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Thursday, December 7, 2006

Life: Decision Making

We make decisions every day. Some big, some small. I noticed that most people do not have a framework that they apply to decision making. Most of the decisions are made on "gut-felling" and without required analysis. I attended an executive program on decision making at Harvard and as optional reading material, I read "Smart Choices"
It outlines a very simple approach which can be applied to all decisions-business, personal, financial, etc. The recommended model is called PrOACT-URL. It is:

Identify the problem correctly. E.g. when you buy a car, usually the problem is commute and not the car.

O=Objectives: What are trying to achieve by solving the problem? You can have multiple objectives with one problem.

A=Alternatives: What alternatives do you have and what alternatives can you create?

C=Consequences: how well the Alternatives meet your Objectives?

T= Trade offs: If can’t achieve all your objectives, what are you willing to trade off?

U=Uncertainty: What information you don’t have that my effect your decision?

R=Risk tolerance: How much risk are you willing to take?

L=Linked Decisions: What future decisions are linked with your current decision in evaluation? E.g. After you buy a car, you have to figure out where to park it.

You may want to quantify the PrOACT-URL factors and apply to a problem you are trying to solve. Good luck!