Decision Making Strategies: 6 Models for Success | Rebecca Brizi | Skillshare

Decision Making Strategies: 6 Models for Success

Rebecca Brizi, Strategy and Business Growth

Play Speed
  • 0.5x
  • 1x (Normal)
  • 1.25x
  • 1.5x
  • 2x
14 Lessons (56m)
    • 1. Intro

      2:09
    • 2. Pre Game: three types of decisions

      2:50
    • 3. Solve the right problem

      2:32
    • 4. Your Course Project

      2:16
    • 5. Pre Mortem: Preparation

      4:09
    • 6. Pre Mortem: Analysis

      3:16
    • 7. Decision Trees

      4:21
    • 8. Decision Matrix

      7:09
    • 9. Direct Comparison

      3:57
    • 10. Gains & Losses

      9:01
    • 11. Ease Benefit

      4:18
    • 12. PMI Analysis

      4:49
    • 13. Complex vs Complicated

      3:17
    • 14. Outro

      2:12

About This Class

Bad decision making is the number one factor in destroying the value of a company.

Decisions are difficult: you can make a decision in one part of your business, that will affect a completely different area in ways you didn't expect. And it feels impossible to guess what the long term consequences of any decision will be.

In this course you will learn some of the most popular methods and models for making business decisions. We will explain how to use each model, but even more importantly, you will learn:

  1. How to examine the interdependencies of decisions in business
  2. How to objectively define "pros" and "cons"
  3. How to analyse possible outcomes

and more beyond... All skills that will make the difference between a good enough decision, and a great decision. 

