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Tools, techniques, and processes for making better strategic decisions.


Decison tools
                   

DECISION MAKING TOOL

WHY USE IT?

Use System 2 to make
strategy decisions

Impulsive, reactive decision making has no place in strategy creation and execution.


Look for evidence
before hypothesizing

Seeking more evidence in lieu of forming an opinion of the situation can avoid jumping to the wrong conclusion and over-reliance on anecdote.


Recognize and
eliminate anchoring

We can be "primed" by an initial piece of information (valid or not) in making comparisons and decisions.


Average multiple judgments

Averaging multiple judgments yields an estimate more accurate than its individual components, on average.


Use the base rate

In decision making, people often focus on irrelevant information rather than considering prior knowledge of the probability that something will occur.


Consider luck

Not looking for "reversion to the mean" is a trap: We see an outcome that in reality is extreme and unlikely to occur again, but we tend to predict it will recur.


Generate options
but don’t overload

Requiring or accepting that a choice must be made among limited strategy options is a false dilemma. But too many options can inhibit decision making. 


Have others challenge
your thinking

Power can lead to bad decision making.


Reframe for change

The meaning of a situation or set of circumstances comes from the frame in which we view it. Reframing the "facts" gives the situation new meaning.


Discern among
experts

“Experts” who deal with the future and base their skills on the non-repeatable past (except short-term physical processes) “are close to a fraud, performing no better than a computer, blinded by intuition.” – Nassim Nicholas Taleb


Discount sunk costs

A sunk cost is paid: It can't be recovered. Escalation of commitment to an activity based on sunk costs can block needed change and limit innovation.


Consider opportunity costs

Considering opportunity costs in strategy decisions helps ensure wise use of scarce resources.


Be a Bayesian

Statistical analysis can lead to false conclusions because of bad data, loose confidence intervals, sample bias and erroneous assumptions. Bayesians look for the base rate and then revise predictions in light of new evidence.


Lead a learning process

Planning as group learning combats shared information bias and narrow framing.


Check it off, simulate and keep score

Using a checklist, simulating, doing a pre-mortem and keeping score helps assure the quality of strategy decisions.



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