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

1. INTECSEA Consulting
So, You Think You’re Good
At Making Decisions??

2. A B C
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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
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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
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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
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6. Value of Information
Do Not Invest
Invest
-£10
Two Black
One Red / One Black
Two Red
£30
£15
-£6
-£3
Info
£0
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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
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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
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9. The Monty Hall Problem
A B C
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10. The Monty Hall Problem
A B CStick with
original
choice
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11. The Monty Hall Problem
A B C Switch from
original
choice
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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.
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13. Elements of Decision Quality
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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. Defining the Decision Frame
Policy
Strategic
Tactical
Constraints and boundaries
within which the decision
must be made
Primary decisions to
be made
Secondary
decisions
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15. Decision Framing Workshop
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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. Prospect Development Study
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17. INTECSEA 17

18. Strategy Map
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19. Strategy Map
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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
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