8f4d0f66

Transcripts

1. Intro: decisions, decisions, decisions. Where to even begin. Welcome to this course on decision making models. This course is aimed mainly at the business professional, whether you run the business or work in the business at any level. Running a business requires constant decision making from the minute to the complex. Everything in between each decision made has huge impacts for everything that comes afterwards. And that's why there exists so many different models to approach your decision, making your problem solving and your critical thinking in these complex situations. The course outline What can you expect in the upcoming videos? Will start with the pregame section, which will explain what a decision is and the different types of decisions that get made in a business to help you isolate out what appropriate decision situation is for this course, I will then give an overview of the project that you're doing. That's where you will take the decision that you've determined after the pregame video and understand how to apply it to your project throughout. And then we'll go through the six different decision making models and look at why you might use that particular model. What the benefit of that model is and then in detail how that model works. And while you will learn the different decision making models, the number one thing I want you to take away from this course is the complexity and the different areas of criteria that go into every single decision made. For those of you who have not seen this particular sofa and this setting before, this is probably your first introduction to me. Rebecca Brite. See, I'm a strategic consultant. I have videos on YouTube, consultant Corner in the Freelance Translator tips channel, and they are always on the sofa. And that's why I say it might be familiar to some of you. Already. I consult with small businesses primarily, but also back offices in large corporate. The commonality amongst my clients is teams of anywhere from one 2 50 employees. Decisions are constant, they are complex, and understanding all of the dependencies is essential to being good at moving a business forward. Off you go into the course. Enjoy 2. Pre Game: three types of decisions : pre gaming your decision making project. If you're making hundreds of decisions a day running a business, that doesn't mean you need to apply a full decision making model to every single one. Thes models are for decisions about change management change management can be either driven by a problem that has arisen and needs a solution, a fundamental change to the business. Or it could be a proactive choice to pursue a new goal, a new targets, a new growth outcome and so on. In this pregame section, I'm going to explain to three types of decisions that get made in business strategic, tactical and operational and how to identify the differences between each. The first type of decision is the strategic decision. A strategic decision makes a change to the business that has implications for many parts of the business. It also means that the business has fundamentally changed. This isn't a single moment in time decision. This is a decision that impacts the business from here on, after strategic decisions are ones like developing a whole new product line, creating a whole new position, pursuing a new client base, a major rebrand, scrapping a huge department or a huge marketing plan in favor of another one. These are all examples, and you could find a dozen more of strategic decisions. Decisions that will change the business throughout. A tactical decision has a slightly smaller impact. A simple way to think of a tactical decision is a decision that changes a particular part of the business but not the business. Overall. An example of a tactical decision might be a marketing department, which has a blawg but no social media strategy, deciding to implement a social media strategy and start to support various online profiles . That is a change for that one department, but not necessarily for the rest of the business. It doesn't necessarily change the overarching goals of the business. The resource is of the business. And the way the businesses run a tactical decision has an impact within very defined boundaries. It is, in essence, a change in tactics, but not necessarily in overarching strategy that encompasses the business as a whole. The third type of decision is the operational decision, and the operational decision has a minor impact. Now I say minor in the sense of the impact on the business it could have a significant impact on the individuals involved. But it is not changing the business as a whole, and it is not changing a department as a whole. If there is a reallocation of resource is it is simply from one place to another, it doesn't require whole new resource is or a redesign of any part of the business on operational change might be something like We're going to publish these block posts on Tuesdays instead of Wednesday's, or we're going to change the font scheme and design of the Blawg. 3. Solve the right problem: With any decision-making exercise, you want to make sure that you are in fact solving the correct problem. We held the tendency as humans, we all do it to state a problem through its solution. Instead of saying, how do we fix this problem, we tend to say, how do we implement the solution? The risk with that approach is that we have not taken the time to properly diagnosed the problem. We don't have the correct data, and therefore we're solving the wrong problem. A very typical example where this happens is the question, how do we increase sales? Well, the answer to that is easy. Run to helicopter drop flyers all across New York City. Higher Drake to be your spokesperson, boom, sales increase. This question is not presenting a problem. It's presenting a solution which is to increase sales. The problem is, why do we have to increase sales? There is an underlying problem that has made somebody think, Well, we should increase sales. Find the actual problem that needs solving. And you will be creating a better solution because you're focusing on the right problem. Are you simply not reaching your targets? Is it a quantitative factor? But what if you have the wrong targets? Could that be the issue? What bout if your problem is actually a lack of sales training? Maybe your salespeople just aren't as good as you'd like them to be. Maybe your messaging isn't very effective and you're not getting across to the right people in the right way. Could it be that your product is just much too difficult to adopt? Maybe your clients find it so much work to actually implement and use the product that it's not worth buying anymore. Which of these is the actual problem? Examine your problem and depth to find the underlying cause. That's what you want to be solving. Let's see that after some analysis you have revealed that the problem in your case is cumbersome adoption. People do like your product, leads are coming in and your sales team are great. But clients are getting cold feet because implementing your product is so much work. Now you know what problem to solve and to do it, you have to involve your salespeople, your customer support people, your product development people to find a solution. This will require using a framework. 