Decision-Making Theories

Decision-making theories

There are many decision-making theories, models, and methods to assist in the complexities of decision-making, especially when it pertains to implementing change. Some of these methods may be the OODA Loop, Ladder of Inference, and Complex Decisional Process (CDP).

OODA Loop

The OODA Loop, according to Taylor Pearson, is “a decision-making process that consists of four steps that were developed by a United States Air Force military strategist and Pentagon consultant by the name of Colonel John Boyd.

The OODA Loop is an acronym that stands for the steps of the process: Observe, Orient, Decide, and Act.

The concept of the OODA Loop is to be able to take uncertainty and risk and turn it into an opportunity. Although the OODA Loop is regularly viewed as being a decision-making model, it technically is more precisely defined as a model of individual and organization learning and adaptation. While we perform the OODA Loop in our everyday lives, it can be used within organizational decision-making processes.

The process of Observe – rather than looking at something from a small part, the function of observing is to look at the whole picture, much like systems thinking. You take into consideration every aspect of physical, mental, moral, internal, external, etc.

The process of Orient – is the act of taking everything you know and observe - such as previous experiences - and analyzing or synthesizing them. Any mistake or bad situation can be turned around to become something positive if it is noticed, observed, and recognized in enough time to rectify the issue before it becomes a serious problem. This is like the learning organization and organizational learning concepts in that it utilizes experiences to learn.

The step of Decide – is being able to take all you have observed, experienced, and learned in the first two stages and utilize them to make a better-informed decision.

The final stage, Act – is to make the decision that has been made and implement it to fruition.” (Pearson, n.d.)

 

The Ladder of Inference

The Ladder of Inference is, according to Patty Mulder, “The ladder of inference was developed by Chris Argyris in 1970. It gained popularity after it was mentioned in a book titled ‘The Fifth Discipline,’ which was a collaborative work between Chris Argyris and Peter Senge.” (Mulder, 2018).

As Mulder (2018) explains, “a lot of thought processes, assumptions, and judgments are made instantaneously and often subconsciously. The ladder of inference helps to figure out how you perceive things and assists in the insight of determining what leads your thought processes or behaviors. Applying the ladder of inference facilitates impartially looking at facts and reducing judgment too early. The ladder of inference that positively utilizes feelings and experiences. The ladder of inference has seven steps, and they move from bottom to top, much like an actual ladder. The seven steps are:

  1. Reality and Facts
  2. Selecting facts
  3. Interpreting facts
  4. Assumptions
  5. Conclusions
  6. Beliefs
  7. Actions.” (Mulder, 2018).

 

The Complex Decisional Process (CDP)

The Complex Decisional Process (CDP) is a proposed decision-making model described by Oriana-Helena Negulescu. According to Negulescu, “the CDP has three stages that take into account various aspects of a system to make a better-informed decision. These aspects are inputs, processes, and outputs.

The inputs stage may consider various factors such as environmental factors, data knowledge, ideas, ethics, principles, external environment, internal risks, limits, and so forth.

The second stage is the processes stage, and this includes defining and discussing the problem, gathering information, identifying alternative solutions, discussing and choosing the decision or alternative method that is consensually agreed upon, determining and forecasting possible after effects, and implementing the decision made. A good rule to go by is the 80/20 rule, which is eighty percent outputs and twenty percent inputs.

The final stage is the output stage. This stage consists of being able to manage any successes or failures that happen with the implementation, the organizational learning process, team reinforcement, and the values or beliefs of the organization. This process of putting the output back into the input is a form of feedback loops.” (Negulescu, 2014).

(Table of Negulescu’s CDP Model -2014).

 

Systems thinking is a concept that everything is interconnected and relies on something else to work; a car needs gasoline, a computer needs electricity, a plant needs water, and so on. This same concept applies in organizations; each system and subsystem need one another to run. Because of the interconnectedness within the system, there is going to be feedback, positive and negative, which is quite similar to the cause and effects that you see in everything around you. When it comes to decision-making and systems thinking the possible effects of a change must be considered.

The dimensions and external factors need to be taken into consideration when implementing change because each organization will have its own set of factors that influences it, and these factors may be different for another organization. In other words, there is not going to be a general umbrella method that will work for every organization trying to implement change. Furthermore, each change effort will have its own set of needs depending on the type of change being made whether it is to integrate new technology, develop a new process or policy, expanding, relocating, downsizing, merging, or any number of other changes being taken into consideration. Some possible factors of influence that can determine the success or failure of a change effort are

External:

Market

Political

Competitors

Economy

Suppliers

Technology

Internal:

Customers

Financial

Operational

Mission

Communication

Structure

Learning

 

There are various methods of predictive analytics that can be used in decision-making and systems thinking. These methods can help to gather more data or information that may be needed to implement a new change initiative. According to Predictive Analytics Today (PAT), “some examples of these analytic methods are Asset Maintenance/Availability, Optimization in exploration – development and drilling, Product Optimization, and Risk assessment and modeling.” (PAT, n.d.).

