Top 5 Decision Making Models - Free eBook in PDF Format

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Business Strategy eBook  
 
 

Book Description - ISBN 978-1-54345-828-6 (40 Pages)
This free eBook describes the top 5 popular decision making models. These models can help you to use facts, analysis, and a step-by-step process to come to a rational decision.

Chapter 1 - The Vroom-Yetton-Jago Decision Model
Successful organizations are good at making a series of quality decisions that keep it focused and heading in the right direction. Many use a variety of models to help assist them in their decision making process. The Vroom-Yetton-Jago Decision Model is a common one and recognizes that not all decisions have equal importance and therefore you will use different models and tools to suit the circumstances.

Chapter 2 - The OODA Loop
Owners and management continually make choices that direct where their business goes. The OODA Loop is relatively straightforward model that enables you to think about the operations of your organization from the perspective of its four stages. As the name ‘loop’ suggests it is a continual process of observing, orientating, deciding and acting.

Chapter 3 - The Recognition-Primed Decision Model
This model is the ideal tool to use in your decision-making as it helps you to act quickly based upon the information you have on hand. The Recognition-Primed Decision (RPD) Model has three steps that you need to work through as part of your decision making – experiencing the situation, analyzing the situation and finally implementing the decision.

Chapter 4 - Paired Comparison Analysis
Most decisions are made based on the underlying priorities of its circumstances. If you are unsure where your priorities lie then the Paired Comparison Analysis model is the perfect aid in making these tough and complex choices. It also helps you to compare options where it is difficult to identify what they have in common.

Chapter 5 - The Ladder of Inference
Management must be mindful not to rush important decisions or make them to please those around them. The Ladder of Inference is a tool that helps you to avoid ‘jumping to conclusions’ based on previous experiences, biases, or other factors when making decisions.

You will learn:
  • The Vroom-Yetton-Jago Decision Model which recognizes that not all decisions have equal importance and therefore you will need to use different models and tools to suit the circumstances.
  • The OODA Loop which is relatively straightforward model that enables you to think about the operations of your organization from the perspective of its four stages.
  • The Recognition Primed Decision Model which has three steps that you need to work through as part of your decision making.
  • Paired Comparison Analysis which is designed to help you prioritize the factors under consideration.
  • The Ladder of Inference which helps you to avoid ‘jumping to conclusions’ based on previous experiences, biases, or other factors when making decisions.

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What is the Vroom Yetton Jago Model?

  • The Vroom-Yetton-Jago Decision Making Model identifies five different styles ranging from autocratic to group-based decisions based on the situation and level of involvement of the decision makers. These are:
  • Autocratic Type I in which the leader alone makes a decision using information that is available at the time.
  • Autocratic Type II in which the leader collects the required information from followers, then makes the decision alone.
  • Consultative Type I in which the leader shares the problem with relevant individuals and seeks their ideas and suggestions before making the decision alone.
  • Consultative Type II in which the leader shares the problem with relevant individuals in a group setting and seeks their ideas and suggestions before making the decision alone.
  • Group-based Type II in which the leader discuss problem with individuals as a group and solicits their suggestions through brainstorming before accepting a group-based decision.
  • Decision making is an important part of leadership and the use of this model is a great way to decide how to organize the decision making process.

 

What is the OODA Loop?

  • The OODA Loop has been adopted by business to assist in speedy decision making so that as soon as an external problem is on the horizon, a solution can be found before market competitiveness is lost.
  • This model is very simple, consisting of four stages: Observe, Orient, Decide, and Act.
  • These actions constitute a loop that continue for the life of the organization in question.
  • Stage 1 Observe: You should always be observing what is going on around you, looking for information that can help you to make smart decisions.
  • Stage 2 Orient: You have to be able to set your biases aside in order to make a choice that is based solely on the evidence in front of you.
  • Stage 3 Decide: The best decision makers are those who are confident in their choice today while remaining open to new ideas that may come along at any time.
  • Stage 4 Act: The success or failure of a given decision will depend not only on the quality of the decision itself, but also on the commitment of the individuals responsible for bringing that decision to life.
  • You will always bein all of the different phases of this loop at all times because you will have some decisions that are in the observe or orient stages, while others are residing in the decide and act stage.

 

What is the Recognition Primed Decision Model?

  • Recognition-primed decision (RPD) is a decision making approach that functions well in situation where a quick decision is essential, goals poorly defined, and information is incomplete.
  • Decisions are based on a mental model that has been developed through experience rather than by considering a series of alternative courses of action.
  • The mental model used is based on cues and indicators that let them recognise patterns.
  • Based on these patterns and the decision they have to make, the decision maker will select the first course of action that is not rejected. This is known as an ‘action script’.
  • This action script is run through a mental simulation and if the decision maker considers the action script will achieve the goal then they go ahead.
  • If not, they alter the action script and consider the modified version. If they don’t think it will work, they discard it completely and choose another action script.
  • As people develop more expertise in their field, their ability to use RPD successfully improves because they are better able to correctly recognize the salient features of a problem and model viable solutions.

 

What is Paired Comparison Analysis?

  • Paired Comparison Analysis is a good way of weighing up the relative importance of conflicting criteria.
  • It can be used when priorities are not clear, or are competing in importance. There are 6 steps in this technique:
  • Step 1: List the options to be compared as rows and columns in a table.
  • Step 2: Assign a letter to each option.
  • Step 3: Block out cells on the table where you will be comparing an option with itself.
  • Step 4: Within the remaining cells compare the option in the row with the one in the column and write down the letter of the more important option in the cell.
  • Step 5: Score the difference in importance from 0 (no difference) to 3 or 5 (major difference).
  • Step 6: Consolidate the results by adding up the total of all the values for each of the options.
  • Paired Comparison Analysis helps you to set priorities where there are conflicting demands on your resources.

 

What is the Ladder of Inference?

  • The idea behind the Ladder of Inference is to help you avoid making poor judgments based on your past experiences, biases, or other factors.
  • It describes the thinking process that we go through, usually without realizing it, to get from a fact to a decision or action.
  • In this model, there are a total of seven ‘rungs’ on the ladder that is supposed to represent the common thought process that we go through while making decisions.
  • These are : Reality and facts, Selected reality, Interpreted reality, Assumptions, Conclusions, Beliefs, and Actions.
  • Starting at the bottom of the ladder, we have reality and facts which we experience selectively based on our beliefs and prior experience.
  • We then interpret what they mean based on our existing assumptions, sometimes without considering them.
  • This allows us to draw conclusions based on the interpreted facts and our assumptions and develop beliefs based on these conclusions.
  • We then take actions that seem ‘right’ because they are based on what we believe.
  • It is only human nature to start to make decisions quickly when faced with a new problem – even if those decisions really aren’t based that deeply in facts.
  • The Ladder of Inference is all about tearing apart your lines of thinking in order to build them back up again on a better foundation.

 

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