4. Your Course Project: your project for this course is to select a major decision for your business and work through each model to consider your options for that decision, at the end of which you will be able to compare the results you've gotten from each model, have they given you similar outcomes? Are they pointing towards the same decisions or different decisions and why? By doing this with the rial business issue, you will also develop a better understanding of your business. Thes models will make you think about different signs of your business, or look at your business in new ways. How to select the decision for this project? Well, first of all, if you have a major decision you have to make in your business, obviously use that use that riel life. A current example. Is there a major problem in your business? Has something being stagnant a major obstacle? Is there a bottle that, or have you already been considering a major change in your business? Perhaps pursuing a new market, creating a new role, developing new partnerships, re raising all of your contracts, a product development If there is nothing pressing right now, if you're not coming to this course with a live situation that you're facing for a decision , then think back to the past 12 months in your business and select a moment of impact. Use that as an example. Think of what had changed or what had caused the change and pretend that you're back in that moment and starting over. Try not to be influenced by the decision that you did make, but rather think of this in a neutral way and work through that situation for your project . Once you've chosen the decision you're working on for the project, select three options. Fourth, this decision. You might already have them if you're working off of a live example. If not, here's a simple way to choose your three options. One. Do something big and drastic. A major change without considering limitations of resource is if you could do anything, what would you do to select the bootstrapped option if you need to make a decision with limited resource is maybe in a smaller scope of time. What would that option B and number three can be doing? Nothing. Maintaining the status quo. You can use those as your three options for the decision and work through the models for each of those three. All right, you have pre gamed. You're ready to go. Let's get started. 5. Pre Mortem: Preparation: the pre mortem, I confess a soft spot for this particular method. I find that it's both very open minded as a process and also somewhat liberating. It tends to engender really good discussion and bring out things that might not otherwise come to the fore, especially if you're in a group brainstorming environment. What is the pre Morse? Um, I'm guessing most of you have heard the expression Post Morse. Um, very simply it means after death. Anybody who watches a true crime show or law and order knows that this is what happens on the cadavers in the shows in order to analyze the causes of death. The pre mortem means before death. How does that work as a decision making strategy? What does it mean in practice? In making a big strategic decision, you always start with What does success look like? You sort of start at the end, so to speak. You know what the ideal outcome that you want is that might change as you go along, but you have a goal, a vision of success in mind. Supposedly in starting this project, you've already got that when you were picking your project for this course, you have this idea of success that you want to achieve with the pre Morse. Um, instead of envisioning success, we envisioned failure. There are two different ways to set up the pre Morse. Um, there's what I call the disaster scenario and then the disaster prevention. Let's start with the disaster scenario. As I said, you're going to start at the end where the worst case scenario has occurred. Everything has gone wrong. The project has been an abject failure. So Step one is to write out your worst case scenario, describe it. What has happened? This is like designing your vision of success, just that you're designing your vision of failure. Describe the entire environment, the occurrence and what it means for you. Where has that left you? Now we're going to move a step back from that. Looking at that worst case scenario outcome, what were all the targets that you did not meet? That led to that failure? In order to achieve success, you would have had to meet certain targets. So what are the targets that were not met? The outcome of which was this abject failure, what was missed? What was not achieved what was done wrong, right that out as a full list all the unmet targets and then one step back again, why were those targets not met? What went wrong in the tasks in the operation that meant the targets were unmet. That then led to the abject failure. For those of you who ever heard of the five wise approach ask why five times to get to the real answer. This is kind of the same thing, except that we're moving backwards. We're starting with a vision of failure and then moving backwards in time asking why, why we got to that failure, why we got to that failure and so on and so forth until you get right back to where you are now create the full list of all the unmet targets and everything that went wrong to bring you to that failure scenario. That's the disaster scenario approach to the pre mawrtians. The other method of preparation for a pre mortem is what I call disaster prevention. We're starting at the end again, but this time we envision success. If this project is successful, what does it look like? Describe the aspiration, draw the picture of success and now make an ongoing, comprehensive, huge list of everything that could go wrong. I don't care how small or big it is, how minute or how impactful think about your resource is or lack thereof. Think about problems with people. Problems with logistics, problems with tools, problems with decisions, problems with clients, perhaps external environment problems. Problems with competition, things, breaking things, not doing what they're supposed to do. Things being unreliable. People being unreliable. Go on and on. Create a full, comprehensive list of everything that could go wrong. Nothing is too small for this. At the end. You should have a nice long list of potential problems in both the disaster scenario and the disaster prevention approach. Your ending up with a list of things that went wrong or things that could go wrong. You're ending up with a comprehensive list of all the potential problems. Now let's look at how to deal with this list. The pre mortem analysis 6. Pre Mortem: Analysis: take that list of problems that you created after the previous video. It's a long list, I said. There's nothing to minute or too big for this list. This is supposed to be a completely comprehensive list. Now go through everything that you have on this disaster list. The first thing to do is to remove the simple problems. These are problems that can be dealt with by one single person or can be solved in a single action. These are problems that might be an annoyance but are not going to derail the project as a whole. I want you to remove all of those problems from your list, but I don't want you to cancel or erase them. You're going to set them aside, put them on a separate list. I call us the awareness list. These aren't necessarily obstacles or hurdles to success. However. There's still things that could arise throughout your project if you put them onto your awareness list and keep that handy as you work forward. When you encounter one of these problems, you've got your solution written out already because you've gone through that process now in the preparation now you're left with the more impactful problems, the types of problems that really could derail the project that really could dictate the difference between success and failure. I want you to go through them one by one and right out the solution. I want you to think of two sides of the solution, prevention and resolution. What can you do to prevent this problem occurring at all? And if the problem still occurs, what would you do to resolve it? So you've got a list of problems and a two column response to IT prevention resolution, how you can avoid or fix these problems if and when they do occur in your project. Once you've done all of this, look at these problems at a high level. How many of these problems are surmountable? How many of them are insurmountable? How likely are they to occur once you've gone through this whole exercise? How confident do you feel about the success of this project? With this particular decision being made, would you move forward on the decision, or would you not now, for your project, go through the whole process, the whole pre mortem for your three options, and then determine of the three options, which is the best one based on what I have learned in my pre mortem, it might not be the one with the fewest number of problems, because one decision might actually present more problems. But they're all simple problems simple toe overcome. So that means the risk of that particular decision is lower. Complete your thorough analysis. Do this for all three and then use a mixture of the data, what you have written down