment that allows for reflection at a later stage.

RDM-B, if any of you feel like conducting such a meeting in the next few weeks, let me know, and we can organise it over a few beers ;-) This offer is open to everyone actually. And we don't even have to discuss RDM :P

: 30 Apr 2011 11:41 |  Tags: Mbe Rdm Self-Assessment |  Comments (1) |  Close comments |  Report a problem

Variation in Decision–Making

Here is a link to an interesting BBC News Magazine article: http://www.bbc.co.uk/news/magazine-13213667

I think, by now, we are all quite familiar with the concept of variation, and how you need to get a system into a control before you start thinking about making changes to it (;-), so the material will not be new, and does not need to be explained. I do, however, want to think about the applications to decision-making. It is essential to be aware of natural variation, even with our intuitive System 1 decisions, or representativeness bias can come into play, and cause havoc. It can cause further problems through anchoring if later decisions are built on this.

The article cites the example of the movie boss who was fired after some poor films, only for the ones that came out soon after (which she had started) to do really well. Had her manager understood variation better, he would not have made the terrible decision to throw away a STAR, for pretty much no reason.

I'm glad we had the benefit of PIUSS (and pretty much all of the other modules) when we took RDM. Doing it this way allowed us to take advantage of what we have learned to date to understand the impact some of the heuristics and associated bias can have, and highlights the importance of knowledge in the decision making process. This links even further with the way we approached the KBAM in-module work. Coming back to RDM, I don't think that understanding of variation was particularly relevant to the decisions we actually had to make, especially since there was so little data, but the principle that you really need to understand something before you can do something about it carries over. Our approach to analysing the situation mainly involved TOWS analysis and the BCG Matrix, which may have had a strong impact on the systemic way we framed the three decisions.

: 28 Apr 2011 16:37 |  Tags: Bias Heuristics Kbam Knowledge Management Mbe Rdm Variation |  Comments (0) |  Close comments |  Report a problem

Situationally–aware leaders, and the reason I'm always late.

Yesterday's session made me feel a little uneasy about being a leader in the future. We all saw some of the terrible things that happened when people are not properly aware of their surroundings, and the bad decisions or poor judgement that this can result in. Obviously, these people are responsible for their own actions. However, we also discussed that leaders hold a great level of responsibility for the working environment they create. If the team fails from a business perspective, that is likely to be down to them to some degree. But, imagine if you were a leader, and someone working for you died on the job. How terrible would you feel? How scary a thought is that. That makes me question whether I want the responsibility of leadership. I know it's an extreme case, but we saw over and over again that these things can happen. What are your thoughts on this? I'm really curious.

Also, we spoke about the errors people can make, relating to: information gathering, interpretation, and anticipation. I wanted to apply this to myself, and decided to analyse why I am so often late by just a few minutes. There are probably a lot of reasons, and this is likely just a simplification, using this model, but I figure it's worth a shot! Is it about gathering of information? No, I don't think so - I'm quite organised, and I pretty much always know what time I am meant to be somewhere, or what time the train leaves, etc. Is it about interpretation? Well, no I don't think so, I always think about what I have to do, how it all fits together, what time I have to leave in order to be somewhere, etc. I think my problem is anticipation - not just for this, but for a lot of errors I make, I tend to be an optimist, and rarely think about the worse case scenario. This results in leaving things to the last minute, assuming things will take the minimum amount of time that they could, not being able to think ahead about sources of so-called 'randomness' in my day, like stopping to talk to someone on the street, or getting an important email, or the air in my bike wheels being low and requiring pumping, etc.

So why am I unable to learn this? To understand the upper and lower limits properly, rather than just assuming the lower limits will apply to me. I think it comes down to poor judgement, and there are perhaps a lot of different internal biases I can use to explain. For example, the representativeness heuristic - I don't seem to understand the underlying statistics, and always assume that lower limits apply to me. This could be due to overconfidence bias. I also seem to have a short memory when it comes to being late - I think that I'll learn, it won't happen again, and I make the same old estimates about how long things take. This is anchoring at play. And why don't I ever learn? Perhaps it is the curse of knowledge - maybe I tend to think looking back that it was a simple certain reason, that I won't make the mistake again, and that I don't need to change approach. Hopefully, developing this thought on the blog will help...

