Decision making Lecture

Decision-Making Techniques
How to Make Better Decisions

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Decision Making Models

Choosing Between Options

Deciding Whether to Go Ahead

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Improving Decision Making

The Impact of Ethics and Values

Group Decision Making

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How to Make Decisions

How Good Is Your Decision Making?

Decision Making Models

The Vroom-Yetton-Jago Decision Model

Deciding How to Decide
The Kepner-Tregoe Matrix
Making Unbiased, Risk-Assessed Decisions

OODA Loops
Understanding the Decision Cycle

The Recognition-Primed Decision (RPD) Process

Making Good Decisions Under Pressure

Choosing Between Options

Decision Matrix Analysis

Making a Decision By Weighing Up Different Factors

Paired Comparison Analysis

Working Out Relative Importances

AHP, decision making

Choosing By Weighing Up Many Subjective Factors

Conjoint Analysis
Measuring Buyer Preferences
Pareto Analysis
Choosing the Most Important Changes to Make

Decision Tree Analysis

Choosing by Projecting "Expected Outcomes"

The Quantitative Strategic Planning Matrix (QSPM)

Choosing the Best Strategic Way Forward

The Futures Wheel

Identifying Future Consequences

Deciding Whether to Go Ahead

Go/No-Go Decisions
Deciding Whether to Go Ahead

TELOS
Conducting a Thorough Feasibility Study

Risk Analysis and Risk Management

Evaluating and Managing Risks

Plus, Minus and Interesting

Weighing the Pros and Cons of a Decision
Force Field Analysis
Analyzing the Pressures For and Against Change

"What If" Analysis

Making Decisions by Exploring Scenarios

Impact Analysis
Identifying the Full Consequences of Change

Business Experiments
Taking Intelligent Risks

Financial Decisions

Cost-Benefit Analysis
Deciding, Quantitatively, Whether to go Ahead

Break-Even Analysis
Determining When a Product Becomes Profitable

Net Present Value (NPV) and Internal Rate of Return (IRR)

Deciding Whether to Invest
Cash Flow Forecasting
Forecasting the Impact of a Financial Decision

Improving Decision Making

Avoiding Psychological Bias in Decision Making

How to Make Objective Decisions

The Ladder of Inference

How to Avoid Jumping to Conclusions

Decision Making Under Uncertainty

Making the Best Choice with the Information Available

"Cautious" or "Courageous"?
Understand Your Risk Preference, and Make Better Decisions

Six Thinking Hats

Looking at a Decision From All Points of View

Critical Thinking
Developing the Skills for Successful Thinking

Blindspot Analysis
Avoiding Common
Reactive Decision Making
Making Good Decisions Under Pressure

Linear Programming
Optimizing Your Limited Resources

Monte Carlo Analysis

Bringing Uncertainty and Risk Into Forecasting

ORAPAPA
A Checklist for Making Better Decisions

The Impact of Ethics and Values

The Foursquare Protocol

Learning to Manage Ethical Decisions

What Are Your Values?

Deciding What's Most Important in Life

Spiral Dynamics
Understanding How People's Values May Affect Their Decision Making

Group Decision Making

Organizing Team Decision Making
Reaching Consensus for Better Decisions

Bain's RAPID Framework

Assigning Roles to Avoid Stalemate

Multi-Voting
Choosing Fairly Between Many Options

The Stepladder Technique

Making Better Group Decisions

The Delphi Method

Achieving Consensus Among Experts

Avoiding Groupthink
Avoiding Sometimes-Fatal Flaws in Group Decision Making

Hartnett's CODM Model

Developing Solutions Collectively

http://www.mindtools.com/pages/article/newTED_03.htm
How to Make Decisions
How to make good decisions,
with James Manktelow & Amy Carlson.

All of us have to make decisions every day.

Some decisions are relatively straightforward and simple: Is this report ready to send to my boss now?

Others are quite complex: Which of these candidates should I select for the job?

Simple decisions usually need a simple decision-making process. But difficult decisions typically involve issues like
these:

Uncertainty Many facts may not be known.

Complexity You have to consider many interrelated factors.

High-risk consequences The impact of the decision may be significant.

Alternatives Each has its own set of uncertainties and consequences.

