Smart Choices: A Practical Guide to Making Better Decisions

Smart Choices: A Practical Guide to Making Better Decisions

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by John S. Hammond, Howard Raiffa, Ralph L. Keeney
     
 

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Smart Choices offers the first straightforward, easy-to-follow process designed to improve the way you make business decisions, family decisions, personal decisions - any decision that can help you reach your goals. Authors Hammond, Keeney, and Raiffa, among the world's best-known experts on resolving complex decision problems, have created a set of techniques…  See more details below

Overview

Smart Choices offers the first straightforward, easy-to-follow process designed to improve the way you make business decisions, family decisions, personal decisions - any decision that can help you reach your goals. Authors Hammond, Keeney, and Raiffa, among the world's best-known experts on resolving complex decision problems, have created a set of techniques for assessing your options more clearly and effectively, ultimately empowering you to make smarter choices. Their step-by-step procedures combine solid research with practical experience and common sense to help you specify your objectives, identify creative alternatives, make reasoned tradeoffs, clarify uncertainties, and evaluate the risks. Smart Choices doesn't tell you what to decide; it tells you how.

Editorial Reviews

From the Publisher
"In Smart Choices, John Hammond, Ralph Keeney, and Howard Raiffa tell us in plain language how to make optimal decisions in our everyday lives. They combine one hundred collective years of experience in an exceptional resource that takes the reader step-by-step through problem formulation and final decision." –Jerome P. Kassirer, editor-in-chief, New England Journal of Medicine

"Throughout Smart Choices, Hammond, Keeney, and Raiffa provide valuable insight and guidance on the inevitable and ongoing negotiation with yourself when facing a difficult decision. By following their effective, systematic process, anyone can make important personal or business decisions with greater clarity, confidence, and efficiency." –Stephen J. Hemsley, former head of Strategy, Technology, and Operating Professional Service Lines, Arthur Andersen
bn.com
There are some people who make decisions with remarkable ease, leaving jobs or making other significant life changes with a seemingly intuitive gift for doing the right thing. And then there are the rest of us. If you find yourself spinning your wheels instead of moving forward, the insights in this book will be of help. The authors teach you to think through your decisions by analyzing your desires, the various alternatives you have at your disposal, and the consequences of each alternative. Don't get stuck with last-minute, poorly considered decisions that will haunt you for years -- use this book to take control of your life.

Product Details

ISBN-13:
9780767908863
Publisher:
The Crown Publishing Group
Publication date:
03/05/2002
Edition description:
Reprint
Pages:
256
Product dimensions:
5.19(w) x 7.99(h) x 0.54(d)

Read an Excerpt

Chapter 1 Making Smart Choices

Our decisions shape our lives. Made consciously or unconsciously, with good or bad consequences, they represent the fundamental tool we use in facing the opportunities, the challenges, and the uncertainties of life.

• Should I go to college? If so, where? To study what?
• What career should I pursue? What job should I take?
• Should I get married now, or wait? Should I have children? If so, when and how many?
• Where should I live? Should I trade up to a larger house? What can I contribute to my community?
• Which job candidate should I hire? What marketing strategies should I recommend for my company?
• Since I feel unfulfilled, should I change jobs? Go back to school? Move?
• How should I invest my savings? When should I retire? To do what? Where?

Such questions mark the progress of our lives and our careers, and the way we answer them determines, to a large extent, our place in society and in the world. Our success in all the roles we play--student, worker, boss, citizen, spouse, parent, individual--turns on the decisions we make.

Making Decisions is a Fundamental Life Skill

Some Decisions will be fairly obvious--"no-brainers." Your bank account is low, but you have a two-week vacation coming up and you want to get away to someplace warm to relax with your family. Will you accept your in-laws' offer of free use of their Florida beachfront condo? Sure. You like your employer and feel ready to move forward in your careers. Will you step in for your boss for three weeks while she attends a professional development course? Of course.

