Some Notes About Decision Making

Some of this material appears in my chapter in Applied Space Systems Engineering: Space Technology Series, which I wrote a few years ago. While originally aimed at making mission-critical decision in a complex engineering environment, some of the ideas are more generally applicable.



“A decision,” wrote author Fletcher Knebel, “is what a man makes when he can’t find anybody to serve on a committee.”

Committees and teamwork are often an essential part of decision-making, but even in that framework, each of us must sooner or later take our stand, knowing full well the range of potential consequences. In an organization, a decision-making process must often be open and auditable. We must know not only the decision we make, but also the process that led us to that decision.

Decisions often require tradeoffs. A perfect solution may not exist. Each potential choice may have a downside, or may be fraught with risk. In some ways, making the least bad choice out of a set of poor alternatives takes greater skill and courage than making a conventionally “good” decision. Napoleon Bonaparte observed, “Nothing is more difficult, and therefore more precious, than being able to decide.”

The outcome of a decision, whether positive or negative, is not in itself proof of the decision’s quality, especially where probability is concerned. The odds may be dramatically in favor of a positive outcome, yet the dice may come up boxcars. Equally, if someone makes a stupid decision but gets lucky, the decision is no less stupid in spite of a good outcome. A good decision process improves our odds and results in the desired outcome the majority of the time.

Decision-making is tightly woven into the risk management process, but one does not follow automatically from another. An engineering evaluation might tell us that there is a 42% probability of an event happening, and that the consequence involves the loss of $20 million and three lives. What the evaluation does not tell us is whether the risk is worth running. Values—organizational values, mission-related values, ethical values—address the consideration of worth.

There are two types of complexity in decision-making. The first, and most obvious, is the technical complexity of the issue and the tradeoffs that may be required. The second, though not always openly addressed, is the organizational complexity: the number of people involved, the number of departments or workgroups that must be consulted, the existing relationships that shape communication among people and groups, the organizational culture, and the pressure of the political process.

Decisions also vary in their importance. Importance can be measured in terms of the consequences of the decision and the constraints imposed on the decision process.

There are two slogans about decision-making: “Don’t just stand there, do something!” and its reverse, “Don’t just do something, stand there!” Both can be worthwhile pieces of advice; the trick is deciding which philosophy applies to the decision at hand. The first question is whether an actual problem exists, and, if so, the nature of that problem. The second is whether an action should be taken, and if so, the nature of that action.

At different times in the decision-making process, consider the opportunities as well as the negative consequences that can result both from the decision to act and from the decision to wait. If the consequences of a missed opportunity are greater, then the appropriate bias is in the direction of action. If an inappropriate decision could cause greater harm, the bias should fall in the direction of delay: gather more information and reassess.

Threats and opportunities both require proactive management, but opportunities even more so. Good luck and bad luck operate differently. If a person, say, loses $100, it’s gone, and all the consequences of that loss flow automatically. If, on the other hand, there’s a $100 bill somewhere in the area, it’s possible to miss it, there is no requirement to pick it up, and no obligation to spend it wisely. Exploiting opportunity requires observation, initiative, and wisdom.

A good process does not necessarily result in a good consequence. Predicting the future is never an exact science, especially when probabilities are involved. Evaluate the decision process separately from the decision outcome. Hindsight is a useful tool, though teams must remember that what seems so clear in light of actual events looked different to the decision-makers.

Decisions, Decisions

Decision makers are faced with a host of challenges. Critical information may be unavailable. Certainty may be unobtainable. Consequences may be catastrophic. Conflicting stakeholder desires may be incompatible. And always, the clock is ticking. As a result, people too often try to avoid difficult choices altogether, become trapped in “analysis paralysis,” or pass the hot potato to someone else. The BOGGSAT process (“Bunch of Guys and Gals Sitting Around Talking”) is all too popular. While sitting around and talking may well be part of a decision-making process, a proper structure (not to mention selecting the right “bunch of guys and gals”) is necessary.

The twin challenges of risk and uncertainty complicate the process. In classical risk, we know the probability and impact of the various outcomes. Risk management involves (a) an assessment of the risk, including the probability of its occurrence and the consequence if it does occur, and (b) a decision on what action to take in response to that risk (avoid, mitigate, transfer, or accept for threat risks, and exploit, enhance, share or accept for opportunity risks). In project management, the fundamental characteristics of “temporary and unique” [PMBOK® Guide] mean that we don’t necessarily know the range of possible outcomes, and almost never have reliable probability information.