Interpersonal issues It can be difficult to predict how other people will react.

With these difficulties in mind, the best way to make a complex decision is to use an effective process. Clear
processes usually lead to consistent, high-quality results, and they can improve the quality of almost everything we
do. In this article, we outline a process that will help improve the quality of your decisions.

A Systematic Approach to Decision Making

A logical and systematic decision-making process helps you address the critical elements that result in a good
decision. By taking an organized approach, you're less likely to miss important factors, and you can build on the
approach to make your decisions better and better.

There are six steps to making an effective decision:

1. Create a constructive environment.

2. Generate good alternatives.

3. Explore these alternatives.

4. Choose the best alternative.

 5. Check your decision.

6. Communicate your decision, and take action.

Here are the steps in detail:

Step 1: Create a constructive environment

To create a constructive environment for successful decision making, make sure you do the following:

Establish the objective Define what you want to achieve.

Agree on the process Know how the final decision will be made, including whether it will be an
individual or a team-based decision. The Vroom-Yetton-Jago Model is a great tool for determining the
most appropriate way of making the decision.

Involve the right people Stakeholder Analysis is important in making an effective decision, and
you'll want to ensure that you've consulted stakeholders appropriately even if you're making an individual
decision. Where a group process is appropriate, the decision-making group typically a team of five to
seven people should have a good representation of stakeholders.

Allow opinions to be heard Encourage participants to contribute to the discussions, debates, and
analysis without any fear of rejection from the group. This is one of the best ways to avoid groupthink .
The Stepladder Technique is a useful method for gradually introducing more and more people to the
group discussion, and making sure everyone is heard. Also, recognize that the objective is to make the
best decision under the circumstances: it's not a game in which people are competing to have their own
preferred alternatives adopted.

Make sure you're asking the right question Ask yourself whether this is really the true issue. The
5 Whys technique is a classic tool that helps you identify the real underlying problem that you face.

Use creativity tools from the start The basis of creativity is thinking from a different perspective.
Do this when you first set out the problem, and then continue it while generating alternatives. Our article
Generating New Ideas will help you create new connections in your mind, break old thought patterns,
and consider new perspectives.

Step 2: Generate Good Alternatives

This step is still critical to making an effective decision. The more good options you consider, the more
comprehensive your final decision will be.

When you generate alternatives, you force yourself to dig deeper, and look at the problem from different angles. If
you use the mindset there must be other solutions out there,' you're more likely to make the best decision possible. If
you don't have reasonable alternatives, then there's really not much of a decision to make!

Here's a summary of some of the key tools and techniques to help you and your team develop good alternatives.

Generating Ideas

Brainstorming is probably the most popular method of generating ideas.

Another approach, Reverse Brainstorming , works similarly. However, it starts by asking people to
brainstorm how to achieve the opposite outcome from the one wanted, and then reversing these actions.
 The Charette Procedure is a systematic process for gathering and developing ideas from very many
stakeholders.

Use the Crawford Slip Writing Technique to generate ideas from a large number of people. This is
an extremely effective way to make sure that everyone's ideas are heard and given equal weight,
irrespective of the person's position or power within the organization.

Considering Different Perspectives

The Reframing Matrix uses 4 Ps (product, planning, potential, and people) as the basis for gathering
different perspectives. You can also ask outsiders to join the discussion, or ask existing participants to
adopt different functional perspectives (for example, have a marketing person speak from the viewpoint of
a financial manager).

If you have very few options, or an unsatisfactory alternative, use a Concept Fan to take a step back
from the problem, and approach it from a wider perspective. This often helps when the people involved in
the decision are too close to the problem.

Appreciative Inquiry forces you to look at the problem based on what's going right,' rather than
what's going wrong.'

Organizing Ideas

This is especially helpful when you have a large number of ideas. Sometimes separate ideas can be combined into
one comprehensive alternative.

Use Affinity Diagrams to organize ideas into common themes and groupings.

Step 3: Explore the Alternatives

When you're satisfied that you have a good selection of realistic alternatives, then you'll need to evaluate the
feasibility, risks, and implications of each choice. Here, we discuss some of the most popular and effective analytical
tools.