and your instinct. What you've learned after going through this process to determine the best decision of the 31 quick last note. One of the great advantages of the pre mortem and one of the reasons I say I have a soft spot for this one is that it creates a great environment to talk about everything that could go wrong. And that will go wrong because that's the whole point of the exercise in a business environment. You do want to include all relevant stakeholders in these decisions and in these project discussions. But it could be difficult in a group environment to have a candid conversation about all the potential problems to have a very negative focus conversation. What I like about the pre mortem is that it forces you to do that, and it brings out all sorts of things that you might otherwise struggle to extract from your team. 7. Decision Trees: decision trees. There's a good chance that most of you have seen some form of a decision tree before this course decision Trees are a visual discussion of the options available in your decision, and they use what are basically flow charts as a business tool. They were developed in the sixties mainly for financial considerations, and have since evolved to be used in a wide variety of business decisions but still often have a financial component to them. The advantage of a decision tree is that the use of a visual allows you to see all your solution options side by side. You can make a direct comparison at each stage of your decision making process. What is a decision tree? I am going to use some of the standard vocabulary of decision trees, so there'll be a few new terms to learn. The 1st 1 is the root note of root. Note is, very simply, your starting point. If we're using the analogy of the tree in a decision tree, the root note is your root, the point from which the rest of the tree develops. My tip is to use a question as your root note. If you were considering opening a new factory. For example, don't make the root note new factory, but rather write down the question. Do I open this factory? Your root note is your starting points worded as a question from your root node, you will design branches in the visual in the chart. These are lines that go from your root note into various directions. What they are in the decision tree is a list of your options sticking with the same example . Do I open this factory? That root node will have two branches, one that says yes and one that says no. At a minimum, you will always have two branches. Your branches are your potential answers your options to answer that question. The options available to you at the end of each branch is a leaf note. That is your next question. Do I open this factory? Yes. What's the question that comes after that? Do I have the resource is available? Where do I open this factory or went or with what partner? Each branch stems off into the next question. If this, then what? If I choose this option, then what has to happen? You will keep building branches and leaf nodes until you have no more questions. At this point, you can step back and look at the decision tree as a whole. Examine each journey and pick the one that is best for you. There are additional things you can do here to denote specific types of answers. For example, if there is a high risk factor, you might use a different shape on that particular leaf note. That's how you get the different shapes that you see in a traditional flow charts. The other thing you can do is add the financial implications to the branches. That's something else that you'll often see. Let me show you some examples. The first is an example have taken from Tutor two u dot net. This shows a fairly standard business decision. How to raise sales for a business and three different options. For doing that, they have an up sell option launching a loyalty card, a cutback option, cutting prices and a status quo option, doing nothing. And as you can see, they've then connected the financial implications to each of those decisions. And on the far right, they can determine which decision is going to bring them the biggest returns. They might also connect a risk factor to this or a probability factor. This is a nice clean example without too many leaf notes and shows you how this works and how you can associate those costs for those financial considerations to your decision tree . Here's another decision. Tree. I got this from the next tech website. What should you do today? Do you have work to do? Yes, Well, in that case, you should stay in. But what if you don't have work to do? Then the next step of my decision is going to be based on the weather outlook. I have three options for that. It could be sunny. It could be overcast. Or it could be Rainey. You see how we keep going through branches and nodes until we get to a decision One way or another, I can then look at all these considerations in determining the weather and whether I have work to do. I know exactly which decision to make. For those of you familiar with the X K C D websites, you'll know pretty much what we're getting here. It's a guy to using flow charts presented in a flow chart. Yes, this also is a decision tree. It's time to apply this to your own project. Start with the one question that you had asked in the consideration of the decision that you're making and then start to list out your options and try to build a single decision tree for all your various options. 8. Decision Matrix: said Decision Matrix in this lesson will go through the decision Matrix, also known as the Pew Matrix, as it was developed by Professor Stuart Pew. Pew was a professor of product design and development, and he created the first version of this matrix as a way to make decisions about product development or product design. A strong advantage of the decision matrix is the way in which it removes bias. If you use this model correctly, you will overcome any innate bias that you have about a situation. When I give an example leisure in this particular lesson, I'm going to use the example of interviewing candidates to hire. It is a classic situation where personal bias can end up playing a role even when we don't intend it to and are not aware that it's happening. We might subconsciously prefer a candidate who sounds like us or is wearing that cool pair of glasses or has a confident walk. The decision matrix gets us beyond those innate, maybe subconscious preferences that we might bring into the decision. Otherwise, how does it work? The key elements of a decision matrix are your options for the decision that you're making in the project we're doing in this course. We've got three options we devised at the very beginning, and then we have criteria for making the decision. So we determine what is important in making this decision. What criteria do we value to say this is good or bad? And then there's an extra step where we add a weight to those criteria so we can create a list of five criteria or 20 criteria and determine which criteria are more important, which are essentials which are nice to haves. And by giving a weight to those we can then determine not just which options fit our criteria, but which options fit our most important criteria. So in summary, you list your options. You determine which options match which criteria, and you give them a point based on a scale. Before I delve into a visual example of this, I want to make a note on scales and how to choose your scales. Should it be 123 Should it be 1 to 5? Should it be 1 to 10? My suggestion with this is that less is more the broader the range that you use, then the harder it's going to be to compare different people's views. If you have a 1 to 10 what really is a difference between a six and a seven, or even a three and a four? The more options you have, the harder it is to understand how people are evaluation, those options, how they're really giving those points 123 is a great scale. Even when using 123 I will often say it's actually 0 to 3. If a particular criteria is 100% absent, that might depend on the type of decision that you're making. But take that into consideration. Should the number zero be part of your scale? If you're doing a 1 to 5, I would probably ignore the zero have a very determined definition of what one is, what five is and what three is, and then