Critical decision-making information is often subjective and values-driven. An engineering evaluation might tell us that there is a 42% probability of an event happening, and that the consequence involves the loss of $21.6 million and three lives. What such an evaluation does not tell us is whether the risk is worth running. Values—organizational values, mission-related values, ethical values—address the consideration of worth. Some of these values are assumed and implicit. Some can be quantified, and others—usually political considerations—can’t even be discussed on the record.

Decisions often require tradeoffs. A perfect solution may not exist. Each potential choice may have a downside, or may be fraught with risk or uncertainty. In some ways, making the least bad choice out of a set of poor alternatives takes greater skill and courage than making a conventionally “good” decision.

The outcome of a decision, whether positive or negative, is not in itself proof of the decision’s quality, especially where probability is concerned. The odds may be dramatically in favor of a positive outcome, yet low probability events can occur. Equally, if someone makes a stupid decision but gets lucky, the decision is no less stupid in spite of a good outcome. A good decision process improves our odds and results in the desired outcome the majority of the time.

In addition, a decision-making process must often be open and auditable. We must know not only the decision we make, but also the process that led us to that decision. If the outcome is bad, someone else (a boss, a customer, a Congressional committee) determines—with the benefit of “20-20 hindsight”—whether your decision was reasonable and appropriate.

This leads to the rational (if not always appropriate) strategy known as “CYA” (cover your assets), where the decision is made not necessarily from a mission perspective, but in a way that ensures blame and punishment will fall elsewhere in the event of a bad outcome. “A decision,” wrote author Fletcher Knebel, “is what a man makes when he can’t find anybody to serve on a committee.”

If enough time and resources are available, even the most complex problems can be structured and studied in a way that leads to an optimal decision. When time and resources are not available, however, a decision still needs to be made, and your accountability remains unchanged. There’s the story of the person who called an attorney, who listened to the situation and said, “Don’t worry, they can’t put you in jail for that.” The person replied, “But counselor, I’m calling from the jail!”

No formal process or methodology can remove all risk from decision-making. Many tools and techniques can improve decision-making, but ultimately successful decision processes require good judgment. Good judgment comes from experience combined with wisdom. Experience can come from bad judgment. While wisdom is the product of experience, experience does not automatically confer wisdom.

Adapted from "Chapter 18, Decision-Making and Analysis," by Michael S. Dobson, Paul Componation, and Ted Leemann, in Applied Project Management for Space Systems (Space Technology Series), edited by Julie Chelsey, Wiley Larson, Marilyn McQuade, and Robert Menrad, McGraw-Hill/US Air Force Academy, 2008.

Decisions, Decisions

“A decision,” wrote author Fletcher Knebel, “is what a man makes when he can’t find anybody to serve on a committee.”

Committees and teamwork are often an essential part of decision-making, but even in that framework, each of us must sooner or later take our stand, knowing full well the range of potential consequences. In an organization, a decision-making process must often be open and auditable. We must know not only the decision we make, but also the process that led us to that decision.

Decisions often require tradeoffs. A perfect solution may not exist. Each potential choice may have a downside, or may be fraught with risk. In some ways, making the least bad choice out of a set of poor alternatives takes greater skill and courage than making a conventionally “good” decision. Napoleon Bonaparte observed, “Nothing is more difficult, and therefore more precious, than being able to decide.”

The outcome of a decision, whether positive or negative, is not in itself proof of the decision’s quality, especially where probability is concerned. The odds may be dramatically in favor of a positive outcome, yet the dice may come up boxcars. Equally, if someone makes a stupid decision but gets lucky, the decision is no less stupid in spite of a good outcome. A good decision process improves our odds and results in the desired outcome the majority of the time.

There are two types of complexity in decision-making. The first, and most obvious, is the technical complexity of the issue and the tradeoffs that may be required. The second, though not always openly addressed, is the organizational complexity: the number of people involved, the number of departments or workgroups that must be consulted, the existing relationships that shape communication among people and groups, the organizational culture, and the pressure of the political process.