Risk

In decision making, there's usually some degree of uncertainty, which inevitably leads to risk. By evaluating the risk
involved with various options, you can determine whether the risk is manageable.

Risk Analysis helps you look at risks objectively. It uses a structured approach for assessing threats,
and for evaluating the probability of events occurring and what they might cost to manage.

Implications

Another way to look at your options is by considering the potential consequences of each.

Six Thinking Hats helps you evaluate the consequences of a decision by looking at the alternatives
from six different perspectives.

Impact Analysis is a useful technique for brainstorming the unexpected' consequences that may
arise from a decision.

Validation
Determine if resources are adequate, if the solution matches your objectives, and if the decision is likely to work in
the long term.

Starbursting helps you think about the questions you should ask to evaluate an alternative properly.

To assess pros and cons of each option, use Force Field Analysis , or use the Plus-Minus-
Interesting approach.

Cost-Benefit Analysis looks at the financial feasibility of an alternative.

Our Bite-Sized Training session on Project Evaluation and Financial Forecasting helps you
evaluate each alternative using the most popular financial evaluation techniques.

Step 4: Choose the Best Alternative

After you have evaluated the alternatives, the next step is to choose between them. The choice may be obvious.
However, if it isn't, these tools will help:

Decision Matrix Analysis , also known as a decision matrix, is a key tool for this type of evaluation.
It's invaluable because it helps you bring disparate factors into your decision-making process in a reliable
and rigorous way.

Use Paired Comparison Analysis to determine the relative importance of various factors. This helps
you compare unlike factors, and decide which ones should carry the most weight in your decision.

Decision Trees are also useful in choosing between options. These help you lay out the different
options open to you, and bring the likelihood of project success or failure into the decision making
process.
For group decisions, there are some excellent evaluation methods available.

When decision criteria are subjective and it's critical that you gain consensus, you can use techniques like Multi-
Voting . These methods help a group agree on priorities, for example, so that they can assign resources and funds.

The Delphi Technique uses multiple cycles of anonymous written discussion and argument, managed by a
facilitator. Participants in the process do not meet, and sometimes they don't even know who else is involved. The
facilitator controls the process, and manages the flow and organization of information. This is useful where you need
to bring the opinions of many different experts into the decision-making process. It's particularly useful where some of
these experts don't get on!

Step 5: Check Your Decision

With all of the effort and hard work that goes into evaluating alternatives, and deciding the best way forward, it's easy
to forget to sense check' your decisions. This is where you look at the decision you're about to make dispassionately,
to make sure that your process has been thorough, and to ensure that common errors haven't crept into the decision-
making process. After all, we can all now see the catastrophic consequences that over-confidence, groupthink, and
other decision-making errors have wrought on the world economy.

The first part of this is an intuitive step, which involves quietly and methodically testing the assumptions and the
decisions you've made against your own experience, and thoroughly reviewing and exploring any doubts you might
have.

A second part involves using a technique like Blindspot Analysis to review whether common decision-making
problems like over-confidence, escalating commitment, or groupthink may have undermined the decision-making
process.
A third part involves using a technique like the Ladder of Inference to check through the logical structure of the
decision with a view to ensuring that a well-founded and consistent decision emerges at the end of the decision-
making process.

Step 6: Communicate Your Decision, and Move to Action!

Once you've made your decision, it's important to explain it to those affected by it, and involved in implementing it.
Talk about why you chose the alternative you did. The more information you provide about risks and projected
benefits, the more likely people are to support the decision.

And with respect to implementation of your decision, our articles on Project Management and Change
Management will help you get this implementation off to a good start!

Key Points
An organized and systematic decision-making process usually leads to better decisions. Without a well-defined
process, you risk making decisions that are based on insufficient information and analysis. Many variables affect the
final impact of your decision. However, if you establish strong foundations for decision making, generate good
alternatives, evaluate these alternatives rigorously, and then check your decision-making process, you will improve
the quality of your decisions.

Take our How Good is Your Decision-Making? quiz to find out how we'll you're doing all of these things now!

