A632.1.4.RB - Multistage Decision-Making

Leaders are faced with many hard decisions in today’s ever-growing industries. The US President Dwight D. Eisenhower evidently once said: ‘the most urgent decisions are rarely the most important one’s (Krogerus, 2012, p. 10).  As leaders we are called to make the right decision at the correct time. Napoleon Bonaparte said that, “Nothing is more difficult, and therefore more precious, than to be able to decide” (Roberto, 2002). It is human nature to make decisions, from when to start dinner to when to start your own business. A good decision-making process that I just learned about is the Eisenhower matrix begins with breaking down the problem and deciding how to progress. The top half of the chart shows what tasks you can do, and the bottom half shows what tasks you can delegate. This matrix is a simple approach to understanding what tasks need attention now; what can be put off to later and what should be delegated to someone else.

Another resource available to a leader is the dynamic decision problems formula. The Wharton text explains a complex formula used by researchers to solve multistage problems.  This formula inputs the variables and probabilities to provide a solution with the greatest chance of success. This approach referred to as dynamic programming is aimed toward the idea that “a decision problem may involve a large number of stages…one need not enumerate and take expectancies of all possible contingent future realizations to arrive at an optimum decision policy” (Hoch, Kunreuther, Gunther, 2001). One-way a leader can narrow down their decision process is by asking these simple questions, such as the following: 1) Am I being myopic? 2) How appropriate is the starting analogy I'm using to solve a problem? 3) What are the penalties for making an error? And 4) what am I learning from the feedback I am receiving? (Hoch, Kunreuther, Gunther, 2001). The dynamic programming is a process for solving multistage decision problems that is widely credited to the mathematician Richard Bellman (Hoch, Kunreuther, Gunther, 2001). This complex, but effective approach is a great resource for making complex decisions. Even though I’m not in a position to utilize this equation in my current position, it will certainly be useful in the future.

As leaders we must be flexible to be able to think and make sudden decisions. A question to consistently ask ourselves is this: “does this decision outweigh the risk?” With the many resources made available to leaders, precise and well thought out decisions can reliably be achieved.

Reference:

Krogerus, M., & Tschappeler, R. (2012). The decision book: Fifty models for strategic thinking. New York: W.W. Norton &.

Roberto, M. (2002). Ivey Business Journal. Retrieved October 25, 2015, from http://iveybusinessjournal.com/publication/making-difficult-decisions-in-turbulent-times/

Hoch, S.J., & Kunreuther, H.C. (2005). Wharton on making decisions. (1^st ed.). Hoboken, NJ: John Wiley & Sons, Inc.