Slides from INFORMS Presentation, Nov. 11, 2014

1. The Collaborative Design
Process
and Decision Engineering
INFORMS Presentation
November 11, 2014
San Francisco, California
Steve Barrager, Ph.D.
Publisher
Baker Street Publishing
steve@bakerstreetpublishing.com

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Harvard Business Review,
November 2013
Did you see this issue of Harvard Business Review?

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McKinsey recently moderated a discussion,
Whatstrategistsneed:Ameetingoftheminds.
Let’s rethink these
frameworks together
with people who use
them in their
professional practice,
and revise the strategy
canon.
What people in my
position want to
know is which
techniques are
scientifically proven,
so we can discard
the rest.
Very few traditional
frameworks, even
scenario planning, were
built for “black swan”
events, which many
companies now face
every ten years or so.
One of the toughest
strategy challenges is
still the creation of
options - creating
them is the black
box of strategy.
Framing questions is
the other tough
challenge, and it’s one
of the most important
yet under appreciated
parts of strategy
development.
While analysis is
very important,
developing
strategies is
ultimately a
While analysis is
very important,
developing
strategies is
ultimately a
While analysis is
very important,
developing
strategies is
ultimately a
While analysis is
very important,
developing
strategies is
ultimately a
While analysis is
very important,
developing strategies
is ultimately a
people-centric
process fueled by
conversation.
For me one of the
most important
things is a set of
dynamic tools to
deal with, or at least
understand,
uncertainty.
You can read about the discussion by clicking here.

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• Julian Birkinshaw, London Business
School
• Michael Birshan, McKinsey London
• Laurence Capron, INSEAD
• Pankaj Gharnawat, IESE
• Fred Gluck, McKinsey
• Robert Grant, Bocconi School of
Management
• MIchael G. Jocobides, London
Business School
• Conor Kehoe, McKinsey London
The participants were the following:
• Sudeep Maltra, Centrica
• Matt McEvoy, Burberry
• Mark Reckitt, Smiths Group
• Dan Simpson, Clorox
• Sven Smit, McKinsey Amsterdam
• PatrickViguerie, McKinsey Atlanta
• Mark Wilson, Unilever
Were you invited?

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Neither was I.
This is what I would say if
McKinsey invited me.

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Decision making is important because it is
the bridge between thought and action.
Decision
Making
The world
of action
The world
of thought
Source: Ron HowardThis is aVenn
diagram.

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Every decision has a basis.
Frame
Action
Values
Information
Alternatives
What we want.
What we know.
What we can do.
Source: Ron Howard
Action

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good outcome ≠ good decision

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There is a difference between
normative and descriptive
decision making.
Normative is what we should
or should not do.
Descriptive is what we actually do.

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There is a difference between
normative and descriptive
decision making.
We should not text while driving.
Many people text while driving.

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What is a good decision?
A good decision is
one that is logically
consistent with what we can do,
what we want, and what we
know.
A good decision is an
informed choice that is
based on valid information
and internal commitment.

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Success in any enterprise consists of doing three
things well.
“Decision making
is only one of the
tasks of an
executive. It
usually takes but
a small fraction of
his time. But
to make
decisions is
the specific
executive
task.”
Peter Drucker,
The Effective
Manager,
1966
Strategic
Decision
Making
Leadership
Operational
Management
(Execution)

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Expansion into new products, services or geographies
Investment in existing products, services or geographies
Building new infrastructure
Mergers and acquisitions
Maintenance of existing infrastructure
Organizational change for other reasons 21
5
11
12
15
34
Two thirds of strategic decisions deal
with products, services, geographies, or
These are the goals of strategic decision making based on a
McKinsey Consulting survey of 2,327 executives from the full
range of industries, regions and functions. (In percentage of
total decisions.)

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Act
Experts/Scientists
Decision Makers
Stakeholders
Action
Strategic decisions usually involve a
conversation among three kinds of
people.

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Now things get complicated.
Act
Action
A
Stakeholders have
different frames,
alternatives, information,
and values.
Frame
Information
Alternativ
We want value-free information
from experts and scientists.
We want decision makers to make
informed choices that are based on
valid information and internal commitment.

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Good strategic decision making
requires profound knowledge of four
things.
Mutual learningFraming
Tools
Observable “data” and experience!
Design

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Inappropriate framing is the root
cause of most bad decisions.
Find x.
4 cm
3cm
x
Here it is!
Too often we get the right answer to the wrong question.

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Framingis largely about answering
questions.
Frame busting
questions
What would you do if you
knew you could not fail?
What would you do if you had
unlimited resources?
Or, no resources?
How did the scene in the crystal bal
happen? (“back casting”)

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Framingis largely about answering
questions.
Questions
about
metaphors
Is business like war?
Is business like dancing?

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Framingis largely about answering
questions.
Rhetorical questions
Is it life insurance or death insurance?

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Framingis largely about answering
questions.
Project
management
questions
What are we going to do?
Why are we doing this?
How will we know if we are successful?
How can we fail?

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Framingis largely about answering
questions.
Context
questions
Do we have the right people involved?
Have we set the boundaries too narrowly?
What systems are we considering?
What assumptions are we making about reality?
Are we using the appropriate values?

23. Technology alone is
not enough.
Mutual Learning

24. Axioms and logic
Norms for how we should
think
and behave
There are norms in both
“technology” and “liberal arts.”
This normative stuff is insanely
great!!!!

