Making decisions is inherent to the human condition and we spend a lot of time doing it. Decisions can magically lead an initiative from success or failure in second, and vice versa.
Generally speaking, a decision-making process can be divided into two models: Natural and Rational. In the natural model the decision-maker does not have much time to decide, the objectives are undefined, the environment is dynamic, the problem is poorly defined, and the decisions are basically intuitive.
In the rational model, there is more time to make the decision, the objectives are defined, the environment is static, the problems are well defined, and the decisions are deductive.
Examples of situations in which a natural decisions are made: firefighters trying to put out a fire and doctors during a surgery. In these situations, the decision-maker does not have much to think, he/she simply has to decide and act in the blink of an eye.
On the other hand, in rational model has as examples a game of chess, a school exam, a planning meeting and a financial investment. In this text I will focus on the rational model. I usually describe this model in several steps, which are: (i) Define the problem; (ii) Define the objective; (iii) Define uncertainties; (iv) Define the method to be used to decide; (v) Define alternatives; (vi) Apply the method; (vii) Choose a solution; (viii) Implement the solution; and (ix) Evaluate the results.
A problem can be defined by a situation that needs to be solved and has two parts, the first being the cause and the second the effect. These two parts must be described in the definition of the problem, as it will be much easier to solve it.
Defining the objective is essential to know where we want to be in the future. The uncertainties of the process are also fundamental to be aware of what is still unknown throughout the process.
It is paramount for the process to choose the decision methods. For this to be defined, it is necessary to know in advance what is wanted. Prioritize? Optimize? Decide whether to continue or not (go-no-go)? Choose the cheapest one? The most profitable? The best? A combination of criteria? Each of these choices leads to different methods, techniques and tools.
In the definition of alternatives, it is important to verify that we have to evaluate the possibility of acting on the cause or on the effect, but usually we try to act on the cause to eliminate or reduce the effect. Applying the method is simply submitting the alternatives to the defined methods, then observing the results and choosing the most advantageous alternative for the problem.
Then, the steps for implementing the solution must be defined. It is often necessary to define the resources (human, material and financial), the time and the way in which we will do this. Finally, after the solution has been implemented, we must observe the effectiveness of the solution. At this moment, lessons are learned, and the course of actions can be redirected to adapt to reality.
As can be seen, the rational model is complex, long and requires resources, but in our initiatives, they often lead us to the right decisions. Strictly relying on our experiences and intuitions can often lead to errors, especially when we don’t realize that we are being victims of decision-making biases.