Decision Making Involves these Concerns
Decision making involves the following concerns:
1. Creating a structure to represent all the factors in a decision and their influences and interactions
2. Generating a set of alternatives and choosing the best one which involves:
- Measuring intangibles
- Setting priorities
- Combining priorities across both tangible and intangible factors
- Performing sensitivity analysis
3. Allocating resources to projects and alternatives. To do this we need to:
- Measure performance
- Optimize the allocation
4. Planning. In planning we
- Determine the most likely outcome
- Find policies to attain a desired outcome
- Incorporate these policies in the structure and again determine the most likely outcome
- Repeat until the likely outcome converges to the desired outcome
5. Designing systems and ensuring their stability
6. Resolving conflict
7. Performing Benefits, Opportunities, Costs and Risks (BOCR) analysis
2 comments:
Modeling non-numeric factors(eg- investor goodwill) to be fit into a structure itself would be a big task.
btw, nice structure to this post - clean and informative.
Thank you Ankit. As you rightly point out, modeling non-numeric factors can be a challenge.
The way that the Analytic Hierarchy Process is designed is to use relative comparisons to establish the priority, so it enables you to actually compare both numeric (tangible) and non-numeric factors in the same model. You would ask, for example, which is more important to the decision, ROI or Building Brand? And by how much? And then you compare Building Brand to Expanding to New Geographies, etc.
What you get is a matrix of comparisons from which can be calculated the overall priorities of both the more numerically-based and non-numerically-based criteria to use as the guideposts for evaluation.
Hope that helps and keep on coming!
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