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This is how we say we should think and
behave in decision making situations.
Your Purpose
•Informed choice
•Valid Information
•Internal commitment
Acting
•State thinking behind own view
•Inquire into other’s views
•Make dilemmas discussible
•Express and reflect on emotion
•Design ways to test merits of
differing views
Results
•Increased understanding
•More informed decisions
•High commitment to action
•Mutual learning
•Better working relationships
Framing
•How you see yourself
-What I see is one perspective
-I may be missing something
•How you see others
-Acting sensibly in own mind
-Caught in a dilemma
Source: Action Design.
Adapted from Chris Argyris &
Donald Schön
This Mutual Learning Model is normative.

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We think and act much differently than
we say we should. We practice a
Unilateral Control model.
Action repertoire
• Assert own view
• Take own reasoning for
granted
• Minimize inquiry into
others’ views
• Ask leading questions
• Promote face-saving
Assumptions
• I am acting sensibly.
• Those who differ are
wrong.
• Mistakes are crimes or
sins.
Aims
• Unilateral control
• Win, don’t lose
• Be rational
• Avoid upset
(Adapted from Argyris & Schön, Theory in Practice, 1974)
Results
•Limited understanding
•Poor Decisions
•Low commitment
•Each sees other as problem
•Limited learning

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A decision coach can help teams move
toward the Mutual Learning Model; where
they say they want to be.
Can we make dilemmas
discussable?
Action
Repertoire
Assumptions
Aims
Joe, our team should think
and act this way. What questions
do you have?
Acting
Results
Framing
Your
Purpose

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We have tools for facilitating mutual
learning.
Balancing Advocacy
and Inquiry
The Ladder of Inference
Observable “data” and experience!

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Observable “data” and experience!
Actions
based on beliefs
Beliefs
about the world
Conclusions
Assumptions
based on affixed
meanings
Affixed Meaning
(cultural and personal)
Selected data
and experience
Adapted from Action
Science, Chris Argyris
et al, 1985
We tend to get stuck because we begin
discussions high on the ladder.
We get stuck
when we work at
the level of
beliefs.
We get unstuck
as we move
toward this level.

30. © 2014 Baker Street Publishing, LLC. All Rights Reserved.
Observable “data” and experience!
Actions
based on beliefs
Beliefs
about the world
Conclusions
Assumptions
based on affixed
meanings
Affixed Meaning
(cultural and personal)
Selected data
and experience
Adapted from Action
Science, Chris Argyris
et al, 1985
Technology and liberal arts come
together on the ladder.
Science
Structural
Models
Facilitation

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Strategy
Competition
Market Share
Comfort and
Convenience
Styling
Unit Costs
Investment
High Sport
Market Size
Performance
Quality
Warranty Costs
Pricing
Strategy
Net Present
Value
Decision and Framing hierarchies --- Which decisions
are we working on? How do they fit with other decisions? What
are the givens.
Strategy tables --- How do alternative strategies differ?
Do they cover the range of possibilities?
Decision Diagrams --- What issues are relevant to the strategy?
How do issues influence each other?
Dynamic System Simulation and Optimization Models ---
Have we captured the complexities and dynamics logically?
Sensitivity Analysis --- What are the important uncertainties?
Where should we focus our attention?
Probability assessment techniques --- How do we express
what we don’t know? How do we deal with cognitive biases?
Bayesian updating of information --- How do probabilities
change as we learn more? What is the value of better
information?
Policy
Strategy
Tactics
A B C
1
2
3
4
5
We routinely use many decision making
tools.

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Forward-looking tools are especially valuable
because strategic decisions are about the
Past Future
Scenarios
Structural
Models
Expert
Assessments
Statistical
Models
K
RC
V
K
Data
You
are
here.

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There are many notions of what design is. For example:
From Resilience by Design

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Generate
Alternatives
Define
Problem
Analyze
Synthesize
The Design
Process
Museum of Science and Industry, Chicago, circa1963
Designinvolves two ways of thinking in
engineering:
analysisand synthesis.

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Design is the blending of analysis and
synthesis.
Steve Jobs called
synthesis,“Connecting
the dots.”
Analysis
Synthesis

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W. Edwards Deming
“If you can’t describe what you are doing as
a process,
then you don’t know what you are doing.”
Process is how we put it all together.

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We can always design a “hybrid” that is better than any
of the “test” strategies. Often the hybrid is much better.
Test Strategy A
Test Strategy C
Hybrid
Strategy
Test Strategy B
We have developed a powerful process
for designing strategies.

38. © 2014 Baker Street Publishing, LLC. All Rights Reserved.
Stakeholders and ExpertsFraming
Alternative
Generation
Analysis Synthesis Act
Experts
Stakeholders
Decision Makers
The Collaborative Design Process
combines advocacy and inquiry; analysis and
synthesis.

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Knowledge Management and Training
Facilitation
Project
ManagementToolsProcess
The decision coaching profession is emerging
to support this process.

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The Collaborative Design process brings together the
important ways of thinking about strategic decisions.
Decision
Theory
Probability
Theory
Systems
Analysis
Framing Design
Mutual Learning

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Thank you
Steve Barrager, Ph.D.
Decision Engineer

42. © 2014 Baker Street Publishing, LLC. All Rights Reserved.
For additional information the following slide
decks are available from Baker Street Publishing.
Coach’s Guide to the Collaborative Design Process
Coach’s Guide to Framing
Coach’s Guide to the Decision Analysis Process
Follow this link to download a copy of these
slides.