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Smart Choices

by: HAMMOND, JOHN S.KEENEY, RALPH L.

Smart Choices

by: HAMMOND, JOHN S.KEENEY, RALPH L.

ISBN 13:
9780767908863
ISBN 10:
0767908864
Edition: Reprint
Format: Trade Paper
Copyright: 03/05/2002
Publisher: Ecampus Direct

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Summary

Where should I live? Is it time to switch careers? What is the best course of action for me? Decisions shape our experiences, from choosing which job offer to accept, to buying the right car, to selecting a good accountant. How do we know which choice is the smart one? How can we be consistent and confident in our decisions? In this book from the three leading authorities on decision-making, readers learn how to approach all types of decisions with a simple set of skills developed by professors from Harvard, MIT, and the University of Southern California. Combining solid research with common sense and practical experience, this user-friendly guide shows readers how to assess deep-seated objectives, create a comprehensive set of alternatives, determine likely consequences, make tradeoffs, and grapple with uncertainty. Not only will readers learnhowto make decisions, they will learn how to make thesmartestdecisions. For anyone caught at a confusing crossroadwhether you're choosing between mutual funds or deciding where to retiretheSmart Choicesprogram will improve your decision-making abilities immediately, and make your life more rewarding and fulfilling.

Author Biography

John Hammond, Ph.D., is a renowned management consultant and a former professor at both Harvard and MIT. Also the coauthor of Strategic Market Planning, he lives in Lincoln, Massachusetts. Ralph Keeney, Ph.D., is the author of Value-Focused Thinking and runs a consulting practice in San Francisco, where he lives. He is also a professor at the University of Southern California. Howard Raiffa, Ph.D., now professor emeritus , has taught the art and science of decision making and negotiations in the Schools of Business, Public Policy, Law, and Medicine at Harvard University for almost five decades. He is widely recognized as one of the founders of the field of decision sciences. He lives in Belmont, Massachusetts.

Introduction to the Paperback Edition

vii

Preface

Making Smart Choices

(14)

How to think about your whole decision problem: a proactive approach

Problem

(14)

How to define your decision problem to solve the right problem

Objectives

(16)

How to clarify what you're really trying to achieve with your decision

Alternatives

(18)

How to make smarter choices by creating better alternatives to choose from

Consequences

(16)

How to describe how well each alternative meets your objectives

Tradeoffs

(26)

How to make tough compromises when you can't acheive all your objectives at once

Uncertainty

105

(26)

How to think about and act on uncertainties affecting your decision

Risk Tolerance

131

(28)

How to account for your appetite for risk

Linked Decisions

159

(26)

How to plan ahead by effectively coordinating current and future decisions

Psychological Traps

185

(30)

How to avoid some of the tricks your mind can play on you when you're deciding

The Wise Decision Maker

215

(18)

How to make smart choices a way of life

A Roadmap to Smart Choices

233

(8)

About the Authors

241

Supplemental Materials

What is included with this book?

The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any access cards, study guides, lab manuals, CDs, etc.

The Used, Rental and eBook copies of this book are not guaranteed to include any supplemental materials. Typically, only the book itself is included. This is true even if the title states it includes any access cards, study guides, lab manuals, CDs, etc.

Excerpts

Chapter 1 Making Smart Choices

Our decisions shape our lives. Made consciously or unconsciously, with good or bad consequences, they represent the fundamental tool we use in facing the opportunities, the challenges, and the uncertainties of life.

• Should I go to college? If so, where? To study what?
• What career should I pursue? What job should I take?
• Should I get married now, or wait? Should I have children? If so, when and how many?
• Where should I live? Should I trade up to a larger house? What can I contribute to my community?
• Which job candidate should I hire? What marketing strategies should I recommend for my company?
• Since I feel unfulfilled, should I change jobs? Go back to school? Move?
• How should I invest my savings? When should I retire? To do what? Where?

Such questions mark the progress of our lives and our careers, and the way we answer them determines, to a large extent, our place in society and in the world. Our success in all the roles we play--student, worker, boss, citizen, spouse, parent, individual--turns on the decisions we make.

Making Decisions is a Fundamental Life Skill

Some Decisions will be fairly obvious--"no-brainers." Your bank account is low, but you have a two-week vacation coming up and you want to get away to someplace warm to relax with your family. Will you accept your in-laws' offer of free use of their Florida beachfront condo? Sure. You like your employer and feel ready to move forward in your careers. Will you step in for your boss for three weeks while she attends a professional development course? Of course.