Linking back to leaders and situational awareness - I think that bias can play a part in all three types of error. I have only shown the ones that apply to me, and for anticipation at that.

: 13 Apr 2011 15:19 |  Tags: Awareness Decisions Errors Judgement Kbam Leadership Mbe Rdm |  Comments (4) |  Close comments |  Report a problem

I'm seeing the connections

I have to learn to stop being surprised by things that Paul says to us, which then go on to be true. Some of you may remember that he mentioned in our introductory KBAM session, that last year's MBE group found that this was the module where everything came together for them. Maybe it is because he said this, and so my bias has taken over and I have been looking, but for the past week, I have been seeing the connections everywhere, and when least expected. I feel like Russell Crowe in A Beautiful Mind (although hopefully a little less crazy - I'll let you all be the judge!).

For example, from CBE, the topic of organisational learning is vital to future asset management strategies. There's little point in getting assets in order unless you have developed the capabilities to continue to do so. From PEUSS, we are using the ideas of considering the product and our assets in a life cycle management approach, so that we can get the best possible use of them for ourselves and our customers. Risk management is also relevant. LE's influence is clear to everyone in all we do, particularly for those of us who volunteered to be leaders, but certainly also for everyone who has taken the time to consider the role they play within their team, and whether they want to be a star, fan, walking dead or urban terrorist. It also taught us about how to implement strategy. RDM has made us aware of our biases, and how assumptions we make impact our results, as well as methods for making the hard decisions on what to do with our assets, in an organised way. I could think of examples for the others, but I think you get the idea! ;-)

I think that the only EFQM enablers we haven't looked at directly are people, and partnerships. And people have been covered indirectly in pretty much everything we have done anyway; they are inseparable from the system! Not to mention we have OPP to look forward to... (and MOC still for me!) As for partnerships, well they haven't been ignored either exactly - there was the option in the CBE PMA, they featured in FACS and could well be a part of KBAM, especially if we decide to outsource. Not to mention that my project is focusing on them to a degree...

Ladies and gentlemen, we have the tools! It might only be April, but I feel it is incredible how good an overview we have of so many aspects of business and management. I've said it a lot, but I'll say it again - doing this MSc was the best decision I ever made.

: 05 Apr 2011 23:07 |  Tags: Business Cbe Connections Excellence Kbam Le Management Mbe Peuss Rdm |  Comments (3) |  Close comments |  Report a problem

Explore your options

In one of the lectures last week, Jeff touched on the point that one of the key steps of the decision-making process was exploring and developing the options or alternatives available, through various means. Doing so tends to result in having more choice obviously, but it's also likely that you might spot a more out-of-the-box solution than otherwise that challenges what is expected. If I'm honest, the creative solutions that our team came up with were not the result of a particular brainstorming session, or any special technique. They spontaneously arose during the natural course of our collective approach. Perhaps we had an element of luck in this, but I think that the really open nature of our working environment helped this.

I think that this is a really important lesson to take-away. Always take the time to think what else you could do, before you take a decision. This is especially important if you're not particularly happy with any of your present options! Real progress only ever occurs by step change, when someone like Gandhi brings to the fore the ideas of total non-violence, or Steve Jobs introduces the Ipod, or Ipad for that matter. You can bet that they were not happy with the status quo!

It's obviously a difficult thing to do in practice - there is not always time to generate alternatives or to challenge the assumptions of a given situation. But, you can be sure that if you have done so, your eventual decision is likely to be more robust, because you know a lot more about what else you (or others competing with you) might have done. It's quite similar in that sense to having more information when making any decision. Sure, you might become paralysed, waiting to act until you are sure, but the very fact that you have considered what is relevant means that your informed decision is one you can have confidence in.

