Four Steps to Adding Structure To Your Decision Making Strategy
Post by Scott Lewis, CEO, Spartan Investment Group, LLC
Organizations operating in complex environments must employ a structured decision-making process that is repeatable at all levels of the organization. As real estate developers, we operate in pretty complex environments with multiple stakeholder groups.
As such, we use a demilitarized version of the army’s military decision-making process, or MDMP. We call our process the Strategic Decision Making Cascade™ (SDMC). There are four steps to the cascade, each one building upon the previous. We employed this process when we decided to make a strategic pivot out of residential development to commercial development. Using the Strategic Decision Making Cascade™, we analyzed a number of different asset classes and found the best one based on our required criteria. Since then, we’ve become more focused, more efficient, and have seen explosive revenue growth. The four steps below outline our process and provide your team with the structure necessary to make tough decisions in a strategic way.
Step 1: Assignment Analysis
The first step of the SDMC™ is to thoroughly analyze the assignment. In the military, this step is called “mission analysis.” At Spartan, we call it “assignment analysis.” We do this using the acronym GETT-TRC, which stands for: goal of the assignment, expected deliverables, tasks to be completed, time available, team, resources available and, finally, customer considerations.
Going through each of the variables above creates a uniform understanding of the assignment. During this part of the process, it is important to establish lists of facts, assumptions and constraints. Develop these lists for each of the GETT-TRC variables and constantly review them throughout the process. The assumptions are most important. Using assumptions in decision making adds risk, so it is important to note which assumptions are being used. Seasoned teams will work to eliminate as many assumptions as possible, changing them into facts or constraints by gathering additional information as necessary.
In addition to analyzing the assignment, establish five to seven evaluation criteria to be used in the last step of the process. Establish the criteria now, as through the process, no matter how diligent the team is in fighting groupthink, there will be a favorite course of action. Waiting until the final step to develop the evaluation criteria could cause those criteria to be skewed so the favorite is chosen.
Step 2: Cours of Action (COA) Development
Once the team has researched and reviewed each part of GETT-TRC, it’s time to move into developing possible courses of action (COAs) for accomplishing the assignment. Make sure the team does not have any preconceived notions of what “right” looks like. This will severely impact the team’s ability to objectively develop multiple courses of action and ultimately pick the correct one. This step has a high risk for groupthink to creep in. The designated leader in charge of the process must stop any aspect of groupthink or the entire process will be wasted.
I recommend developing three to four COAs that meet the screening criteria which are: feasible, acceptable, suitable, distinguishable and complete. “Distinguishable” is the criterion teams often get incorrect. Time and time again, I’ve seen teams develop one COA, then fall in love and go with the next two as variations of the first. For example, when you go to Taco Bell, there are no distinguishable courses of action for your meal. They’re all made of the same ingredients, just wrapped in a different shell.
Step 3: Course of Action Analysis
With all courses of action having passed the screening criteria, the team is ready to analyze them. This is called “wargaming.” There are two concepts that make wargaming effective as well as a lot of fun. The first is “action — reaction — counteraction.” For this to work, split the team into two or more groups (I recommend basing them on key stakeholder groups) and walk through the COA with the “corporate” team executing an action, the “stakeholder” teams reacting to that action and ending with the corporate team executing a counteraction. Execute this cycle as many times as necessary until you reach an acceptable outcome. Make sure you document everything.
The second concept comes from the Israeli Mossad (their CIA) and is often referred to as the tenth man. The Israelis select one person to be as disagreeable but factual as possible with everything the team is suggesting. If the team can work through all the disagreements, you probably have a solid solution and have prevented groupthink.
Step 4: Course of Action Comparison And Selection
Now having war-gamed the COAs, the survivors need to be compared and one ultimately needs to be selected. This is where a decision matrix comes in, which is basically a chart listing the COAs and the evaluation criteria. This step of the process requires upfront planning as to how the decision matrix will be created. The team needs to decide how the scoring will work, whether they want to weight the evaluation criteria and how to work through any scoring disagreements.
Once the team has decided on a scoring methodology, they need to develop the matrix and execute the comparison. To develop the matrix, have the team list the various COAs across the top and the evaluation criteria in a column to the left. Assign a value to each evaluation criteria for all COAs (usually 1-10). Select the COA with the largest value.
Using a structured decision-making process not only ensures the best decisions are made, it also saves a lot of time. Like anything else, teams will struggle with the process until they become familiar with it and individual roles are figured out. Once that happens, it’s amazing how fast complex decisions can be made without sacrificing accuracy or thoroughness.