Better decisions with the right model

20 März 2017

Today it is critical, as it has always been, for companies and authorities to reach the right decisions. Decisions must be made quickly on increasingly complex issues. This complexity requires the decision-making process to be much broader than just choosing between different options. It requires that the entire organization's capabilities and knowledge has been gathered, focused and condensed. It is also essential that the right questions are being asked and that the best possible basis in data is uncovered. So that, finally, the right path can be chosen. Read Tomas Ericsson's article on the importance of commitment, shared goals and communication to make the right decisions.

There are many challenges in shaping an effective decision. A key part is to get the team that will form the decision to agree on a common vision and understanding so that they can pull together, communicate and collaborate. To address this challenge, a model – preferably a predictive model – can be used to create the right conditions.

Commitment leads to effective teamwork

“Teamwork” is a popular concept in today's working life. We want to build teams that can perform its task efficiently and quickly. For a team to be effective, it must pull together, communicate, collaborate, cooperate and coordinate efforts. This is done primarily by fostering commitment.

This can be difficult because team members often have different agendas and goals - even if their intentions are good. For that reason, it is important to create a consensus for the work.

One way, which is ineffective except for simple tasks, is to decree a consensus. Another and more efficient way to reach consensus is to demonstrate the benefits and impacts of having it.

The commitment of those involved will directly determine the quality of the result, both in the project and the decisions being made.

The key to commitment is the understanding of what you are trying to achieve, common goals and a feeling that your efforts will contribute to the end result. If this can be achieved, results will be positive and the individuals feel fulfilled. If it is missing, it will lead to frustration and failure or substandard performance.

Decision forming

There is a distinct difference between “decisions” and “choices.” Making the right decision is about much more than just choosing whether to go right or left, up or down.

The decision is not something that just emerges, it is something that is shaped by the work that precedes the decision and the opinions and experiences of those involved. You can say that a decision is formed. Typically this is done in a project where people work together to develop information to support the decision, but it also happens in all decision-making situations, whether the decision is big or small, at work or at home.

Decision forming is a dynamic process where the final result is not at all a foregone conclusion. It is instead the result of a process and it develops gradually.

Ideally, you want to start from a point where there are many different possible routes and options, then have the ability to gradually steer toward the right decision with the right underpinning. In this process there are many pitfalls and obstacles that can thwart the ability to make the right decision.

Cooperation Obstacles

Because the team is made up of different people, it is often difficult to establish effective cooperation. It may be that people do not have a clear understanding of the goal for the team and therefore may work hard to reach a result, but not work toward any clear goal. Another risk is that each member is working towards a clear goal, but the goals are different. A third risk is that you cannot agree on the goal, but only broaden the issue, making the final decision more difficult.

Communication Barriers

Another major risk is that the decision that has been formed cannot be communicated to the person who will eventually make the final call. Although the decision has gradually evolved and been clarified, it may be difficult to convey what decision that actually should be made. Another risk is that the project group has not produced input on the issue that the decision makers were expecting to decide on. A third risk is that the choice has already been made and that the process is just an alibi for making this decision.

Organizational Obstacles

A third area is that the organization does not have an understanding of what decisions should be made, or why, which means there is no clear decision-shaping process or that no decision-making has occurred at all.
These three areas - team collaboration, interaction with management and organizational shortcomings - are some of the examples through which the decision-forming and decision-making process is hampered. They lead to the inability to make the right decisions, decide on the right thing or make the decision in due time. Failure in any of these aspect is very serious for an organization and it is therefore important to work on eliminating these obstacles.

Eliminate barriers with models

There are many methods and processes to make decisions and to develop decision input. Most of which are based on working with clear decision points, and based on economic considerations determine who in the hierarchy that has the authority to make the decision. These areas are important but do not contribute much to get a team to work effectively. Working to create mutual goals and improve communication is something that is often emphasized and highlighted, but it can be difficult to translate into practice. By using models, combined with clear processes, you can often become much more effective.

The right model provides the right support

The right model can be a powerful tool to create conditions to form and make the right decision. For that to happen, the model must be an integral part of the work process, and it should be developed iteratively as the decision-making process becomes more concrete. At the very earliest stages it’s an important task for the team to choose a model that describes, explains and illuminates this in the best way forward.