Decisions also vary in their importance. Importance can be measured in terms of the consequences of the decision and the constraints imposed on the decision process. Critical decisions fall into three categories:

• Time critical decisions must be made within a narrow window of time
• Safety critical decisions have the potential for injury or death
• Business/Financial critical decisions can affect the future or funding of the organization

At different times in the decision-making process, consider the opportunities as well as the negative consequences that can result both from the decision to act and from the decision to wait. If the consequences of a missed opportunity are greater, then the appropriate bias is in the direction of action. If an inappropriate decision could cause greater harm, the bias should fall in the direction of delay: gather more information and reassess.

Threats and opportunities both require proactive management, but opportunities even more so. Good luck and bad luck operate differently. If a person, say, loses $100, it’s gone, and all the consequences of that loss flow automatically. If, on the other hand, there’s a $100 bill somewhere in the area, it’s possible to miss it, there is no requirement to pick it up, and no obligation to spend it wisely. Exploiting opportunity requires observation, initiative, and wisdom.

Decisions must reflect goals. A successful project outcome is not necessarily an organizationally desirable outcome. Project managers and technical professionals must consider wider factors. Sometimes the right organizational decision involves hampering or even destroying the project.

Less than ideal circumstances are typically the reality. If there were more money, if the policies were different, if procedures didn’t require this item, the decision frame would be different—and so, likely, would be the decision itself. Generally, technical professionals prefer an emphasis on getting the job done correctly over meeting the schedule, but organizational circumstances may compel the latter.

When teams are involved in the decision, team decision-making considerations come into play. Conflict is not only inevitable, but if managed properly, desirable. The goal is to reach a consensus, which is not necessarily 100% agreement but rather a decision all team members can live with.

Compare the actual to the intended. If there is a discrepancy, the crucial question is “Why?” Knowing the actual results, would the team have done better with a different process? Should the process for future decisions be modified? Is there a trend in outcomes, especially in bad outcomes? If so, there may be process issues.


Thoughts adapted from “Decision Making,” by Michael Dobson et al., in Applied Project Management for Space Systems (Space Technology Series), McGraw-Hill, 2008.

The Fine Art of Making Bad Decisions

Butch Cassidy and the Sundance Kid are trapped on the edge of the cliff. “What I look at it, we can either fight or give. If we give, we go to jail. If we fight, they can go for position and shoot us, wait and starve us out, maybe start a rock slide and get us that way. What else can they do?”

“They could surrender to us, but I wouldn’t count on it,” replied the Kid.

Butch thinks for a minute. “Wait! We’ll jump!” It’s 300 feet down into rock-filled, treacherous waters. And after some argument ("I can't swim!"), both men eventually jump.

What kind of idiot makes a blind jump into uncharted waters? Answer: the one who’s otherwise dead anyway.

Making good decisions is easy. A good decision implies the existence of a good alternative, and anybody can do that. If there is a good choice, problem solved. But what if all your alternatives are rotten? Well, in most organizations, that gets kicked up the ladder. The higher you are, the nastier the choices that end up on your plate.

Actually, Butch and Sundance had a pretty easy choice: the certainty of death if they stayed, the probability of death if they jumped. Not a pleasant decision, but not a hard one. Real leaders have it worse. They have to choose among strategies each of which makes sense given a specific future. But the future is like Schrödinger’s Cat: depending on the actions of unknown random variables, the cat is both alive and dead until the moment the box is opened. The future become real only when it becomes the present.

Risk managers distinguish between the concepts of “pure risk” and “business risk.” Pure risk only contains a downside. If you didn’t get into a car accident yesterday, you’re not better off. You just failed to become worse off. If pure risk is avoided, it’s status quo. Business risk, on the other hand, combines threat and opportunity in the same decision. If you launch a new product, you might make a lot of money. If it doesn’t succeed, you’ll lose a bundle.

There are four parts of the business risk equation: the probability of the downside, the effect of the downside if it should happen, the probability of the upside, and the effect of the upside if it happens. In classical risk, you know the probability and the impact, so calculating the expected value of the decision is fairly straightforward.

What do you do when you don’t have the numbers? Try asking these four questions when evaluating potential bad choices:

1. What’s the best that can happen? (Can I make it better?)

2. What’s the worst that can happen? (Can I mitigate the impact?)

3. Is #1 worth risking #2? (Is the probability of one higher than the other? Is the impact of one higher than the other? Am I looking at an absence of good options?)

4. Can I live with #2 if it happens? (If not, do I have a less bad option available?)

The buck has to stop somewhere, and the available options may not be what anyone would prefer. Making bad choices is one of the unavoidable burdens of leadership. Do it as well as you can. That's what SideWise thinkers do.