This site teaches you the skills you need for a happy and successful career; and this is just one of many tools and
resources that you'll find here at Mind Tools. Click here for more, subscribe to our free newsletter, or become a
member for just $1.
Choosing Between Options

Decision Matrix Analysis

Making a Decision By Weighing Up Different Factors
(Also known as Grid Analysis, Pugh Matrix Analysis, and Multi-Attribute Utility
Theory)

Use Decision Matrix Analysis to make better decisions.

iStockphoto/cogal

Imagine that your boss has put you in charge of taking on a new outsourced IT supplier. You've already identified
several different suppliers, and you now need to decide which one to use.

You could decide to go with the low-cost option. But you don't want to make your decision on cost alone factors
such as contract length, underlying technology, and service levels need to be taken into consideration. So how can
you make sure you make the best decision, while taking all of these different factors into account?

Decision Matrix Analysis is a useful technique to use for making a decision. It's particularly powerful where you have
a number of good alternatives to choose from, and many different factors to take into account. This makes it a great
technique to use in almost any important decision where there isn't a clear and obvious preferred option.

Being able to use Decision Matrix Analysis means that you can take decisions confidently and rationally, at a time
when other people might be struggling to make a decision.

How to Use the Tool

Decision Matrix Analysis works by getting you to list your options as rows on a table, and the factors you need
consider as columns. You then score each option/factor combination, weight this score by the relative importance of
the factor, and add these scores up to give an overall score for each option.

While this sounds complex, this technique is actually quite easy to use. Here's a step-by-step guide with an example.
Start by downloading our free worksheet. Then work through these steps.

Step 1
List all of your options as the row labels on the table, and list the factors that you need to consider as the column
headings. For example, if you were buying a new laptop, factors to consider might be cost, dimensions, and hard disk
size.

Step 2

Next, work your way down the columns of your table, scoring each option for each of the factors in your decision.
Score each option from 0 (poor) to 5 (very good). Note that you do not have to have a different score for each option
if none of them are good for a particular factor in your decision, then all options should score 0.

Step 3

The next step is to work out the relative importance of the factors in your decision. Show these as numbers from, say,
0 to 5, where 0 means that the factor is absolutely unimportant in the final decision, and 5 means that it is very
important. (It's perfectly acceptable to have factors with the same importance.)
Tip:

These values may be obvious. If they are not, then use a technique such as Paired Comparison Analysis to
estimate them.

Step 4

Now multiply each of your scores from step 2 by the values for relative importance of the factor that you calculated in
step 3. This will give you weighted scores for each option/factor combination.

Step 5

Finally, add up these weighted scores for each of your options. The option that scores the highest wins!
Tip:

If your intuition tells you that the top scoring option isnt the best one, then reflect on the scores and weightings that
youve applied. This may be a sign that certain factors are more important to you than you initially thought.

Also, if an option scores very poorly for a factor, decide whether this rules it out altogether.

Example
A caterer needs to find a new supplier for his basic ingredients. He has four options.

Factors that he wants to consider are:

Cost.

Quality.

Location.

Reliability.

Payment options.

Firstly he draws up the table shown in Figure 1, and scores each option by how well it satisfies each factor:
Figure 1: Example Decision Matrix Analysis Showing Unweighted Assessment of How Each Supplier
Satisfies Each Factor

Payment
Factors: Cost Quality Location Reliability Total
Options

Weights:

Supplier 1 1 0 0 1 3

Supplier 2 0 3 2 2 1

Supplier 3 2 2 1 3 0

Supplier 4 2 3 3 3 0

Next he decides the relative weights for each of the factors. He multiplies these by the scores already entered, and
totals them. This is shown in Figure 2:

Figure 2: Example Decision Matrix Analysis Showing Weighted Assessment of How Each Supplier Satisfies
Each Factor

Payment
Factors: Cost Quality Location Reliability Total
Options

Weights: 4 5 1 2 3

Supplier 1 4 0 0 2 9 15

Supplier 2 0 15 2 4 3 24

Supplier 3 8 10 1 6 0 25

Supplier 4 8 15 3 6 0 32

This makes it clear to the caterer that Supplier 4 is the best option, despite the lack of flexibility of its payment
options.

Key Points
Decision Matrix Analysis helps you to decide between several options, where you need to take many different factors
into account.