Mutual understanding and shared goals

By using a model against which new ideas, new data and new conditions can be tested, the group gets a tool for common understanding that can also be used to guide the discussions. Perhaps the most important benefit of a mutual model is that it provides a description of what will be decided. That means it will help group members to align their goals so that everyone can unite and work towards a common goal. The model also helps to define concepts and relationships, and create clearer understanding of causality.

Better communication and creativity

A model also facilitates communication because the model can help avoid misunderstandings. Apples are apples and pears are pears, both within the group and in relation to other parts of the organization (or clients). This means that, despite the group's members probably having different backgrounds, experiences and frames of reference, one can take advantage of the entire team's abilities and creativity.

Focus on the right aspects

A good model will also help to focus the group. What aspects will be important to work on, and what aspects are already sufficiently clear? By clearly highlighting the issues raised within the group and understanding how they affect the result, new, previously hidden aspects can emerge. This means you will avoid missing important aspects, and also avoid overemphasizing non-important issues.
The decision forming, is often carried out iteratively over a long period, which makes it important for the team to remember why they chose to focus on certain aspects, and why others were deemed to be less important. The model’s output can also be used to keep track of the work progress and of how the various issues have been highlighted.

A personal experience

In many projects I worked on, I have witnessed how effective it can be to use a model to create a common view of the problem. A couple of years ago, I participated in a project for a major Swedish industrial company where the effects of a new government funded infrastructure investment would be investigated. What did this new opportunity mean? What demands were placed on the company’s investments and did it mean that the company's logistics solutions would need to change?

Since this potentially meant both major investments, changes and opportunities a project team was formed with stakeholders from many different parts of the company, in which Systecon also participated. Production, logistics, marketing and finance, would all help form the right decisions for the company. Everyone in the group had the same goal; to create the best possible conditions for the company. However, the knowledge, experience and information needed was spread among the group members and in the organization. In addition, all team members also had different perspectives on what was most important to focus on, where the challenges lay and perhaps also what was best for the company in relation to their own business areas.

To form the best possible decision we agreed early on to use LCC, Life Cycle Cost, as a method, and a cost analysis tool to compile all the information and evaluate all the various possible scenarios and aspects. We built a simple initial cost model that we gradually refined during the process. Linked to this model, we also agreed on an iterative approach where we would gather for project meetings and use the model as a basis to discuss the new data that needed to be developed, if there were new aspects that need to be covered or if there were things to put aside. Of course, numerous discussions were held in which the cost model was not the focus, but it was always there as a support that we could use in order to maintain the right focus for the team.

It was exciting to be involved in the process and see how the team gradually grew into the model. Initially we often returned to issues that were linked to people's different roles in the organization, but the model quickly helped us show that some issues were not important to our ultimate goal, even though they could, for example, be central to the overall logistics solution.

After some time it became clear that we needed to expand the scope of the logistic chain that we needed to include in the analysis and in the model, since we realized the last part of the logistics chain (closer to the customer) dominated the total cost. Using the model, we could easily see how important it was to focus on this part.

When we approached the completion of the work, the manager responsible for passing on our input to the steering committee was involved. It then became clear that we had partially omitted things that was central to the steering committee, and that the manager also needed to be involved in forming the decision to be able to understand why it was right to put certain aspects aside.

Even this step was facilitated by the model because we could effectively discuss the results and rapidly expand our proposal to incorporate the new issues. We could also execute analyses to show that it was right not to focus on the aspects we put aside.

By working with the model through the entire process, we ensured that we developed the right decision input and that the steering committee could move forward with the right information and understanding to make a well-founded decision.

Conclusion

It is critical to make the right decisions at the right time in an increasingly complex world. An important factor that is often emphasized but still easily forgotten is the need for a mutual understanding of the goals and clear communication for a team to be able to form the right decision. You cannot in advance predict exactly which aspects that need to be addressed or which final decisions that should be made. That’s why it’s important to have a way of working in which knowledge and experience of all team members can contribute to the decision making and the right aspects scrutinized. A model can be a powerful tool for bringing together members' views toward a common good.

Tomas Eriksson
Development Manager at Systecon AB