you can use the two and the four. For one, that criteria is a little bit present or somewhat present, but doesn't exactly match your definition of 13 or five. There is another option for doing scales. I have used this rarely, but there are occasions where this comes in handy, and that is to use drastic numbers. You might have 13 and 20 for example, where something really deserves strong consideration. You might also think about whether a particular criteria or the lack of a protic particular criteria detracts from the evaluation, in which case you might want to go into negative numbers. Use those extreme scales rarely be very selective of when you use them, because again they are going to create confusion. But bear in mind that those are effective tools when the situation is correct for the project you're doing here for your project. In this course, I suggest a 123 Keep it simple. This is about learning the model. Let's design our decision. Matrix table. Let's start with the rose. Your rose are your options. I'm using the example here of evaluating candidates for higher, so I'm going to write Candidate one candidate to and candidate three in thes Rose. When you're doing your project right out the actual three options that you're considering for your project for this course. Next, let's design our columns. The columns are the criteria that we're using to evaluate these options. In this case, the candidates in today's example we might be using criteria like critical thinking, problem solving contacts. What kind of a role Adex can this person bring to the job and technical skill? Before we start our evaluation? We're going to add one more consideration to each of these criteria, and that is to determine how important they are. Autonomy for the weight I'm giving to my criteria I'm also going to use a 123 1 to 5 is also perfectly acceptable for managing these criteria. Critical thinking. How important is this particular criteria in selecting the right candidates? We've determined that this criteria is very important. We want somebody who can work autonomously, who is going to evaluate its each situation on its own merits and Condell with new developments in situations as they arise. So critical thinking gets a weight of three problem solving somewhat important, but they will be instructed that when they come across an obstacle, we have a group triage system for solving those so that everybody learns from everybody else's problems. So I'm going to give it a weight of one. It matters, but it's not the deciding factor in of itself contacts. I want this person to come with a good Rollo Decks because they can bring in important contacts for our business. And I'm going to give it a two where a business that's looking to grow so everybody's network mashers, even though it's not essential to getting the job done technical skill for this particular role. I'm going to give it a one. There's a lot that this person can learn on the job, and we have great training programs in place. So while I need them to have a base understanding, I expect to develop their technical skill on the job. Now I feel in my table. As I interview each candidate, I'm making notes about their abilities about the impression that they make based on what they say, as well as their past experience, their CVS and any supporting documentation. And after each interview, I feel in this table the same evaluation is carried through two candidates, two and candidates three, and we fill in the numbers based on how they exhibit these particular criteria. Once I'm done with all three candidates, I do the math. I don't simply sum up the numbers in each row, but rather I take the number of each cell and multiply it for the weight I've given to that criteria. And then I add those numbers at the end. This is what my table looks like, and this is how I can determine which candidate has the highest score. The purpose is to consider the things that are important, but make sure that just cause somebody talks a good talk and has a great role, Adex. I'm not actually giving that more importance than the critical thinking or the various things that are crucially important to the role. That's how this method removes bias from your decision. It's your turn. Build out your decision matrix, list your three options in the rose and then consider your criteria and how important each criteria is for the on going development of your business based on this decision and fill in your charts. 9. Direct Comparison: a direct comparison analysis. This method is different because it pitches each option against one another directly. Your options for a decision basically have to battle it out amongst each other in most other methods for decision making. You look at your decisions one at a time, or evaluate each on its own merits. With a direct comparison analysis, you're evaluating each option against the merits of the other options available. The advantage to this method is that direct comparison of pros and cons. It forces you to talk through those comparisons and essentially decide which benefits are more important to you and which obstacles may actually be more problematic for you. How does the direct comparison analysis work? You lay out your list of options. Yes, there is a visual for this and we will come to that and then you pitch each option against all other options. So option one versus Option two. Then option one versus Option three, an option to versus Option three. You decide who wins in each of those bash ALS. Which option comes out ahead as more beneficial to you, and you also decide by how much you give a weight scale to the outcome of the bashful, if you will. So you might say, for example, you pitch option A against Option B. You determine that option B is better by a lot, say three points. So when you have all of your options compared against one another, you're not just saying which one is better than another one, but also is it a lot better or just a little bit better? And you use that wait to make your decision that is your score, so to speak before we see this in action. A note on scales and the note is to see the previous lecture for more in depth information on scales. For the sake of the direct comparison analysis, I advise specifically using a scale from 0 to 3. You will use a zero when there isn't effect. No difference in outcome between the two options. One is a little bit of difference to is significant difference, and three is outstanding difference. Let's see direct comparison analysis in action. The visual for direct comparison analysis also uses a table. You're going to build your table by putting all of your options both in the rose and in the columns like. So you have the same rose as you do columns going through this. You will pitch each row against each column so that you pitch each option against the other options, of course, graying out or somehow obscuring the duplicates and where an option would be pitched just against itself. Now the battle commences. Look at Option A and consider it against Option B. Haven't in depth discussion as to which option would be better for you. A group environment is beneficial here, not too large, But having multiple voices will allow the conversation to address all the different scenarios that can arise. You can also use a debate method where you take a small group of people and assign half of them toe one option and half to the other and have them debated out. Each group has to defend one particular option over another. The important thing is to make sure that you are considering everything that could go well and everything that could go wrong. But discussing it as a direct comparison things will go basher here or worse over there. That is a slightly different type of discussion than what you've been having in the previous examples where you were looking at each option on its own. Determine your winner for each battle and by how much. Go through your table, compare each option against the other and right out which option wins and by how much? 012 or three. These battles, so to speak, are the qualitative analysis. Once you're done with oldest, you jump to the quantitative analysis tally up not just how many times each option has one , but also add the numbers of by how much do the math and come to your final numbers. The