To use the tool, lay out your options as rows on a table. Set up the columns to show the factors you need to consider.
Score each choice for each factor using numbers from 0 (poor) to 5 (very good), and then allocate weights to show
the importance of each of these factors.

Multiply each score by the weight of the factor, to show its contribution to the overall selection. Finally add up the total
scores for each option. The highest scoring option will be the best option.

Note:

Decision Matrix Analysis is the simplest form of Multiple Criteria Decision Analysis (MCDA), also known as Multiple
Criteria Decision Aid or Multiple Criteria Decision Management (MCDM). Sophisticated MCDA can involve highly
complex modelling of different potential scenarios, using advanced mathematics.

A lot of business decision making, however, is based on approximate or subjective data. Where this is the case,
Decision Matrix Analysis may be all thats needed.
Decision Making Models

The Kepner-Tregoe Matrix

Making Unbiased, Risk-Assessed Decisions

Weigh up your options carefully.

iStockphoto/AnthonyRosenberg

No matter what position you hold, from the board room to the mailroom, you make decisions every day.

And the end result in business is directly linked to the quality of the decisions made at each point along the way.

So not surprisingly, decision-making is a universally important competence in business. Some decisions clearly have
a greater impact on the business than others, but the underlying skill is the same: The difference is in the scope and
depth of the process you go through to reach your decision.

One reason why decision-making can be so problematic is that the most critical decisions tend to have to be made in
the least amount of time. You feel pressured and anxious. The time pressure means taking shortcuts, jumping to
conclusions, or relying heavily on instinct to guide your way.

In your organization, you've probably heard of someone who made it all the way to VP by relying on his gut to make
decisions. At the other extreme is the guy who simply can't make a decision because he analyses the situation to
death. The bottom line is, you have to make decisions, and you have to make good decisions. Poor decisions are bad
for business. Worse still, one poor decision can lead to others, and so the impact can be compounded and lead to
more and more problems down the line.

Thankfully, decision-making is a skill set that can be learned and improved on. Somewhere between instinct and
over-analysis is a logical and practical approach to decision-making that doesn't require endless investigation, but
helps you weigh up the options and impacts.

One such approach is called the Kepner-Tregoe Matrix. It provides an efficient, systematic framework for gathering,
organizing and evaluating decision making information. The approach was developed by Charles H. Kepner and
Benjamin B. Tregoe in the 1960's and they first wrote about it in the business classic, The Rational Manager (1965).
The approach is well-respected and used by many of the world's top organizations including NASA and General
Motors.

The Kepner-Tregoe Approach

The Kepner-Tregoe approach is based on the premise that the end goal of any decision is to make the "best
possible" choice. This is a critical distinction: The goal is not to make the perfect choice, or the choice that has no
defects. So the decision maker must accept some risk. And an important feature of the Kepner-Tregoe Matrix is to
help evaluate and mitigate the risks of your decision.

The Kepner-Tregoe Matrix approach guides you through the process of setting objectives, exploring and prioritizing
alternatives, exploring the strengths and weaknesses of the top alternatives, and of choosing the final "best"
alternative. It then prompts you to generate ways to control the potential problems that will crop up as a consequence
of your decision.

This type of detailed problem and risk analysis helps you to make an unbiased decision. By skipping this analysis and
relying on gut instinct, your evaluation will be influenced by your preconceived beliefs and prior experience it's
simply human nature. The structure of the Kepner-Tregoe approach limits these conscious and unconscious biases
as much as possible.

The Kepner-Tregoe Matrix comprises four basic steps:

1. Situation Appraisal identify concerns and outline the priorities.

2. Problem Analysis describe the exact problem or issue by identifying and evaluating the causes.

3. Decision Analysis identify and evaluate alternatives by performing a risk analysis for each and then
make a final decision.

4. Potential Problem Analysis evaluate the final decision for risk and identify the contingencies and
preventive actions necessary to minimize that risk.

Going through each stage of this process will help you come to the "best possible choice", given your knowledge and
understanding of the issues that bear on the decision.