But the no-brainers are the exceptions. Most of the important decisions you'll face in life are tough and complex, with no easy or obvious solutions. And they probably won't affect you alone. They'll affect your family, your friends, your coworkers and many others known and unknown. Making good decisions is thus one of the most important determinants of how well you meet your responsibilities and achieve your personal and professional goals. In short, the ability to make smart choices is a fundamental life skill.

Most of us, however, dread making hard decisions. By definition, tough choices have high stakes and serious consequences; they involve numerous and complex considerations; and they expose us to the judgments of others. The need to make a difficult decision puts us at risk of anxiety, confusion, doubt, error, regret, embarrassment, loss. No wonder we find it har to settle down and choose. In living through a major decision, we suffer periods of alternating self-doubt and overconfidence, of procrastination, of wheel-spinning and flip-flopping, of frustration, even of desperation. Our discomfort often leads us to make decisions too quickly, or too slowly, or too arbitrarily. We flip a coin, toss a dart, let someone else--or time--decide. The result: a mediocre choice, dependent on luck for success. It's only afterwards that we realize we could have made a smarter choice. And by then it's too late.

You Can Learn to Make Better Decisions

Why do we have such trouble? It's simple: we don't know how to make decisions well. Despite the importance of decision making to our lives, few of us ever receive any training in it. So we are left to learn from experience. But experience is a costly, inefficient teacher that teaches us bad habits along with good ones. Because decision situations vary so markedly, the experience of making one important decision often seems of little use when facing the next. How is deciding what job to take or what house to buy similar to deciding what school to send your children to, what medical treatment to pursue for a serious illness, or what balance to strike among cost, aesthetics, and function in planning a new office park?

The connection among the decisions you make lies not in what you're deciding, but in how you decide. The only way to really raise your odds of making a good decision is to learn to use a good decision-making process--one that gets you to the best solution with a minimal loss of time, energy, money, and composure.

An effective decision-making process fulfills these six criteria:

• It focuses on what's important.
• It is logical and consistent.
• It acknowledges both subjective and objective factors and blends analytical with intuitive thinking.
• It requires only as much information and analysis as is necessary to resolve a particular dilemma.
• It encourages and guides the gathering of relevant information and informed opinion.
• It is straightforward, reliable, easy to use, and flexible.

A decision-making approach that addresses these criteria can be practiced on decisions major and minor--what movie to see, what car to buy, what vacation to take, what investment to make, what department head to hire, what medical treatment to pursue. And the more you use such an approach, the more efficient and effective it will become. As you grow more skilled and your confidence grows, making decisions will become second nature to you. In fact, you may find your friends and associates asking you for help and advice with their tough choices!

Use the PrOACT Approach to Make Smart Choices

This book provides you with a straightforward, proven approach for making decisions. It does not tell you what to decide, but it does show you how. Our approach meets the six criteria listed above. It helps you to see both the tangible and the intangible aspects of your decision situation more clearly and to translate all pertinent facts, feelings, opinions, beliefs, and advice into the best possible choice. Highly flexible, it is applicable to business and professional decisions, to personal decisions, to family decisions--any decision you need to make.

One thing the method won't do is make hard decisions easy. That's impossible. Hard decisions are hard because they're complex, and no one can make that complexity disappear. But you can manage complexity sensibly. How? Just like you'd climb up a mountain: one step at a time.

Our approach takes one step at a time. We have found that even the most complex decision can be analyzed and resolved by considering a set of eight elements. The first five--Problem, Objective, Alternatives, Consequences, Tradeoffs--constitute the core of our approach and are applicable to virtually any decision. The acronym for these--PrOACT--serves as a reminder that the best approach to decision situations is a proactive one. The worst thing you can do is wait until a decision is forced on you--or made for you.

The Eight Elements of Smart Choices

Problem
Objectives
Alternatives
Consequences
Tradeoffs
-----------------------
Uncertainty
Risk Tolerance
Linked Decisions

The three remaining elements--uncertainty, risk tolerance, and linked decisions--help clarify decisions in volatile or evolving environments. Some decisions won't involve these elements, but many of your most important decisions will.

The essence of the PrOACT approach is to divide and conquer. To resolve a complex decision situation, you break it into these elements and think systematically about each one, focusing on those that are key to your particular situation. Then you reassemble your thoughts and analysis into the smart choice. So, although our method may not make a hard decision easy, it will certainly make it easier.

Excerpted from Smart Choices: A Practical Guide to Making Better Decisions by John S. Hammond, Ralph L. Keeney, Howard Raiffa
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.