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# So, you think you are good at making decisions? - 8th October - Aberdeen

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So, you think you are good at making decisions?
8th October - Aberdeen
Dr Keith Eagles

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### So, you think you are good at making decisions? - 8th October - Aberdeen

1. 1. INTECSEA Consulting So, You Think You’re Good At Making Decisions??
2. 2. A B C INTECSEA 2
3. 3. An Investment ‘Opportunity’  Investment of £10 with uncertain return  Investment is sunk cost (will not be returned)  To simulate uncertainty, we use four playing cards – two red and two black. - Two black cards win £30 - One black and one red win £15 - Two red cards attract an additional penalty of £6 i.e. total loss of £16 INTECSEA 3
4. 4. A Decision Tree Makes The Problem Clearer Do Not Invest Invest -£10 Two Black One Red / One Black Two Red £30 £15 -£6 £0 INTECSEA 4
5. 5. The Expected Value Do Not Invest Invest -£10 Two Black One Red / One Black Two Red £30 £15 -£6 £0 1/6 1/6 2/3 EV = 30.(1/6) +15.(2/3) – 6.(1/6) £14 £4 INTECSEA 5
6. 6. Value of Information Do Not Invest Invest -£10 Two Black One Red / One Black Two Red £30 £15 -£6 -£3 Info £0 INTECSEA 6
7. 7. The First Card is Red Do Not Invest Invest -£10 Two Black One Red / One Black Two Red £30 £15 -£6 £0 0 1/3 2/3 EV = 30.(0) +15.(2/3) – 6.(1/3) £8.00 -£2.00 -£3 Info INTECSEA 7
8. 8. The First Card is Black Do Not Invest Invest -£10 Two Black One Red / One Black Two Red £30 £15 -£6 £0 1/3 0 2/3 EV = 30.(1/3) +15.(2/3) – 6.(0) £20.00 £10.00 -£3 Info INTECSEA 8
9. 9. The Monty Hall Problem A B C INTECSEA 9
10. 10. The Monty Hall Problem A B CStick with original choice INTECSEA 10
11. 11. The Monty Hall Problem A B C Switch from original choice INTECSEA 11
12. 12. Decision Quality  DQ represents the periodic application of structured decision making to specific opportunities and decision problems.  Organisational Decision Quality (ODQ) is the understanding and use of DQ by the full, corporate-wide decision making community, in collaborative value creation. INTECSEA 12
13. 13. Elements of Decision Quality INTECSEA 13 Appropriate Frame Clear Values and Trade- off Creative Alternatives Meaningful Reliable Information Logically Correct Reasoning Commitment to Action A Decision Is Only As Good As Its Weakest Link
14. 14. Defining the Decision Frame Policy Strategic Tactical Constraints and boundaries within which the decision must be made Primary decisions to be made Secondary decisions INTECSEA 14
15. 15. Decision Framing Workshop INTECSEA 15 Business Opportunity Strategic Questions Business Drivers Decision Criteria Strategy Map – All Options Concepts to be Considered Decision Frame Values and Trade-offs Creative Alternatives Information Reasoning Action Business Framing Concept Identification
16. 16. Prospect Development Study INTECSEA 16
17. 17. INTECSEA 17
18. 18. Strategy Map INTECSEA 18
19. 19. Strategy Map INTECSEA 19
20. 20. Summing Up  An organisation’s value is just the sum of the decisions it makes and executes  Humans are not naturally wired to consistently make good decisions  Decision Quality methods provide a structured framework within which complex decision making can be transparent and auditable  Decision Quality is a learned skill Take a look at …………….  SPE Technical Report – Guidance for Decision Quality for Multi- company Upstream Projects  Society of Decision Professionals website www.decisionprofessionals.com INTECSEA 20