How to Use the Tool

The Kepner-Tregoe Matrix is an in-depth approach that can be supported by detailed instruction and worksheets. As
an overview of the approach, the following steps show the general principles of how the Kepner-Tregoe approach can
apply to a decision-making situation:
The Vroom-Yetton-Jago Decision Model
Deciding How to Decide

iStockphoto

How you go about making a decision can involve as many choices as the decision itself. Sometimes you have to take
charge and decide what to do on your own. Other times it's better to make a decision using group consensus. How
do you decide which approach to use?

Making good decisions is one of the main leadership tasks. Part of doing this is determining the most efficient and
effective means of reaching the decision.

You don't want to make autocratic decisions when team acceptance is crucial for a successful outcome. Nor do you
want be involving your team in every decision you make, because that is an ineffective use of time and resources.
What this means is you have to adapt your leadership style to the situation and decision you are facing. Autocratic
styles work some of the time, highly participative styles work at other times, and various combinations of the two work
best in the times in between.

The Vroom-Yetton-Jago Decision Model provides a useful framework for identifying the best leadership style to adopt
for the situation you're in.
Note:

This model was originally described by Victor Vroom and Philip Yetton in their 1973 book titled Leadership and
Decision Making. Later in 1988, Vroom and Arthur Jago, replaced the decision tree system of the original model with
an expert system based on mathematics. Hence you will see the model called Vroom-Yetton, Vroom-Jago, and
Vroom-Yetton-Jago. The model here is based on the Vroom-Jago version of the model.

Understanding the Model

When you sit down to make a decision, your style, and the degree of participation you need to get from your team,
are affected by three main factors:

Decision Quality how important is it to come up with the "right" solution? The higher the quality of
the decision needed, the more you should involve other people in the decision.

Subordinate Commitment how important is it that your team and others buy into the decision?
When teammates need to embrace the decision you should increase the participation levels.
 Time Constraints How much time do you have to make the decision? The more time you have, the
more you have the luxury of including others, and of using the decision as an opportunity for teambuilding.

Specific Leadership Styles

The way that these factors impact on you helps you determine the best leadership and decision-making style to use.
Vroom-Jago distinguishes three styles of leadership, and five different processes of decision-making that you can
consider using:

Autocratic you make the decision and inform others of it.

Style:
There are two separate processes for decision making in an
autocratic style:

Autocratic 1(A1) you use the information you already have

and make the decision
Processes: Autocratic 2 (A2) you ask team members for specific
information and once you have it, you make the decision.
Here you don't necessarily tell them what the information is
needed for.
Consultative you gather information from the team and
Style:
other and then make the decision.
Consultative 1 (C1) you inform team members of what
you're doing and may individually ask opinions, however, the
group is not brought together for discussion. You make the
Processes: decision.
Consultative 2 (C2) you are responsible for making the
decision, however, you get together as a group to discuss the
situation, hear other perspectives, and solicit suggestions.
Collaborative you and your team work together to reach a
Style:
consensus.
Group (G2) The team makes a decision together. Your role
Process: is mostly facilitative and you help the team come to a final
decision that everyone agrees on.

Table 2.1 Decision Methods for Group and Individual Problems. From "Leadership and Decision-Making," by Victor H. Vroom and Philip W. Yetton.
1973. All rights are controlled by University of Pittsburgh Press, Pittsburgh, PA 15260. Used by permission of the University of Pittsburgh Press.

Tip:

This is a useful model, but it's quite complex and long-winded. Use it in new situations, or in ones which have unusual
characteristics: Using it, you'll quickly get an feel for the right approach to use in more usual circumstances.

To determine which of these styles and processes is most appropriate, there is a series of yes/no questions that you
ask yourself about the situation, and building a decision tree based on the responses. There are seven questions in
total.

These are:

1. Is the technical quality of the decision very important? Meaning, are the consequences of failure
significant?

2. Does a successful outcome depend on your team members' commitment to the decision? Must there
be buy-in for the solution to work?

3. Do you have sufficient information to be able to make the decision on your own?
 4. Is the problem well-structured so that you can easily understand what needs to be addressed and what
defines a good solution?

5. Are you reasonably sure that your team will accept your decision even if you make it yourself?

6. Are the goals of the team consistent with the goals the organization has set to define a successful
solution?

7. Will there likely be conflict among the team as to which solution is best?

Use Figure 1 below to follow your answers through on the decision tree and identify the best decision process for
your circumstances. Not that in some scenarios, you don't need to

In general, a consultative or collaborative style is most appropriate when:

You need information from others to solve a problem.