: 18 Mar 2011 21:16 |  Tags: Challenge Decisions Mbe Options Rdm |  Comments (1) |  Close comments |  Report a problem

Good research for robust decisions

We gave our decision-making presentations today; wow that was a long, tough session to endure! I’m not sure anyone was able to sustain their focus through the whole thing, especially due to how tired we all were. Still, in the moments that I wasn’t completely vacant (some might say that these are rare, or non-existent even! ;-)), I did get to note some interesting comparisons between the approaches of other groups and our own.

Something that surprised me though was the lack of research that some groups put into their marketing strategy and budgeting. I don’t know whether anybody was already quite familiar with the industry and so didn’t need to do much research, but I am pretty sure that the task specifically asked for it. How can you expect to make a robust decision without having the requisite knowledge to base it on (I’m sure you can hear the undertones of Deming in what I am saying hehe!)?

I was really proud of the fact that my group did spend quite a lot of time on this. After initially struggling, and trying to base the decisions on our own biases (e.g. “we all do our shopping on the internet, so fishermen will too”, or, “I always take in adverts that I hear on the radio”) the availability heuristic in particular was clearly present for all to see. When we could find no academic work related to what we were looking for, we simply decided to ask those who might know! This entailed looking for companies producing fishing boats in the UK, and effectively calling them up and speaking to their leaders or marketing departments in order to ascertain the information about the best and most effective marketing methods. From this, we learned that TV and radio were virtually useless (we had previously assumed fishermen listened to the radio all day, and that it would be an effective route), but also, most importantly, that internet and advertising in fishing magazines was good. However, the best find for us, which wasn’t one of the options given originally, was that boat shows were the most effective route for selling boats. For example, the Southampton boat show is the biggest in the UK, runs for 10 days each year, and brings in around 120,000 people each year, with average incomes above £95,000 and around 80% of visitors making a purchase from exhibitors of the show. What a fantastic way to target customers who have disposable income and want to buy from you! And we would never have known without picking up the phone and speaking to professional boat salesmen. Doing so informed our decision no-end, leading to confidence that if we had to implement our plan for the different methods, we are relatively sure we would have been successful. Good theory (or knowledge or experience) should be the backbone of decision-making.

: 18 Mar 2011 19:21 |  Tags: Decisions Marketing Mbe Rdm Research Robust |  Comments (0) |  Close comments |  Report a problem

I guess I’m a (Decision) tree–hugger!

After spending a lot of time looking at a lot of different tools lately, I have decided that DT’s are probably one of the best (obviously, depending on the situation and the information that you have. Their ability to get to the heart of a problem through finances (or utility) is quite amazing, and the structuring of the process is brilliant in that it helps you to ensure that you have covered every eventuality. It is especially good at helping you to avoid the confirmation trap. For example, any time you make a branch, you also have to question if there is an opposite alternative at the very least, if not more completely distinct ones. They are also hard to argue with, and help you make informed decisions based on the likelihood of certain scenarios playing out. The power of decision trees is something that I am unlikely to forget, and they are probably something I will integrate into my general System-2 decision-making methodology.

In terms of helping our team to reach a final decision, about whether to continue or not, and where to locate, they were absolutely invaluable. Of course, the tree doesn’t know anything that you don’t tell it, so qualitative factors are very hard to incorporate, and something like Grid Analysis or Analytical Hierarchy Process are much more appropriate. Similarly, while we did include marketing costs, or factory re-sale gains, other costs that are difficult to estimate, such as the potential training costs of workers for the Exmouth factory, were not included.

So it can be argues that DT’s do not always give you the full picture, which is true. But, you don’t have to take the outcome as fact. Even after evaluating the tree, you need a high degree of judgement to decide what is important or not, and how risky certain paths really are. The chance of the worst case-scenario playing out for Waveriders (so, product doesn’t get developed until Dec 2012, and when production begins in Jan 2014, the market conditions are poor) is around 0.15. That is the only situation under which producing at both factories might be a problem, so it is worth balancing the risk and pursuing that course of action anyway.

