Pres 131 carl spetzler july 27 2016

www.sdg.com© 2015 by Strategic Decisions Group International LLC. All rights reserved.
DQ
Decision Quality
ISSIP Service Innovation Weekly Speaker Series
July 27, 2016
Carl Spetzler

DQ for Leaders Page 2© 2015 by Strategic Decisions Group. All rights reserved. www.sdg.com
Decision Quality: Value Creation
from Better Business Decisions
By Carl Spetzler, Hannah Winter, and
Jennifer Meyer (Wiley 2016)
Dedication:
To the many DQ champions who share our
passion for making the common sense of
decision quality truly common.
Carl Spetzler
CEO, Strategic Decisions Group
Program Director, Stanford SDRM

Making
Good
Decisions
Visioning
Tone
Setting
Communi-
cating
Coaching
Feedback
Relationshp
Building
Teaching
Motivating
Peter Drucker
The core function
of Leaders and
Executives is
Decision Making.
Making
Good
Decisions
To win followers
and achieve
success Leaders
must do many
things …
But

Why do smart people make poor decisions?
Here are just a few reasons:
• They frame the problem incorrectly and end up addressing the wrong
problem.
• The “good enough” syndrome encourages decision makers to latch on
to the first or second option that comes their way when, with a bit more
effort, they might find alternatives with much greater value.
• The decision is based on irrelevant, unreliable or inadequate
information.
• Biases and false assumptions subvert rational thinking and analysis.
• They have received extensive training in many areas, but rarely explicitly
in the art and science of decision making.
• Executives are sold an idea by a convincing advocate, instead of
choosing among alternatives.

Confusing decisions and outcomes is endemic in
most organizations.
• We emphasize accountability and results, and we consider “good
decision/bad outcome” as a lame excuse.
• Accounting and incentive systems are usually backward-looking and
only include outcomes.
• When we have bad outcomes, we especially tend to confuse decisions
and outcomes.
– “I can’t remember someone claiming to have been lucky when they
had a good outcome.”
• Many organizations think clearly about decisions versus outcomes in
some parts of their business (e.g., R&D, exploration), but then miss the
distinction in the rest of their business.
We need to carefully distinguish the quality of decisions and outcomes and track
the quality of decisions.

A good decision never turns into
a bad decision, and a bad
decision never turns into a good
decision.
Professor Ron Howard,
Stanford University
We must build quality into our decisions
and our decision making processes.

The challenge to good decision-making is overcoming
organizational and analytical complexities.
High
Low
Low HighAnalytical Complexity
Organizational Complexity
• Uncertainty
• Dynamics; Options
• Many interrelated
important variables
• Many parties in conflict
• Individual and organizational
differences in:
- Values, desires, and
motivation
- Initial convictions
- Fundamentally
different frames
- Personalities and
competencies
- Degrees of power and
resource availability
• Group dynamics—
human nature in groups
Decision
Analysis
Facilitative
Leadership
Common
sense &
rules of
thumb
Skill to Judge
DQ
• Many alternatives
• Multiple interrelated decision criteria
• Multiple players
in competition -- gaming
Rigorous
DQ
Process
Skill to
demand
DQ

Five megabiases are the primary cause of
dysfunctional decision-making in organizations.
• Narrow Framing
• Agreement Trap
• Illusion of DQ
• Comfort Zone Megabias
• Advocacy/Approval Myth

To reach DQ, we must meet six requirements.
Requirements
for Decision
Quality
Relevant and
Reliable
Information
Clear
Values and
Tradeoffs
Sound
Reasoning
Commitment
to Action
Appropriate
Frame
Creative
Alternatives
Like a chain, overall quality is no stronger than the weakest link.

When it is not worth additional effort or delay to
improve quality, we have reached 100%.
Appropriate Frame
Creative Alternatives
Relevant and Reliable Information
Clear Values and Tradeoffs
Sound Reasoning
Commitment to Action
0% 50% 100%
0% 50% 100%
0% 50% 100%
0% 50% 100%
0% 50% 100%
0% 50% 100%
DQ
1
2
3
4
5
6

Achieving DQ in simpler decisions starts with defining
a good frame, includes iteration, and ends with
commitment to action.
Decision
1
2
3
4
5
6
Appropriate Frame
Sound Reasoning
Tackling the requirements in one sequential pass is inefficient and a formula for failure.

Conduct a quick once-through to identify weak links
and then dedicate a focused effort to strengthen them.
Appropriate Frame
Sound Reasoning
0% 50% 100%
0% 50% 100%
0% 50% 100%
0% 50% 100%
0% 50% 100%
0% 50% 100%
1
2
3
4
5
6 1
2
3

Decision-makers and decision staff interact via the
Dialogue Decision Process (DDP).
Decision Board
Project Team
Project Team
Decision Board

Decision
Board
Project
Team
Recog-
nize
Situation
Assess
Situation
Frame
Agree on
Frame
Develop
Alternatives
Alternatives
Agree on
Alternatives
Evaluate
Alternatives
Evaluated
Alternatives
Make
Decision
Plan for
Implementation
Evaluated
Alternatives
Plan
Agree on
Plan
DQ
For difficult strategic decisions, reaching DQ requires
the Dialogue Decision Process (DDP).
Dialogue Decision Process

The DQ body of knowledge and practice is a major
improvement on common practice.
• Maximize Value Potential – not just improve or fix a few decision traps.
• A clear destination – 100 % DQ on the six elements of DQ – at the time
of decision.
• Incorporates uncertainty and other complexities – clear distinction
between a good decision and a good outcome.
• Recognition of biases and human nature – use of processes and tools to
avoid decision traps.
• Iteration is efficient and avoids the comfort zone bias.
• Shift from the advocacy/approval process to DDP results in clarity of
roles and a collaborative search for maximum value.
• Applying DQ generates immense value potential: ROIs – like 600:1

Pres 131 carl spetzler july 27 2016

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Pres 131 carl spetzler july 27 2016