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A new profession is emerging: Decision Coach
INFORMS Analytics ConferenceApril 15 -17, 2012
Huntington Beach, California
Stephen Barrager, Ph.D.Baker Street Publishing, LLCsteve@bakerstreetpublishing.com
© 2012 Baker Street Publishing, LLC. All Rights Reserved.
I started my career in aerospace and computers.
First job - Apollo. Second job - IBM360
That’s me -- to the right of
the analog computers.
© 2012 Baker Street Publishing, LLC. All Rights Reserved.
Third job - Lead Teaching Assistant for Professor Howard’s probability and decision analysis courses at Stanford.
Professor Howard
Graduate StudentBarrager
© 2012 Baker Street Publishing, LLC. All Rights Reserved.
I hope you learn the following things today:
• A new profession is emerging: decision coaching
• There is a core knowledge set required for strategic decision making: process, systems analysis, and applied probability.
• In addition, decision coaches must master facilitation skills, project management, and organizational learning.
© 2012 Baker Street Publishing, LLC. All Rights Reserved.
StrategicDecision Making
Decision making is only one of the tasks of an executive. It usually takes but a small fraction of his time. But to make decisions is the specific executive task.
Peter Drucker, The Ef fective Manager 1966
Operational Management(execution)
Leadership
Success in any enterprise consists of doing three basic things well.
There is a lot to be gained if we can improve strategic decision making.
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Expansion into new products, services or geographies
Investment in existing products, services or geographies
Building new infrastructure
Mergers and acquisitions
Maintenance of existing infrastructure
Organizational change for other reasons 21
5
11
12
15
34
A McKinsey survey of 2,327 executives from the full range of industries, regions and functions revealed the following goals of strategic decision making. (In percentage of total decisions.)
From “How companies make good decisions,” The McKinsey Quarterly, December 2008
© 2012 Baker Street Publishing, LLC. All Rights Reserved.
Act
Generally there are 3 groups involved in important strategic decisions: decision makers, stakeholders, and experts.
Experts
Decision Makers
Stakeholders
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Scene from Moneyball, Columbia Pictures
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What is missing?
Act
Experts
Decision Makers
Stakeholders
Process?
Project Management?
Facilitation?
Tools?
Knowledge Management and training?
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Who is missing?
Act
Experts
Decision Makers
Stakeholders
?
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Knowledge Management and Training
Facilitation ProjectManagementToolsProcess
A decision coach brings several things to the table.
© 2012 Baker Street Publishing, LLC. All Rights Reserved.
“If you can’t describe what you are doing as a process, you don’t know what you are doing.”
W. Edwards Deming
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Two processes are fundamental. The Decision Analysis Process and the Collaborative Design Process.
Act
Decision framing and basis development
A B C12345
Deterministic Modeling andsensitivity analysis
Probability assessment and calculation
Appraisal and value of Information calculations
Situation
Systems Analysis
Probability Theory
Value of information
Decision Theory
Stakeholders and ExpertsFraming AlternativeGeneration Analysis Synthesis Act
Decision Makers
Stakeholders and experts
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The Decision Analysis Process combines the power of:
in a normative way.
DecisionTheory
ProbabilityTheory
SystemsAnalysis
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The Collaborative Design Process brings in the people.
Stakeholders and ExpertsFraming AlternativeGeneration Analysis Synthesis Act
Experts Stakeholders
Decision Makers
Coach
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The Collaborative Design Process emphasizes framing and design.
DecisionTheory
ProbabilityTheory
SystemsAnalysis
Framing Design
Decision Analysis is the analytical backbone of the Collaborative Design Process.
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Inappropriate framing is the root cause of most bad decisions.
Find x.
4 cm
3 cmx
Here����������� ������������������ it����������� ������������������ is!
Too often we get the right answer to the wrong question.
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Design is the intersection of analysis and synthesis. We want this intersection to be big.
Stakeholders and ExpertsFraming AlternativeGeneration Analysis Synthesis
Design
Steve Jobs called synthesis, “Connecting
the dots.”
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Knowledge Management and Training
Facilitation ProjectManagementProcess Tools
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Strategy
Competition
Market Share
Comfort andConvenience
Styling
Unit Costs
Investment
High SportMarket Size
Performance
Quality
Warranty Costs
Pricing Strategy
Net Present
Value
Decision and Framing hierarchies --- Which decisions are we working on? How do they fit with other decisions? What are the givens.
Strategy tables --- How do alternative strategies differ? Do they cover the range of possibilities?
Decision Diagrams --- What issues are relevant to the strategy?How do issues influence each other?
Dynamic System Simulation and Optimization Models --- Have we captured the complexities and dynamics logically?
Sensitivity Analysis --- What are the important uncertainties? Where should we focus our attention?
Probability assessment techniques --- How do we express what we don’t know? How do we deal with cognitive biases?
Bayesian updating of information --- How do probabilities change as we learn more? What is the value of better information?
Policy
Strategy
Tactics
A B C
1
2
3
4
5
A decision coach brings a bag full of tools.
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A business enterprise is a complex system. Systems modeling is the best tool we have for understanding it.
Diagram adapted from:“Business Model Generation,” by Alexander
Osterwalder and Yves Pigeur, Wiley 2010
Key Resources
RevenueStreams
CostStructure
Value
Prop
ositi
ons
Channels
Customer Segments
Customer Relationships
Key Activities
Key Partners
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Computer-based, mathematical models are the key to cutting through complexity and dynamics.