highest number should be pointing to the best option for you now over to you for this part of the project. Build your table, list your options in both your rose and your columns and have them battle it out to see who wins. 10. Gains & Losses: gains and losses. This is a method that I created by putting together lessons learned through education and experience. It's a method that I often used, especially for the many years that I worked in house at a small business. It works while in that context for two main reasons. One. It's a good way to evaluate some of the more ethereal elements of decision making some of those thoughts and considerations and sometimes abstract concepts that might otherwise not come to the fore. And to, As I said, I was in a small business 10 employees, 20 up to 30 and so we didn't have. The resource is for external research or, frankly, a lot of time to spend on each decision. Brainstorming through this particular model was a quick way to find solutions. Also note. I have another course on this platform that goes through this specific model in great depth . How does this model work? Gains and losses is premised on the fact that with every decision, something must be gained. Otherwise, what's the point in making the change at all? But life is balanced, and every decision also incurs a loss, because when something changes, it does mean that something has to go. What we do with the gains and losses method is create distinct categories into which each gain and each loss can be examined. It's a way to cover all possible situations and to really think about them in terms of upside or downside, more or less again, like with some of the other models to hopefully facilitate the more difficult conversations as well. As always, this is both qualitative and quantitative. So there's the brainstorming in which you discuss the gains and losses. And then when a decision is made about each category, you look at the likelihood of that gain or loss occurring and the impact that that gain or loss will have on the business going forward. Let's look at this in practice. Let's start with gains. Take your three options and consider what you will gain in your business. With each of these decisions, gains have four categories. The first category is happiness. What is gained in happiness with this particular option, happiness is probably the most abstract of all the categories of gains and losses. You have to think about what happiness means within your business for you, for your employees for your customers. For all your stakeholders, Think about things like motivation or loyalty. What's going to make your place of work a nice place to work, a nice place in which to do business? What would make your employees or your customers have a positive memory about the experience with you? The next category is cash, specifically cash, not revenue. We're talking here about cash in hand. You want to consider if this decision gives you a gain in cash, and if so, is it a one off gain or is it a continuous game? The reason you want to isolate cash is so that you don't create a confusion between cash in hand versus an asset or a promise for the future. In this case, we're focusing on liquidity. So, consider is there a gain in cash? The third category for gains is growth. Here's where you can start to look a revenue in growth. You can look at anything that already exists in your business and consider will you get more of that thing? More revenue, more business, more market share, more clients, more products, more employees and does before. Is this a moment of growth, Or is this ongoing growth and is it sustainable? Will I have the resources to sustain this growth? Because remember that more clients means more work. More employees means more resource is and so on and so forth. So what will you have more off? And can you support that growth? A quick comment on why cash is separated out because, of course, you could have more cash. The reason we separate these out is to make sure that cash and revenue do not get confused . And the fourth category of gains is options. If growth was any place where you could say more of than options is any place where you can say I knew something that does not exist before? So think about whole new revenue streams, whole new markets, new positions, new products, new partnerships. This is not about doing more of what you're already doing. It's about doing things after this decision that you could not do prior to the decision. So what new options could this decision bring to your business? If any one option at a time, go through and consider all these areas of gains and for each when you have determined what the game is, give a numerical score to the likelihood that this will happen. Maybe this change is going to bring a gain in happiness. Because Eido, all my employees have been asking for this. So that's fairly certain. I'm gonna put that at a two on a scale of 1 to 3 and then also determine the impact that this will have. Maybe your employees are already happy and this is an upside. And it'll have an impact because employee happiness is always positive, but not that big an impact. This is something they want, but it's not a deal breaker to them working there. So maybe you're scale for impact. In this case is one again with scales, I suggest 123 to make sure that you know exactly what you mean. When you're using those numbers, less is more. Now we brainstorm through our losses categories. We have three categories for your losses. We think of losses in a different way from how we think about gains. Your first category is money in your losses. We are putting revenue and cash all in the same category. So this is a loss in revenue or a loss in cash. But as you're thinking through these losses, I do want you to distinguish one and the other. Is this a loss in revenue or loss in cash? Generally, a loss in cash is immediate, and one off a loss in revenue tends to be ongoing. When you think about your loss in money, consider how much you will lose. Consider if it is a one off loss or ongoing, and also consider if the loss occurs in the immediate future or in the later future. The reason for this is that a loss that happens later in time is much more difficult to accept than a loss that happens closer in time to the decision being made. If I make a decision now, and I know that I'm going to lose money for it on example of that would be buying a new resource, perhaps new hardware or a software tool for your business. If I pay for that now and receive the objects now, then I see that direct relation between what I've lost on what I've gained. However, if I receive the new product now and I pay for it in six months, that payment is going to be more impactful because I've already been using the product. It does not feel as fresh and exciting as when I first received it. So, in fact, the impact of a money loss that happens later in time from when the decision is made will be higher, then the impact of that same loss closer in time next, consider quality. This is also a slightly abstract category, so make sure you define exactly what quality means, same as we had to do with happiness. How do you define this within your organization? Think about what quality means for your products, for your customer experience, for your employees, experience in your management style and priorities. First described what quality means and then determine if there will be a loss in quality through this decision being made. And the third category is time. Is there a loss in time? Does this decision make you slower? Does it push back a delivery date? Do you have to sacrifice some regular hours forever? Is the loss in time once for a particular deadline? Or is this going to change your timelines overall and then as above for each element that you lose. I want you to determine on a scale of 1 to 3 the likelihood of that loss occurring in the impact it will have on your business. You should never come out with a zero either gains or losses. I assure you that every decision has a loss that is not a negative. Necessarily. That is not a bad thing. It is a question of deciding priorities. For example, if you are buying new hardware, obviously that hardware is more important than the 500 or $1000 that you spent on the hard work. You need the