Management MCO101 – Unit 4 – Decision-making and Planning

Planning

“… planning means changing minds not making plans” – Arie de Geus

Have you heard about or been involved in a project or business that failed miserably?

Perhaps it just wasn’t as successful as it needed to be. Did you ever spend time looking back to see what caused the project to go wrong? If you did, their is a strong chance you said, “You know, we should have spent more time planning.”

Should you have? What could you plan for, and what aspects or events could you not have planned for? In the last unit we explored uncertainty and indeterminacy. Is there cases where planning is a waste of time. Do you learn by doing? Do you learn by trying? Or do you think before you do? Do you look before you leap, or simply close your eyes and jump and hope for the best?

We should be thinking of this as we put our thoughts down on paper regarding what will happen to our business in the next week, month, year, or years.

Most projects have deadlines. It seems they’re getting shorter and shorter. Hitting aggressive deadlines puts pressure on the project manager to start the project as soon as possible. However, before the project work begins, you need to spend time up-front planning to make sure that the work is properly understood and agreed to. Is everyone that needs to know what is to happen aware of their role and responsibilities?

Planning in organizations and public policy is both the organizational process of creating and maintaining a plan; and the psychological process of thinking about the activities required to create a desired future on some scale. As such, it is a fundamental property of intelligent behavior. This thought process is essential to the creation and refinement of a plan, or integration of it with other plans, that is, it combines forecasting of developments with the preparation of scenarios of how to react to them.

Good organizations convey a strong vision of where they will be in the future, and there are many ways to state the benefits of planning or anticipatory decision making. The following claimed benefits are discussed in a number of sources.

1. Planning helps decision makers by providing guidelines and goals for future decisions.

2. Planning helps a manager exercise more control in a situation, establish goals “proactively” and consider contingencies.

3. Planning can help quantify goals and establish a means of measuring success.

4. Planning can help insure that a coherent set of actions are implemented that are consistent with the values and priorities of the decision maker.

5. Planning helps allocate limited resources like staff, materials, and time in an orderly and systematic manner.

The usefulness of planning can never be better than the knowledge, judgment, and interactions of the people who comprise your planning team. These people are expected to create a shared definition of the causes and consequences of complex problems. They propose, debate, and eventually select goals and strategies for improvement. The talents to do this successfully include:

1. Knowledge of the issues. Planning has to be in the hands of people who have reasonable knowledge about what is happening, and why. But knowledge is more than technical information. It also includes social, political, economic, and ethical types of knowledge.

2. Open and constructive communications. This refers to the ability to listen to, understand, and respect a variety of philosophical positions on complex issues. Different people have their own “knowledge” (see preceding point), and all of it can be valid in different ways.

3. Dedication. This is the desire to achieve a “greater good” beyond the individual good of any single department, project, or person. Every person in a planning group has special interests that he or she supports and opposes. But it is not every person who is able to subordinate his or her personal interests for the sake of the country as a whole.

4. Creativeness. If old ways work, then there is no need for planning. If old ways work, then improvement goals will be achieved without any extra effort. Clearly, this is never the case. Planning is always about innovation. Planning must have a creative flavor to it, or it will not transcend old ways.

The essence of strategic planning is to escape the year-to-year crisis management that afflicts every organization, and to look for solutions that dig deeper. Planning teams can help with this. In strategic planning, you are not trying to solve individual problems one by one. Rather, you are again examining what we discussed in the previous unit, you are consideringcomplex systems of problems, and this requires digging to the roots.

Main Pitfalls of Planning

The main pitfall from which all others derive is falling into the delusion that planning can determine outcome.

PLANNING IS ONLY AS GOOD AS THE INFORMATION ON WHICH IT IS BASED. Too often, groups rely on untested assumptions or hunches, erecting their plans on unsteady ground.