However, DT’s are clearly an excellent tool for decision making, and when used correctly, are capable of judging a situation in a way that our own cognitive processes are rarely capable of. Of course, there is still potential for bias, and they are no substitute for experience and good judgement. They cannot be relied upon to actually make the decision, as they will certainly NOT be taking the blame for bad decisions!

: 18 Mar 2011 18:47 |  Tags: Decision Mbe Rdm Tools |  Comments (0) |  Close comments |  Report a problem

Group Decisions in the Real World

Not that we need to make this task harder, but while reading earlier, I thought of a complication that would often be present in group decision making in the real world. In our groups, no-one really has their own agenda; we are all working together, collaborating for the group in order to do as well as we can. There are no competing agendas or ulterior motives. Additionally, we are all equals - no one person has any more say than another in theory (that might be different in practice!).

However, within a business for example, many groups might be composed of multi-functional teams, or with management of varying levels of positional power present. Each of these might have different areas of concern, i.e. the finance manager's role might be to cut costs, the engineer might be attempting to maximise quality, the marketing manager might wish to preserve the size of the budget available, etc. So how do the competing agendas of these people affect their decision making, and consequently, the ability of the group to make decisions? There is bound to be some bias in the proceedings. We know that Deming would advise that the best way forward would be to break down the barriers between these people, instill constancy of purpose, and get everyone thinking about the organisations goal as a system, rather than their own. But of course, in practice, this is difficult.

So, I wonder, what would this task have been like if we were all to play a role? Pretty difficult I imagine, to the point that it might even defeat the purpose of trying to use all the tools and work together. However, maybe there is cause to have a seminar on this, or some (LE style) role-playing exercise to explore the challenges of a situation like this?

: 12 Mar 2011 18:08 |  Tags: Decision Group Making Mbe Rdm |  Comments (3) |  Close comments |  Report a problem

Tools for deciding, or confusing?

The last few days have been spent clarifying the problem and then trying to understand the tools best suited to solving it. We used a little bit of a methodological approach even in deciding which tools to try (!), and then each person volunteered to try to implement the ones that interested them. Upon meeting again, we attempted to present the results of our findings to each other, most of us thinking that our work had got us to the point where the group might be able to finalise decisions.

How wrong we were!!! Our internal biases had once again led us astray, and into thinking that our work could be without fault, and that each of the others would automatically understand what we had worked on, making the assumption that they had the same tacit knowledge that we did! It's becoming clear to me that managing all kinds of bias is certainly the biggest and most important challenge when making any judgement or decision.

What actually happened was that we found our work either littered with mistakes we hadn't previously seen, or in some cases, the rest of the group held wildly different views when presented with the work we had each done. This meant that much of what we had done turned out to be work in progress rather than the finished article, as so much rework was required! For example, I had largely focused on the decision trees, both for deciding what our options were and working through the possible results of around 8 different resultant scenarios. But, I'd failed to take into account that we might need another tree entirely for choosing the best location, or that sunk costs shouldn't have been included in the expected value calculations...

Once again, that means that after much confusing of our teammates, who might not have known the tools we worked with as well as we did, and realising that even we might not have used them correctly and entirely, or done requisite research, we find ourselves unable to make a decision still! Monday will be an important day for this.

Reflecting back, and thinking about future applications, I think that this will always be a problem. We will often have to present to colleagues entirely unfamiliar with our methods, so it will be crucial to learn how to translate our resuls in a transparent way, making sure to avoid the curse of knowledge. Of course there will be times when we fail to see errors in our work, so it is also very helpful to have colleagues who also know the methods and can check our work. This is quite a common approach in most engineering situations already, but perhaps as managers or leaders, we are not quite so used to this.

: 12 Mar 2011 14:03 |  Tags: Confusion Decision Making Mbe Rdm Tools |  Comments (3) |  Close comments |  Report a problem