hardware to move the job forward, so the loss does not have to be negative. I assure you, however, that when you make a change, there is a loss, and that's fine. Don't think of that as a bad thing. Just think of it as part of what happens now. Once you have done this exercise for both your gains and your losses, you have your likelihood calculations and your impact calculations to determine which gains are most likely and how big that impact will be, which losses are most likely and how big that impact will be and based on that. Determine what the best decision is for you. If you're doing this in a group environment, one thing you could do is discuss the gains and losses together and then let everybody do their likelihood and impact calculations on their own and then come back and compare the numbers that you have discussed the discrepancies and discuss the outliers. Why are you thinking about thes in such a different way? It is another good step to work through all of that innate bias and make sure that everybody's on the same page. If your gains are all very impactful, but not very likely, that will change how you think about this particular option. You might have another option that has fewer gains, but they are more impactful. Does that make that the better option? What does that mean for your business on to you For your project. Take your three options and work through gains and losses for each ad, your scale of likelihood and impact and see what that tells you about the best option for you 11. Ease Benefit: the ease benefit method. This method does exactly what it says on the tin. You consider the ease of a certain option how easy it is to do and the benefit of that option. What impact will it have? What beneficial impact based on the balance between ease and benefit? You make your decision, you pick your option. This is another method that helps with a quick brainstorming where you have to make a decision fairly quickly, keep moving things forward. This method will allow you to air concerns and get some ideas out in a relatively quick and efficient manner. The main benefit to this, in my view, really is the visual. As you plot your options on this ease versus benefit graph, you can start to do a direct comparison, and it also forces you to describe what you mean by both easy and beneficial. I have seen this done without a graph. Just by giving a score to your different options, I recommend using the graph. Generally, it uses this visual. And as I say to me, that is one of the great benefits of this method. How does it work? Ideally, you have a white board but Shock Board of Flip charts where you and your group can assemble and we'll be looking at the exact same thing and a series of post it notes or something similar. You will start by creation. Your graph on your X axis you will list ease from low to high. Low ease means not very easy. Hii's means quite easy on your y axis. You'll plot the benefit from low to high. Low means not beneficial. Low impact doesn't do much for you. Hi, of course, means highly beneficial, strong, positive impact. Take a look at your chart for a moment divided into four quadrants, and you can see what you're doing here in the lower left. You have low ease, low benefit in the upper right. You have both easy and beneficial. And then, of course, Louise. High Benefit Hii's Low Benefit. You've got your three options for the decision. Start with the 1st 1 again in a group brainstorming environment. This will be a lively discussion. Where do you put your first option on this graph in which of the four quadrants write it on your post it note, place it visually in that quadrant and then discuss that. Defend the position. Why is it low ease or hii's or low benefit or high benefit? Describe how that happens. Maybe it turns into a combination of factors. May be your one post it note becomes to post it notes. Remember to focus on the root cause. Is this beneficial to the root cause and to the ongoing success of the business? So look at both sides of that consideration. Move your post it note around until everybody's happy with where it's fishing and then move on to option to. Once you've gone through all your options, you're happy with where everything is plotted. On your graph. Analyze your four areas. Let's start in the top right. What you have in the top right is Hii's and high benefit. These are your priority activities. If you have one of your three options comfortably sitting up here, then that is the best option for you. If you've broken down those options into multiple factors or multiple steps than the steps in this quadrant are your starting point. Whatever is easy to do in a highly beneficial to your business takes precedence over anything else. Next, look at the top left the's are activities or options that are highly beneficial but more difficult to do. Anything you have in this quadrant I want you to consider and build a plan. The things that are difficult to do rarely bring us to the outcome that we want or hope for . So build a good plan, a detailed plan to determine if your outcome really can be achieved and will be achieved. So top left, detailed planning in depth consideration. Bottom right quadrant. These are things that are easy to do but have low impact on your business. I would put these on a list to the side, and there's something that you could come to or an option that you could consider. If you know that it will allow for the next great thing. It's nice to do things that are easy. It gives us a sense of accomplishment. The risk is that you focus on things that are easy without them having a good impact on your business. So you are, in effect, procrastinating by keeping busy, even if something has a low impact on your business. But it is a long term impact might open a new door, then consider it. But if it's just low impact period, you might want to get rid of that option to anything that is in the bottom. Left Quadrant is, ah, hard pass. If it is difficult to dio and of low benefit to your business, don't even consider it. It's got to go your turn now Build your graph, draw your four quadrants and do the consideration for your options. 12. PMI Analysis: PM I analysis. The keen observers amongst you will have noticed that throughout the course we've moved for models that were a bit more involved, a bit more detailed to thinks that were gradually sel I tli easier to use or simplified in their application were topping that off with the PM I analysis that stands for plus minus. Interesting is essentially another form of a pros and cons list. But allowing for that third column the interesting. It goes one step further and is still more effective than simply trying to think of pros and cons. A benefit of the system is it can be used quickly, spur of the moment. It is great for a quick brainstorming. Yes, you could drag this out to 1/2 day brainstorming session, but frankly, you could do a PM I in 15 minutes and get great results. It can be used as its own decision make model. It can be usual ized on the spot in the middle of a debate or discussion to break a deadlock. Or you could even use this as a retrospective to examine results on a particular decision made doing a PM I is a question of creation. Three lists again, as in the East benefits. I like to use a white board and post it notes to get this done. Or a white Ford and markers. Let's see how this works in action. You can create any design you like. I've seen people use an envelope style design, a sort of flow chart that goes from question through analysis. I like to keep this simple. I just use a table that has three columns and two rows and looks like this. The first column is your plus column. The second column is the minus, and the third column is interesting. I write out the names of the columns right away because even though I'm gonna tackle each one at a time through discussion, things will come up that I want to move into other columns. So it's good to know what I'm working with and then start your analysis. What are the positives with this particular decision or this option? What are the upsides, whether intentional or unintentional, make a comprehensive list here of everything that is a net positive from this option from this decision again. Ideally, you're doing this in a brainstorming environment so