PLANNING ISN’T MAGIC: YOU CAN’T ALWAYS GET WHAT YOU WANT. Frequently, organizations contemplating new initiatives begin by writing the last page of their plans, the one where everyone lives happily ever after. But the process of planning is one of research and investigation. Considering a major expansion of activity means taking stock of organizational readiness in many ways. Is there an audience or constituency? Do you have access to the policymakers? The material resources? The time required to do it right? Planning is a tool that can help you decide whether to go forward, not just how. If the answers to key questions are “no,” then the outcome of planning should be to postpone the contemplated expansion, working toward readiness to tackle it farther down the road.

PLANS ARE ADAPTABLE. An organization isn’t an artifact to be set in place with planks and nails. In contrast to a construction project, organization-building is never complete; an organization’s choices are to continuously adapt or die. Rather than planning as if the future were pre-determined, plan for flexibility. Plans that can’t be changed shouldn’t be written.

PUT PLANNING IN ITS PLACE AND TIME. Some groups don’t recognize that it takes time and effort to plan well. They want the results but aren’t able or willing to make the investment. They end up in the worst of both worlds: their ongoing work is set back because they took time to plan without thinking through the implications and their too-rushed plans end up meaningless. Be realistic about what you can invest. Find a way to plan that suits your available resources – time, energy, money.

GROUPS CAN BE BLINDSIDED BY THE ISSUES THAT PLANNING REVEALS. There’s a mollifying rhythm to the daily grind, as diligence, deadlines, and distractions keep tensions and conflicts at bay. When an organization pauses to plan, what’s been submerged may come up for air. When an organization undertakes to plan, everyone should be made aware that issues may arise that need talking through, that there may be moments of heat, struggle, even head-on collision. Your planning process should include the time, focus, and talent for the mediation needed to resolve such conflicts, so you can turn to face the future as a team.

WRITING IT UP IN PLANSPEAK RATHER THAN PLAIN LANGUAGE UNDOES THE GOOD OF PLANNING. Sometimes organizations have great face-to-face planning experiences: good discussions, moments of profound insight, the excitement of contemplating future possibility, the elation of a meeting of the minds. But feelings don’t last long: they need to be carried forward into action, guided by a written plan. Some planning documents are written so vaguely, abstract, and general, they’re useless to the people who invested so much in their development. As time goes by and the memory of the face-to-face experience fades, the planning document’s generalities are drained of any meaning that might once have clung to them. If you are going to take the time to plan, talk through alternative scenarios for realizing your aims; map out ways to test them; be concrete about deadlines, and evaluation methods. Put enough flesh on the bare bones of your plans to keep the document alive and kicking or it will be buried in a drawer before the ink has dried.

Goals

Once you have planned your project, turn your attention to developing several goals that will enable you to be successful. Goals should be SMART – specific, measurable, agreed upon, realistic and time-based.

A goal might be to hold a weekly project meeting with the key members of your team or to organise and run a continuous test programme throughout the project. Goals may be distal – long-term or primary, or proximal goals – short-term and more immediate.

The acronym SMART has a number of slightly different variations, which can be used to provide a more comprehensive definition for goal setting:

S – specific, significant, stretching

M – measurable, meaningful, motivational

A – agreed upon, attainable, achievable, acceptable, action-oriented

R – realistic, relevant, reasonable, rewarding, results-oriented

T – time-based, timely, tangible, trackable

SMART Goals

Specific

* Well defined
* Clear to anyone that has a basic knowledge of the project

Measurable

* Know if the goal is obtainable and how far away completion is
* Know when it has been achieved

Agreed Upon

* Agreement with all the stakeholders what the goals should be

Realistic

* Within the availability of resources, knowledge and time

Time Based

* Enough time to achieve the goal
* Not too much time, which can affect project performance

Decision-Making

Decision making in management is an important skill – and making the right decisions is essential. Every manager should be looking to improve their decision making skills. Human performance in decision making terms has been subject of active research from several perspectives. From a psychological perspective, it is necessary to examine individual decisions in the context of a set of needs, preferences an individual has and values he/she seeks. From a cognitive perspective, the decision making process must be regarded as a continuous process integrated in the interaction with the environment.

Rational decision making

Have a look at this video from Google on decision making and chance:

Rational decision making The process is one that is logical and follows the orderly path from problem identification through solution.

