Decision-analysis software can save you time and is particularly valuable for improving teamwork
How do you decide between a project that would improve your company's image and another that would make you more responsive to competitive threats? They're both critically important to your business, and you can afford only one of them.
To help make such decisions, I've come to rely on Decision Pad Rev. 1.2, a software package that allows you to organize information, displays how each measure influences your rankings, and shows what happens to your top selection when you change the relative importance of some of the features. I've used Decision Pad to help select which projects a company with a limited budget should undertake and to choose among projects when the rationale for doing them is less straightforward than pure bottom-line considerations. (The package is available from Apian Software, P.O. Box 1224, Menlo Park CA 94026; 800-237-4565 in the United States and 415-851-8496 in Canada. List price is $195 for IBM PC-compatible computers.)
If you're an intuitive thinker -- and most CEOs I know are -- you may balk at the idea of numerically weighing payback dollars, for instance, against competitive risks. I've found in practice, though, that most managers find the Decision Pad method a good way to focus on relevant issues and much preferable to endless debates on every project. Since people have only a limited capacity for evaluating variables simultaneously (more than seven at a time taxes our abilities, according to experimental psychologists), the method can be very useful even if intuition ultimately prevails.
Each decision you make is influenced by a variety of factors. Take choosing among job candidates, for example. You look at some facts, such as years of business experience or education level. You base other considerations on opinions, such as what you think of the candidate's self-assurance. Then you have uncertainties. Are the applicant's references shaky, reasonably verifiable, or solid? Does the applicant have the potential to become the next chief operating officer or marketing vice-president, or just enough talent to continue growing in a sales job?
When I was general manager of an expanding organization, I was required to interview every prospective management candidate. I averaged three employment interviews every day and evaluated about 20 characteristics for each applicant. Nobody can keep track of that much information. When I did interviews in those days, I usually entered all the information on forms or checklists.
Decision Pad lets you weigh the ratings together. It has the capacity to line up as many as 150 candidates, each possessing up to 60 qualifications for a job. It will take the facts as well as the opinions and compute a consistent numerical score that will rank each applicant. As you get more information, the software will recalculate the ratings -- it may even suggest that you stop because the top choice is so far ahead of the others.
Decision Pad is especially useful if you want your management team to help you make hard choices. Otherwise, you can spend a lot of time reconciling differences of opinions about a number of business decisions that you frequently face -- hiring, choosing vendors, choosing equipment, awarding bonuses, identifying who should be promoted, and so on. All such decisions require judgments that must balance multiple views of each alternative.
Say you want to a hire a senior marketing executive. Out of a hundred rÃ©sumÃ©s you interviewed a dozen applicants and narrowed the choice down to the top three, and you'd like your two key associates to participate in making the final choice. You define six criteria for scoring each candidate: sales ability, technical know-how, general business expertise, experience in your particular business, edu-cational achievement, and potential for growth. From experience you figure that 30% of the weight should be given to skills, 40% to experience, 10% to education and 20% to promotion potential. How can three people agree on the relative merits of an M.B.A. from Harvard who has high promotional potential but little experience compared with a seasoned B.A. who shows extraordinary salesmanship skills?
Decision Pad can consolidate everybody's evaluations. Your number two may be ranked number one by your associates. Are the differences due to misperceptions, incomplete information, or disagreement about the relative weights of the criteria? Decision Pad offers you several ways to understand discrepancies in the rankings. For instance, one option flags the ratings that would eliminate your top choice or those that need no further attention because your highest-ranking selection would not be affected anyway. A difference that makes no difference is not worth talking about. You not only save time but also improve communications about what's important and what isn't among your team members.
The decision-analysis method saves a great deal of time in meetings where people argue about their preferences. When reasonable people have differences about their conclusions, it's usually because of their assumptions and not because of facts. Decision Pad will cut meeting time because it makes explicit what is behind each person's proposition. You can then concentrate on the differences in a few critical opinions instead of wasting time talking about details that won't alter anything. If before the meeting someone collects individual opinions on the topic at hand and enters them into the Decision Pad, you can project the ratings for viewing by the entire group. You can buy transparent image-generating overlays, which sit on top of an ordinary overhead projector, for about $2,000.
If you are not used to formal evaluation methods, you can call Apian Software for a free demonstration disk. You'll be able to tell after 30 minutes whether Decision Pad will help you. The origins of this software are in the work of Charles H. Kepner and Benjamin B. Tregoe, who in the 1960s taught thousands of managers how to calculate the composite ratings that Decision Pad now delivers automatically. Apian Software has information about and will make referrals for training in team decision making, vendor ratings, interviewing, and employee selection, as well as for merit-pay evaluations.
Decision Pad is a noteworthy example of a new family of computer applications that deliver tools for improving teamwork. Group collaboration software is a departure from the most popular microcomputer applications -- word processing and spreadsheets -- that improve the productivity of individuals working alone. If you are looking for techniques to improve shared decisions, Decision Pad is worth trying. A good place to start is with routine decisions that everyone already finds burdensome. As long as you remember that it may be a painful experience for your more intuitive or exclusive thinkers, I think you'll find the experimentation promotes better understanding among the diverse personalities in your organization.
Paul A. Strassmann managed the computerized information systems for General Foods, Kraft, and Xerox from 1960 to 1977. From 1977 until his retirement in 1985, he was vice-president of strategic planning at Xerox. His home office is in New Canaan, Conn.