Decision Quality

CARL SPETZLER is the cofounder, chairman, and CEO of Strategic Decisions Group (SDG), a leading strategy consulting firm renowned for its expertise in strategic decision- making for greater value creation. HANNAH WINTER is a partner, strategy consultant, and educator with SDG, where she leads the firm's 10-year education partnership with Stanford in strategic decision making. JENNIFER MEYER leads client engagements at SDG, resulting in hundreds of millions of dollars in added value through better strategic decisions. More at Strategic Decisions Group's website www.sdg.com

• Acknowledgments xiiiPreface xvPart I The Decision Quality Framework 11 The Power of Decisions 3Decision Quality: A Framework for Better Decisions 4Decision Skills Can Be Learned 5Decisions versus Outcomes 6Key Points to Remember 8Endnotes 92 The Requirements for Decision Quality 11The Appropriate Frame 13Creative Alternatives 13Relevant and Reliable Information 14Clear Values and Tradeoffs 15Sound Reasoning 16Commitment to Action 16Judging the Quality of a Decision 17Key Points to Remember 19Endnotes 193 Getting to Decision Quality 21Declaring the Need for a Decision 21Setting the Decision Agenda 23Understanding the Destination of Decision Quality 23Avoiding Decision Traps and Biases 24Designing the Decision Process through Diagnosis 25Tailoring to Fit the Decision 30Key Points to Remember 32Endnotes 33Part II The Six Requirements for DQ 354 The Appropriate Frame 37A Friday Afternoon Dilemma 37The Key Components of a Frame 39Framing the Friday Afternoon Dilemma 41An Extended Example: The House Decision 42Developing an Appropriate Frame 43The Decision Hierarchy: A Tool for Framing 44Things That Can Go Wrong 46Judging the Quality of a Decision Frame 47Key Points to Remember 49Endnotes 495 Creative Alternatives 51Characteristics of Good Alternatives 53The Strategy Table: A Tool for Defining Alternatives 56Things That Can Go Wrong 57Judging the Quality of Alternatives 60Key Points to Remember 63Endnotes 646 Relevant and Reliable Information 65Information from a Decision Perspective 65An Extended Example: Michael’s Job Choice 67Structuring the Relevant Information in a Decision 68The Decision Tree: A Tool for Structuring a Decision 68What is Reliable? 72Things That Can Go Wrong 74Judging the Quality of Information 75Key Points to Remember 78Endnotes 797 Clear Values and Tradeoffs 81Values and Tradeoffs for Decisions 82Michael’s Values and Tradeoffs 82Values in a Business Context 85Making Tradeoffs in Business Decisions 86Things That Can Go Wrong 88Judging the Quality of Values 89Key Points to Remember 91Endnotes 918 Sound Reasoning 93Reasoning for Michael’s Job Decision 94Reasoning in More Complex Decisions 97The Relevance Diagram: A Tool for Structuring Complex Decisions 97The Decision Model: A Tool for Analyzing Complex Decisions 98The Tornado Diagram: A Tool for Displaying the Relevance of Information 99Flying Bars: A Tool for Displaying Overall Uncertainty 102Things That Can Go Wrong 103When to Get Help with Reasoning 104The Power of Iterating from a Simple Start 105Judging the Quality of Reasoning 105Key Points to Remember 109Endnotes 1109 Commitment to Action 111Two Mindsets: Decision and Action 111Commitment through Participation and Ownership 113Conscious Commitment 115Things That Can Go Wrong 115Judging the Quality of Commitment to Action 117Key Points to Remember 119Part III How to Achieve DQ 12110 Biases and Traps in Decision Making 123Mechanisms of the Mind 123Protection of Mindset 126Personality and Habits 128Faulty Reasoning 130Automatic Associations and Relative Thinking 133Social Influences 137Summing Up 138Endnotes 13911 Megabiases that Undermine DQ 143DQ and Megabiases 144Megabias #1: Narrow Framing 144Megabias #2: The Illusion of DQ 147Megabias #3: The Agreement Trap 149Megabias #4: The Comfort Zone Megabias 150Megabias #5: The Advocacy/Approval Myth 152General Guidelines for Avoiding Megabiases 154Endnotes 15412 Achieving Quality in Strategic Decisions 157The Dialogue Decision Process 158Four Phases of Dialogue 161Every Decision Situation is Different 163Advantages of the DDP 16413 Achieving Quality in Significant Decisions 169The DQ Appraisal Cycle: Iterating Our Way to DQ 170The DQ Appraisal Cycle in Action: Robin’s Career Crossroads 176Summing Up 187Part IV The Journey to DQ 18914 The Amoco Unleaded Gasoline Decision 191Getting Started on the Unleaded Decision 194Seeking Greater Clarity on the Key Uncertainty 196Competing Reports 198The Bottom Line 201Decades of Experience in Improving Value 202Endnote 20315 Building Organizational Decision Quality 205Organizational DQ 207The Components of ODQ 207Reaching ODQ 209Chevron’s Journey to ODQ 212Taking the First Step 213Endnote 21416 Embarking on the DQ Journey 215What Next? 216References 219About the Authors 223Index 225