But the no-brainers are the exceptions. Most of the important decisions you'll face in life are tough and complex, with no easy or obvious solutions. And they probably won't affect you alone. They'll affect your family, your friends, your coworkers and many others known and unknown. Making good decisions is thus one of the most important determinants of how well you meet your responsibilities and achieve your personal and professional goals. In short, the ability to make smart choices is a fundamental life skill.

Most of us, however, dread making hard decisions. By definition, tough choices have high stakes and serious consequences; they involve numerous and complex considerations; and they expose us to the judgments of others. The need to make a difficult decision puts us at risk of anxiety, confusion, doubt, error, regret, embarrassment, loss. No wonder we find it har to settle down and choose. In living through a major decision, we suffer periods of alternating self-doubt and overconfidence, of procrastination, of wheel-spinning and flip-flopping, of frustration, even of desperation. Our discomfort often leads us to make decisions too quickly, or too slowly, or too arbitrarily. We flip a coin, toss a dart, let someone else--or time--decide. The result: a mediocre choice, dependent on luck for success. It's only afterwards that we realize we could have made a smarter choice. And by then it's too late.

You Can Learn to Make Better Decisions

Why do we have such trouble? It's simple: we don't know how to make decisions well. Despite the importance of decision making to our lives, few of us ever receive any training in it. So we are left to learn from experience. But experience is a costly, inefficient teacher that teaches us bad habits along with good ones. Because decision situations vary so markedly, the experience of making one important decision often seems of little use when facing the next. How is deciding what job to take or what house to buy similar to deciding what school to send your children to, what medical treatment to pursue for a serious illness, or what balance to strike among cost, aesthetics, and function in planning a new office park?

The connection among the decisions you make lies not in what you're deciding, but in how you decide. The only way to really raise your odds of making a good decision is to learn to use a good decision-making process--one that gets you to the best solution with a minimal loss of time, energy, money, and composure.

An effective decision-making process fulfills these six criteria:

• It focuses on what's important.
• It is logical and consistent.
• It acknowledges both subjective and objective factors and blends analytical with intuitive thinking.
• It requires only as much information and analysis as is necessary to resolve a particular dilemma.
• It encourages and guides the gathering of relevant information and informed opinion.
• It is straightforward, reliable, easy to use, and flexible.

A decision-making approach that addresses these criteria can be practiced on decisions major and minor--what movie to see, what car to buy, what vacation to take, what investment to make, what department head to hire, what medical treatment to pursue. And the more you use such an approach, the more efficient and effective it will become. As you grow more skilled and your confidence grows, making decisions will become second nature to you. In fact, you may find your friends and associates asking you for help and advice with their tough choices!

Use the PrOACT Approach to Make Smart Choices

This book provides you with a straightforward, proven approach for making decisions. It does not tell you what to decide, but it does show you how. Our approach meets the six criteria listed above. It helps you to see both the tangible and the intangible aspects of your decision situation more clearly and to translate all pertinent facts, feelings, opinions, beliefs, and advice into the best possible choice. Highly flexible, it is applicable to business and professional decisions, to personal decisions, to family decisions--any decision you need to make.

One thing the method won't do is make hard decisions easy. That's impossible. Hard decisions are hard because they're complex, and no one can make that complexity disappear. But you can manage complexity sensibly. How? Just like you'd climb up a mountain: one step at a time.

Our approach takes one step at a time. We have found that even the most complex decision can be analyzed and resolved by considering a set of eight elements. The first five--Problem, Objective, Alternatives, Consequences, Tradeoffs--constitute the core of our approach and are applicable to virtually any decision. The acronym for these--PrOACT--serves as a reminder that the best approach to decision situations is a proactive one. The worst thing you can do is wait until a decision is forced on you--or made for you.

