How do you make decisions?

Submitted by Owen Plowman on 5 November, 2007 - 16:38

Stop and think for a moment: how do you make a decision?

What process do you use? If your answer includes weighing the facts, relying on your intelligence and past experience, using your intuition, and then deciding, you’re aligned with the majority of people. But there’s actually much more to the decision process than that. I recently read an interesting paper entitled “Would You Know a Good Decision if You Saw One?” (if you are a member of the SPE, or wish to purchase a copy of the paper, you’ll find it at OnePetro). The authors focus on the qualitative elements of decision making, including the cognitive and judgment aspects, and lay out a four stage framework for the decision-making process:

  • Framing: determines the viewpoint for looking at the issue under consideration, and what aspects of it must be taken into account.
  • Gathering intelligence: determining facts and options , and also evaluating the degree of uncertainty.
  • Coming to conclusions: using some sort of technique for actually deciding. This is usually where intuition, experience, and good judgment come into play. But this is also where the danger lies! For example, when somebody makes a decision based on intuition, it’s very hard to dispute it. They “just know” they’re correct, and there’s not really any “process” to examine, to determine how they came up with their result. One way around this is to use multi-criteria modeling, which adds a layer of automation, consistency, and reusability to the decision process.
  • Learning from experience: calibrating the decision-making skill by examining past outcomes.

This is a useful framework for both improving your own decision outcomes, and for understanding what’s going on around you. When I think back to my own experiences, I’ve often (actually, too often) seen a decision-making process where everybody assumed that there was a common framing of the issue (there wasn’t), a large amount of time (in fact, most of the time) was spent in gathering facts and considering options, the decision was made very quickly (and mostly based on experience), and then everybody moved on to execute. Learning from experience? Perhaps a five minute conversation about something in the dimly-remembered past.

The principal author of this paper, Professor Reidar Bratvold (University of Stavanger), is contributing author of “Decision-Making in the Oil and Gas Industry: From Blissful Ignorance to Uncertainty-Induced Confusion” at the SPE Advanced Technology Conference in Anaheim next week. I’ll be very keen to hear what he has to say.