Monday, April 02, 2007

Success Secrets: Decision Analysis

As I was reading Trump University Entrepreneurship 101: How to Turn Your Idea into a Money Machine (actually written by author Michael E. Gordon), I came across a reference to Kepner and Tregoe’s “The Rational Manager”, a (seemingly) out-of-print book from the 1960s. I picked it up at the library, and now I can see why Gordon recommends it as a management classic. It is luminous in its clarity regarding both Problem Analysis and Decision Analysis. I am sometimes fascinated that we are taught algebra, biology, etc in high school, but not such subjects as goal-setting and DecisionAanalysis.

We all have to make decisions in our business and personal lives, and the Kepner-Tregoe text contains an excellent procedure for making decisions. While I don’t want to spoil the book for those who choose to delve into the process, here is a condensation of Kepner-Tregoe on Decision analysis:

Set Objectives

Try to be “objective” in your objectives. Quantify the results you are seeking: What? Where? When? In what time frame? How many? How much?

Classify Objective into “Must” and “Want” objectives

The “Musts” are the required minimum results. Just determining a “Must” objective will help eliminate a large number of alternatives.

The “Want” objectives are still very important. For instance, if your “Must” objective is to meet 10 new people, and one alternative (say, going to a convention) will help you meet 100 new people and another (say, going to a gallery opening) might result in meeting 15 people, you pick the alternative with the most potential, even though either alternative will meet eh “Must” objective of meeting 10 new people.

So, given that you have made a list of objectives and alternatives, is there a way to introduce some objectivity into the choice of alternative?

Score Each "Want" and Each "Alternative "
Kepner and Tregoe recommend a quantitative scoring system as follows:

Assign a weight to each “Want: objective by how important it is in itself. It’s ability to fulfill the “Must” objectives would of course factor in as a component)

Next, for each alternative you are considering, score the alternative on each “want” objective it meets.

For each alternative multiply the score for each “Want” objective bt the weight assigned to that “Want” objective.

This will give you an idea of how strong each alternative is in each area.

More on Kepner-Tregoe Decision Analysis in the next post.


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