The Eight Elements of Smart Choices

Problem
Objectives
Alternatives
Consequences
Tradeoffs
-----------------------
Uncertainty
Risk Tolerance
Linked Decisions

The three remaining elements--uncertainty, risk tolerance, and linked decisions--help clarify decisions in volatile or evolving environments. Some decisions won't involve these elements, but many of your most important decisions will.

The essence of the PrOACT approach is to divide and conquer. To resolve a complex decision situation, you break it into these elements and think systematically about each one, focusing on those that are key to your particular situation. Then you reassemble your thoughts and analysis into the smart choice. So, although our method may not make a hard decision easy, it will certainly make it easier.

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What People are saying about this

Roger Fisher
Through clearly written common sense and everyday examples, the authors convert high-flying theory into practical advice. The best book I know on how to make a decision. -- Co-author of Getting to Yes: Negotiating Agreement Without Giving In
Jerome P. Kassirer
In Smart Choices, Hammond, Keeney, and Raiffa tell us in plain language how to make optimal decisions in our everyday lives. They combine 100 collective years of experience in an exceptional resource that takes the reader step-by-step through problem formulation and final decision.

Meet the Author


John S. Hammond is an internationally known decision-making consultant specializing in negotiation and corporate strategy, and a former professor at Harvard Business School. Ralph L. Keeney is a Research Professor Emeritus at Fuqua School of Business at Duke University, a member of the National Academy of Engineering, and a well-known decision-making consultant. Howard Raiffa, a pioneer in developing decision and negotiating analysis, is professor emeritus at Harvard Business School, and the author of The Art and Science of Negotiation. He has extensively taught decision making to students of business, public policy, law, and medicine.

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Smart Choices 4 out of 5 based on 0 ratings. 4 reviews.
Anonymous More than 1 year ago
Anonymous More than 1 year ago
HemantP More than 1 year ago
wonderful common sense wrapped in a easy to remember formal model :-)
Guest More than 1 year ago
The book, Smart Choices, outlines a seven step process to making better, smarter choices which hopefully lead to better outcomes. At several points, Hammond, Keeney, and Raiffa, the authors point out that even with smart choices, the outcomes might not be great, and occasionally one gets a great outcome despite a poor decision making process. The process involves first properly defining the problem for how a problem is stated will one down the proper path to answer it. Being able to state the objectives that the decision needs to address is crucial as the objectives become the standard by which possible decisions can be judged. Then creating a list of multiple alternatives can allow one to choose a better solution than originally considered. Good decision makers always understand the consequences of each of the alternatives as consequences more clearly define the objectives, problem, and ramification of each alternative. The next step is learning to make tradeoffs between alternatives that are often similar when not properly examined. Finally the greatness of the book is that it provides a systematic way to think about uncertainty, risk tolerance, decisions linked from the present into the future, and psychological traps that limit us so that we do not make smart choices. When considering alternatives which involve uncertainty, the authors recommend creating a risk profile, outlining the possible outcomes for each choice, the chances of each outcome, and the consequences of each. Risk tolerance is a variable that is different for each individual and often tolerance for risk varies with the decision being considered. A risk profile must also include the specific level of risk that the individual wishes to assume in order to have a better outcome than an outcome without risks. The authors suggest decisions that necessarily involve decisions that need to be made in the present and will affect future decisions are a linked together in a pattern of decide-learn more-decide again-learn some more-decide again-learn some more. To make smart choices that extend into the future requires both planning ahead and focusing on the tradeoffs and consequences that matter most. For uncertainty, risk tolerance, and linked decisions, the authors provide models of decision trees and ways of calculating ranking among the alternatives. Finally, the authors provide a list of psychological traps that all of us make that limit our options and choices and how to avoid them. Although many points were a review, the first four chapters about how to properly frame the question, develop the objectives, consider all alternatives, judge the possible consequences and weigh tradeoffs to come to a decision, were an excellent review, I especially liked the second chapter on the importance of properly stating the question as that will lead the best decision.