Another method to gather data and information for a new change initiative is the SWOT Analysis. The SWOT Analysis looks at the strengths, weaknesses, opportunities, and threats of an organization.

Another method of gathering data and factors of influence for a new change initiative is the PESTLE Analysis. The PESTLE Analysis looks at various factors such as political, economic, social, technological, legal, and environmental.

Once information and data are collected and analyzed, and a clear picture of what needs to be changed is achieved, then the next steps of implementation can take place. However, before the changes can happen, any possible factors of resistance to change need to be considered to prepare for them. Some of these factors may be job security, lack of understanding of the change, fear, habits, prior experience, increased workload, etc. Once you determine what resistance factors may arise then a process to decrease the resistance can be implemented before the changes take place.

In any organization, one of the most important aspects is the customers/clients. Without the clients buying your product or services, then you have no business. It is important that your clients are engaged with your organization in order to develop and build brand loyalty.

Client engagement is important as it is a way to get customers interested in what you have to offer and want to buy your products or services. However, it is about more than just selling your products or services, it is about providing a feeling of being heard, being important, and taking into consideration the wants or needs of your customer. An organization can go as far as including their customers in exchanging ideas, thoughts, and opinions on what they would like to see happen or see integrated. This allows the customer to become emotionally invested in your brand and vision. There are many methods that can be implemented to engage clients and possibly get new ones. Some methods are social media, blogs, simplify their experience, listen to customer feedback, contests, listen to their interests, communication such as phone, email, etc., and more.

While engaging your customers is important, being able to assess insight into what the clients like, need, want, or dislike is crucial to being able to engage customers. Client assessments, while can give you insights into the customer, can also provide you with information on risks that may arise, provide you with information on their values, and can even give you insight into their readiness for the changes you plan to implement.

Once you have assessed your customers’ needs or wants and you have achieved client engagement, you will want to perform a client evaluation. Performing a customer evaluation will give you insight into what the customer feels or thinks about your products or services. The evaluation is vital because it will let you know what areas you will need to work on and what are doing well. Evaluating the feedback, you receive from customers will also allow you to improve customer service as well as constantly maintain engagement and change it as needed.

While engaging your clients is important, being able to engage your employees and the organization is just as crucial to the success of the organization and any change efforts. Developing a culture of learning and change can go a long way toward being able to get everyone on board with less resistance to any change efforts that will be carried out. With a culture of learning and change the innovation, values, performance, team collaboration, engagement, satisfaction, efficiency, and so forth will be a habit that will be subconsciously carried out to the benefit of everyone from top to bottom. Successfully integrating and believing in this sort of culture will allow for better customer engagement, loyalty, and belief in your brand as well, simply because your organization believes in it.

Implementation of a New Change Initiative Plan:

Stage one: Discuss and identify the need for change, determine what may be able to meet the need, and determine whether the change can be implemented, this may include collecting data such as budgets/finances, schedule/timeframe possibility, resources available, skills needed, determine the technology that may be needed, etc. This is the data gathering and exploring stage.

Stage two: Begin processes of developing the capability or readiness of the system to be able to support and integrate the implementation of changes. This stage can be used to strengthen any weak spots in the system, write an implementation plan, define the implementation schedule, determine the teams that will be over each designated role, carry out communication, and improve any software or hardware needed to handle the capabilities, forecast any potential feedback loops, establish the points of contact, determine what training will be needed and designate trainers so they can prepare, etc. This is the installation stage due to installing and improving the system in order to prepare for the implantation of the change efforts to be carried out.

Stage three: This stage is where the final review of data happens, any extra decisions are made, and implement some aspects of the improved systems from the previous stage. The training will begin in this stage in order to prepare for full implementation of the change and counter any resistance. Evaluation and feedback will be carried out to determine any issues and adapt accordingly. This stage also consists of continued communication throughout all levels and updates of progress. This can be considered the initial implementation stage due to the very beginning stages of the change being carried out to allow for easier adaption into the full implementation and the ability to see what system areas still need to be strengthened.

Stage four: This stage can be considered the full implementation stage and is where the final steps of full integration take place. Considering the implementation stages are carried out in increments this allows for continued analysis of the process as it carries out. A review of the resources, budget, schedule, etc. can help give a view on whether everything is on task. Once all the implementation is finalized and complete the new change effort is complete in this stage.

Stage five: Even though the change effort is complete and fully integrated it does not mean that the work is done. This stage consists of monitoring the changes and adapting to any issues that may come up. This is where the performance can be measured to determine whether the changes are functioning. Several things can be looked at such as performance improvements, ROI, individual performance, KPIs, efficiency measures, satisfaction, turnover rates, etc. This stage also determines how well the changes are accepted or whether there will be any other processes to be implemented to improve an issue.

1 Comment

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