How to Make Better Long Term Decisions
Decision making is a shared activity experienced by every organization, large or small. But, why does it seem like top performers seem to know how to always make good decisions? What do they know about the decision-making process that the rest of us don’t?
As a start, top performers know that time constraints and the volume of information often determines which decision-making process to deploy. Emergencies and time-sensitive, limited data require a different approach than those situations where there are minimal time constraints but large volumes of data to process. (TIP: Read the blog “How to Make Better Quick Decisions” to learn how to train for situations requiring quick decisions.)
Unlike quick decisions, long-term decisions are typically associated with larger volumes of data, involve multiple people, and charts the course of action for a group or the entire organization. Long-term decisions demand a deeper analysis, which cannot be performed when having to make quick decisions.
In 1960, Charles H. Kepner and Benjamin B. Tregoe developed a systematic approach to longer-term decision making, which appeared in the book entitled “The Rational Manager,” now considered to be a business classic. An updated version entitled, The New Rational Manager – An Updated Edition for the New World, was released in 2013, and available from any bookstore or online book website.
Kepner and Tregoe formulated a systematic and effective framework for organizing, gathering, and evaluating associated information for successful long-term decision making. This process has been adopted by many organizations, now referred to as the Kepner-Tregoe Matrix, or KT-Matrix. Others call it the “root cause analysis” as this process is used often to understand the causes of problems before crafting solutions.
The basic concept behind the KT-Matrix is that every decision has risks. But with the proper evaluation, including reviewing objectives, exploring and prioritizing alternatives, options can be weighed by risks to determine the best choice.
There are four steps to the KT-Matrix, summarized below:
- Situation Analysis — Begin by clarifying the situation. Identify all concerns and list objectives and priorities for finding a direction.
- Problem Analysis — Next, define the problems and discover the root cause. Be sure to list everything, as there may be underlining sources.
- Decision Analysis — Identify all possible directions and alternatives. List all risks associated with each option, including whether the proposed solution is possible. Add the objectives satisfied by each option. Weighted scores are assigned and calculated. The top two or three options are selected as possible solutions or directions.
- Risk Analysis — Continue to understand risks, negative consequences, as well as actions required to reduce or remove associated risks. Recalculate weighted scores. The option that scores the highest is selected as the best choice.
The KP-Matrix is about making clear, informed, best choices by weighing alternatives, identifying risks, and understanding how to mitigate negative consequences. Weak choices are eliminated, while strong alternatives remain. Weighted scores make that final selection easy.
There is a science associated with the KT-Matrix process that requires further explanation. As expressed in the summary, several steps require the calculation of weighted scores. Use a 1-10 range (low to high, respectively) when scoring objectives, and options.
Let’s take a closer look at the Decision Analysis step:
- Start by preparing a decision statement. That statement must include the desired results, along with the required actions. Identify strategic requirements (must have), desired objects (want to have), and known constraints (all limits).
- List every possible course of action and an option. If using a spreadsheet, leave enough rows beneath each listed option.
- Insert all objectives (must have) and prioritize them in order of importance, by assigning an importance value, the 1-10 rating system discussed above.
- Now insert a score for how each potential option addressed that “must-have” objective.
- Finally, multiple the two assigned values to generate a combined score, as shown below. The higher the score the better the option.
Work through all the potential solutions, generating scores for each one. Once this task is completed, select the top three possible solutions. The final step is to score the risks or negative impacts associated with each solution.
- Create a new series of rows and columns, as shown below. Note there are new columns for scoring the probability, impact, and mitigation of failure, respectively.
- Multiple all three columns to get a final combined score. Do this for all three top possible solutions.
Once this scoring is done, the best choice will have the highest score. The illustrations and steps are just summaries to help you understand the Kepner-Tregoe Matrix. The most crucial aspect in the KT-Matrix is prioritizing objectives, assessing risk, and mitigating risks where possible. Keep in mind, there are no “right” decisions, just better choices. Assigning weighted scores allows you to choose the best possible alternative to achieve the desired results with the least negative impact.
Call to Action — Prepare by Learning
The Kepner-Tregoe Matrix is not a simple decision-making process, as there are several import steps in properly assessing objectives and risks. Start by learning what you can about the KT-Matrix.
- A great start is the Ability Platform video lesson called “Decision Making Models.”
- Follow up that lesson with another entitled “Risk Management – Decision Making.”
- Use this link to download a more comprehensive spreadsheet for reviewing, listing and scoring options, provided by Minnesota Section ASQ.
Top performers understand that a “perfect” solution or direction doesn’t exist. They don’t rely on their instincts, preferences, or comfort. The KT-Matrix allows them to assign scores to calculate which choices are the best. The challenge, however, is to guard against personal bias when assigning scores, which is why learning more about managing risk is essential to your transformation to a top performer.
These are just 2 of 19 lessons in the Risk Management Learning Path, a collection put together by subject matter experts. The Ability Platform learning content champions the micro-learning approach, where lessons are short, 10-minutes or less, videos that are easily consumed, engaging and informative. We encourage learning to occur whenever there are 10-minute gaps in any busy schedule.
There are 100+ Learning Paths available in Ability Platform. Each collection of related video-based lessons is organized for you by subject matter experts, so you can start immediately to improve your skills. Build your own collection, and include your custom courses, policies and standard operating procedures (SOP) to produce the proper learning environment for generating top-performers.
Remember, our mission is for you to become a top performer in your industry. Don’t have access to the 100+ Learning Paths? Then register for a Free 7-Day Trial and start today. Learn how to make better choices! The Risk Management Learning Path is a great place to start.