have the discussion. If somebody says this is a positive, also explained how and why it is a positive. Next move on to the minus column. What are the negatives? What are the detraction by doing this thing over here? What are we removing or sacrificing someplace else? What, are we making more difficult? What new obstacles or hurdles might we be introducing to our work flows or to our results? Anything that is a negative that in some way makes work more difficult or decreases your output. All of that goes into your minus column. Now, as you're discussing what goes into plus and what goes into minus, you might find yourself moving things around. That's why Post it notes will work well but also having markers that you can cancel any raise because what is likely to happen is you'll notice that one thing you've put into a plus column, for example, you will end up breaking down into multiple parts or steps and some of those air in your plus column summer in your minus. So be prepared to elaborate on all your points and finally, your interesting column. This is things that are worthy of note. And some of those might be obvious to you when you begin. But you will also be populating this column in your discussions of the plus column and the minus column. As you're discussing these points, you will note other features or changes or outcomes that are not necessarily positive and are not necessarily negative but are worthy of note. If you're unsure if something will be impactful, it goes into interesting if you think something might happen, but you don't know what its consequence will be. It goes into interesting anything that is a change or outside of the norm, and you cannot put into either the plus or minus. For whatever reason goes into your interesting column, you can see how this can work as a retrospective or as a quick brainstorming to break a deadlock in a conversation. Of course, for your project in this course, you're going to do a PM I analysis for each of your three options. Once you've done all three, compare those tables. Does one table stand out as having particularly more plus points than it does minus? Did you populate your interest in columns with a lot of different features? cause. If so, that particular decision probably needs more analysis. You might also note the weakness of this analysis doing it in this quick way without assigning weight or rank to some of these considerations. You might find that for one option, your plus column is much more populated than your minus. Call him. But what's in your minus column is a flamethrower event, and everything in your plus column are just minor improvements. So use your discretion with this. Bring a qualitative point of view to how you look at this. Having said that, if you're using the PM, my analysis for a quick review, then it should be simple enough to dio because the point is not to spend too much time on it. So when you are reviewing your options, all of those qualitative aspects are still fresh in your mind, and a quick glance at your results will allow you to evaluate them appropriately. All right, you know what's up? It's your turn 13. Complex vs Complicated: Let's take a short moment to understand the difference between a complex decision and a complicated decision. How are these two different and why does it measure something that is complex, is something that is unpredictable. It is unexpected. With complexity. You're dealing with unknowns, unknown, unknowns, things that you can't predict or see. You're dealing with different types of dependencies between numerous changing factors. What happens in step three could alter drastically what's going to happen way down in step seven. In ways you can't possibly predict. You're dealing with conditions that can change based on what has come before. Each step of a process or a decision is going to alter the options for the next step. It's difficult to plan out, it's impossible to predict. Complexity is a moving target. Complicated is something that might be time-consuming, might be challenging, and it could even be confusing at first. But it is not unknown. Complication means that it can be resolved through the correct sequence of steps. And once you've identified those steps and acquired the necessary technical skills, you can predict the process through to its completion. Complicated is something you can still control. With a strategic and impactful decision, it's always worth pausing to ask yourself, is this situation complex? Or is it complicated when you're dealing with a complex decision than the frameworks in this course come into play as your decision-making tools. Very actively. You want to pick a framework and remember that the application of your decision will require flexibility and updating. You may even be using a decision-making framework multiple times throughout a project as you have to decide next steps and actions. If you are dealing with a complicated decision, the framework should be used to ensure that you are choosing the correct sequence events and to make sure that you've accounted for all the technical skill required, you should be able to apply a decision-making framework upfront and then plan the execution of the following projects. One more thing to note about complexity, when you're dealing with complexity, makes sure that you are not creating dependencies for yourself on things that you cannot control. Examine your decision, and examine the process that's coming out of that. And if one step is dependent on a previous action that you don't actually control, review that step. Things that you don't control. Our people's actions outside of your business or organization, environmental factors, the weather. Take that level of examination and remember that in complexity, there's a lot that you don't control. Try not to make decisions based on factors that you don't control. Create your action or your task list in a way that you can control its flow. Even if a new event might cause you to update it at any given time. 14. Outro: hurrah. You made it. You have gone through all of the models. You've been working on your project and you have completed this course with everything you have learned here, you may have an opportunity to apply one or many of these models in your business. You may not. That's fine. The key thing that you will take away from this course and from the project that you have done is a better understanding. Everything that goes into a decision, all of the dependencies, all of the intricacies, all of the consequences and how different parts of one decision impact other parts of the business. What you are doing is making the complex simple. Remember, the difference between complicated and complex something that is complicated has many steps but can be worked through its not necessarily difficult. It just has to be gone through in the correct sequence. Something that is complex has many interdependencies and many a notes. Complexity is really the challenging area here. With everything you've learned in this course, we want to remove complex city so you can start to see all those interdependent and interconnected parts. Things might still be complicated, but we can work through complications. If we know what steps to take when you are confronted with your next business decision, you will have a more natural and immediate understanding of all of those surrounding factors. Because you've learned to think that way by going through all the models in this course. If you found a particular model that works really well for you, bring it into your business, introduce it and use it when you have those big strategic decisions to make. But even in those smaller, more immediate decisions learn how to think about everything that goes into that decision and all the consequences thereof apply critical thinking to every situation. Thank you for following me and you can find my other courses on my profile Page. One of those courses is an in depth view of the gains and losses method that you saw in this course, and, as always, if you want more lectures, if you need me to elaborate on anything in particular in this lecture or if you want to new course on something that came to mind by going through this course simply let me know. I'm always glad to oblige. Go forth and make good decisions