The Rational Decision Making is a seven step model for making rational and logical reasons:

A rational, seven-step decision-making method: How to make a “perfect” decision

1. Define the problem. The first step in the technology adoption decision process is to define the problem, the need, or the opportunity. Although this may seem either trivial or obvious, quite frequently it is neither. Many of us have had the experience of essentially wasting days and weeks working to solve a problem and then finding out that various members of the group had different definitions of the problem leading to significantly different assumptions about the process. Everyone involved in the decision must have the same frame of reference in terms of the problem, the need, or the opportunity. It may even help to generate a formal problem statement.

2. Generate all possible solutions. The second step in the process is to generate all possible solutions. This involves active searches for information and alternatives. Group process techniques such as brainstorming and assigning someone to play “Devil’s Advocate” are frequently helpful. Many new technologies get chosen and implemented without a thorough exploration of the alternatives. This can happen because the technology decision is dictated from a higher organisational level or because the new technology is perceived as the latest “thing” being used by “everyone.” It is at this point in the process that technological gatekeepers become valuable. Information must be gathered from vendors and other users, at trade shows and from the trade and more academic publications. If you do not fully explore and become aware of your options, you cannot make an optimal decision.

3. Generate objective assessment criteria. After having clearly defined the problem, need, or opportunity and then gathering and exploring all of the relevant information and alternatives, you must then evaluate the information and the alternatives and anticipate the consequences of the various options open to you. It is very helpful at this point to establish objective criteria against which to compare the alternatives. This is also the point at which you need to establish the operational criteria against which you will measure the success or failure of the choice once implemented.

4. Choose the best solution from those generated in step 2 above, based on criteria generated in step 3 above. The fourth step is to select the best solution based on the evaluation and analyses conducted in step 3. Once the first three steps have been completed, this step should be relatively straight-forward. These four steps form the core of the rational decision-making method.

5. Implement the chosen alternative.

6. Evaluate the “success” of the chosen alternative.

7. Modify the decision and actions taken based on the evaluation done in step 6.

There are several assumptions, requirements or cautions for the success of the rational decision-making process that must be considered:

This process assumes that you have or can obtain adequate information, both in terms of accuracy, quality, and quantity, about the situation and the alternative technical innovations.

This process assumes that you have or can obtain substantive knowledge of the cause-and-effect relationships relevant to the evaluation of alternatives. In other words, it assumes that you have knowledge of all of the alternatives and all of the consequences of the alternatives.

This process assumes that you have or can generate a way of applying the values and interests involved in order to rationally and objectively judge the alternatives. That is, it assumes that you can somehow rank-order the alternatives or generate satisfactory decision-rules or criteria for choice.

We can derive, from these assumptions and requirements, several limitations of the rational decision-making model:

* It requires a great deal of time.
* It requires a great deal of information.
* It assumes rational, measurable criteria are available and agreed upon.
* It assumes accurate, stable, and complete knowledge of alternatives, preferences, goals, and consequences.
* It assumes a rational, reasonable, non-political world.

The bounded rational process: A more realistic version

The rational decision-making model is also referred to as an optimising model of decision-making. Among its many assumptions is that there is a single, best solution that will maximise the desired outcomes. The bounded rationality model, however, suggests that people reduce problems and decisions to a level at which they can be understood. This model suggests that we interpret information and extract essential features, and then within these bounds, we behave rationally.

This process is also seen to be compromising, rather than as optimising. The decision-maker is assumed to choose a solution that is not quite the ultimately perfect choice or is assumed to choose the first solution that is “good enough” based on our limited capacity to handle complexity, ambiguity and information. The steps are basically the same seven discussed above, but it is assumed that we will not have perfect knowledge about all of the available alternatives or perfectly objective, rational and measurable criteria for choice or evaluation and feedback.

Consider this:

Techniques to improve group decision-making

More on decision-making here.

Interesting white paper here.

And here.

De Geus, A.P., Planning As Learning, Harvard Business Review, March-April, 1988

To view slides full page or to download them click HERE.

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