The problem definition isn't clear.

Team members' buy-in to the decision is important.

 You have enough time to manage a group decision.

An autocratic style is most efficient when:

You have more expertise on the subject than others.

You are confident about acting alone.

The team will accept your decision.

There is little time available.

Key Points
The underlying assumption of the Vroom-Yetton-Jago Decision Models is that no one leadership style or decision
making process fits all situations.

By analyzing the situation and evaluating the problem based on time, team buy-in, and decision quality, a conclusion
about which style best fits the situation can be made. The model defines a very logical approach to which style to
adopt and is useful for managers and leaders who are trying to balance the benefits of participative management with
the need to make decisions effectively.

This site teaches you the skills you need for a happy and successful career; and this is just one of many tools and
resources that you'll find here at Mind Tools. Click here for more, subscribe to our free newsletter

The Recognition-Primed Decision (RPD) Process

Making Good Decisions Under Pressure

Learn how to make accurate decisions in high-pressure situations.

iStockphoto/Bibigon

Firefighters often have to make life-or-death decisions with a moment's notice.

One wrong choice on their part could threaten the lives of others on their team, or of bystanders on the scene.

So how do people who work in high-pressure situations make these crucial decisions so quickly?

The answer lies in how they assess the situation, and then compare what's in front of them with situations that they've
encountered in the past.
The Recognition-Primed Decision (RPD) Process explores this. In this article, we'll examine the RPD Process, and
look at how you can use it to make better decisions in high-pressure situations.

About the RPD Process

The RPD Process was first identified by research psychologists Gary Klein, Roberta Calderwood, and Anne Clinton-
Cirocco in the late 1980s. Klein then published the process in his 1999 book "Sources of Power: How People Make
Decisions." Klein is best-known for pioneering the field of naturalistic decision making the study of how people
make decisions in demanding and high-pressure situations.

Klein, Calderwood, and Clinton-Cirocco identified the process after studying professionals such as firefighters,
emergency medical technicians/paramedics, and nuclear technicians, who routinely make quick, life-or-death
decisions. They found that other decision-making models didn't adequately explain how people make good decisions
under pressure.

The process highlights the three simple steps that we go through, often subconsciously, when we need to make a
quick decision in a high-pressure situation. This process is based on "pattern recognition," and on how we use past
experiences of similar situations to influence our decisions.

The three steps are as follows:

... for the complete article:

Mind Tools

Deciding Whether to Go Ahead

Risk Analysis and Risk Management

Evaluating and Managing Risks

Find out how to do a risk analysis,

with James Manktelow and Amy Carlson.

Whatever your role, it's likely that you'll need to make a decision that involves an element of risk at some point.

Risk is made up of two parts: the probability of something going wrong, and the negative consequences if it does.

Risk can be hard to spot, however, let alone prepare for and manage. And, if you're hit by a consequence that you
hadn't planned for, costs, time, and reputations could be on the line.

This makes Risk Analysis an essential tool when your work involves risk. It can help you idenfity and understand the
risks that you could face in your role. In turn, this helps you manage these risks, and minimize their impact on your
plans.

In this article, we'll look at how you can use Risk Analysis to identify and manage risk effectively.
What is Risk Analysis?
Risk Analysis is a process that helps you identify and manage potential problems that could undermine key business
initiatives or projects.

To carry out a Risk Analysis, you must first identify the possible threats that you face, and then estimate the likelihood
that these threats will materialize.

Risk Analysis can be complex, as you'll need to draw on detailed information such as project plans, financial data,
security protocols, marketing forecasts, and other relevant information. However, it's an essential planning tool, and
one that could save time, money, and reputations.

When to Use Risk Analysis

Risk analysis is useful in many situations:

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Find threats
Calculate risk
Manage the risk get contingency plans
Do risk analysis once a while and find if things change
Some problems have low risks and their consequences are not severe
Others could have large risk and the consequences are realyy severe
Like the recent explosion of contracted rocket used by NASA to send provincies to
space station took place in late October 2014! Huge loss in terms of millions of
dollars!!!