In the mid-1980’s Herb Simon* gave a lecture at Stanford University. He discussed the slow, but unrelenting march of critical thinking about complex social problems.
Toward the end of his talk he stated that he thought the computer-based, mathematical model was perhaps the greatest invention of all time. I was a bit taken back. I was expecting him to suggest something like the microprocessor, not esoteric computer models like those I was building.
He went on to explain that these models were so important because they offered the first opportunity for groups of people to think collectively about very complicated problems. Individuals can model parts of the problem and then combine their knowledge with that of other people in a logically consistent way. Mankind has never had this capability.
When used properly, these models are like meta neural networks. They combine the thinking of many brains. They capture the thinking in a way that can be shared and refined by many people spread out over the globe.
*Herb Simon was the first winner of the Nobel Prize in Economics.
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Knowledge Management and Training
ProjectManagementToolsProcess Facilitation
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There are 3 well known barriers to good decision making:
• Cognitive biases, e.g., anchoring and availability
• The confirmation bias
• Organizational defenses
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Overcoming the confirmation bias is a big challenge in group decision making.
We tend to hear only those things that are consistent with our prior experience and beliefs.
From: The Complete Far Side, Gary Larson
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What do we do if there is a warthog in the room and no-one wants to talk about it?
What if the warthog is the boss?
Organizational defenses are pervasive.
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Your Purpose•Valid information•Informed choice•Internal commitment
The Mutual Learning Model is normative. We say this is how we should think and behave.
Acting•State thinking behind own view•Inquire into other’s views•Make dilemmas discussible•Express and reflect on emotion•Design ways to test merits of differing views
Source: Action Design. Adapted from Chris Argyris & Donald Schön
Results•Increased understanding•More informed decisions•High commitment to action•Mutual learning•Better working relationships
Framing•How you see yourself-What I see is one perspective-I may be missing something
•How you see others-Acting sensibly in own mind-Caught in a dilemma
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Knowledge Management and Training
FacilitationSkills
ProjectManagementToolsProcess
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Coaches can fill the project management role.
Framing AlternativeGeneration
Analysis Synthesis
A
Decision Makers
Stakeholders and experts
ProcessTools
Money
A B C
1
2
3
4
5
Phase
Sept Oct Nov Dec Jan
Alternative Generation
AnalysisSynthesisImplementation
Schedule
People andOrganization
Project Management
Plan
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FacilitationSkills
ProjectManagementToolsProcess
Knowledge Management and Training
© 2012 Baker Street Publishing, LLC. All Rights Reserved.
Organizations need a memory.“When important decisions are not documented, one becomes dependent on individual memory, which is quickly lost as people leave or move to other jobs. In my work, it is important to be able to go back a number of years to determine the facts that were considered in arriving at a decision. This makes it easier to resolve new problems by putting them into proper perspective. It also minimizes the risk of repeating past mistakes. Moreover, if important communications and actions are not documented clearly, one can never be sure they were understood or even executed.” From Doing a Job, by Admiral Hyman G. Rickover
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Someone needs to be responsible for knowledge management and organizational learning. This is a natural role for the decision coach.
Act
Act Act
ActAct
Best PracticesRoster
Successful failures
Lessons Learned
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Knowledge Management and Training
FacilitationSkills
ProjectManagementToolsProcess
A decision coach brings several things to the table.
© 2012 Baker Street Publishing, LLC. All Rights Reserved.
Core Skills
Skill MBA ORManagement Science andEngineering
Process
Decision Analysis ☀ ☀ ☀ Collaborative Design ? ? ?
Tools
Framing ☀ Systems Analysis ☀ ☀ Applied probability ☀ ☀
Facilitation ☀
Project Management ☀ ☀
Organizational Learning ☀
We need more qualified coaches. Where are they going to come from?
© 2012 Baker Street Publishing, LLC. All Rights Reserved.
In summary,
• A new profession is emerging: decision coaching
• There is a core knowledge set required for strategic decision making: process, systems analysis, and applied probability.
• In addition, decision coaches must master facilitation skills, project management, and organizational learning.
Odds are good that more engineers will become decision coaches and ultimately move into executive positions. This will lead to major, sustained improvements in public and private decision making.
© 2012 Baker Street Publishing, LLC. All Rights Reserved.
The Baker Street mission is to supply decision coaches with the things that they need to be successful. For more information see the following:
• Coach’s Guide to Framing, slide deck, PDF http://bakerstreetpublishing.com/publications/framing-strategic-decisions-an-overview/
• Coach’s Guide to the Decision Analysis Process, slide deck, PDF http://bakerstreetpublishing.com/publications/coachs-guide-to-the-decision-analysis-process/
• Coach’s Guide to the Collaborative Design Process, slide deck, PDF http://bakerstreetpublishing.com/publications/coachs-guide-to-the-collaborative-design-process/
• Coach’s Guide to Mutual Learning, forthcoming, enhanced e-book for the iPad.
• Baker Street Publishing Blog http://bakerstreetpublishing.com/blog/
• Speaking of Decisions: Precise Decision Language, Ron Howard, INFORMS, Onlinehttp://da.journal.informs.org/content/1/2/71.abstract