Organizational Use of Decision Analysis

40 Pages Posted: 21 Oct 2008

See all articles by Samuel E. Bodily

Samuel E. Bodily

University of Virginia - Darden School of Business

Abstract

We consider three activities that are key to creating value for the organization: making excellent choices, actually bringing about change, and operating effectively with new choices. We recommend a process that involves lacing together a decision board and a project team as they work together through six work steps. The process is focused on alternative generation, evaluation, and implementation, and is grounded in decision analysis. Tools for creativity enhancement and structuring of analysis are crucial to success; much of this chapter is about creativity. Collaborative efforts to frame the assessment of risk and make explicit value trade-offs are integral to the process. Risk-management techniques expand the set of alternatives to add value and reduce risk. Companies and consultants have been very successful with this process.

Excerpt

UVA-QA-0655

Rev. Jul. 11, 2013

Organizational Use of Decision Analysis

Effective organizational use of decision analysis goes far beyond having individuals in the organization who know how to do decision analysis. In this note, we consider how decision analysis may be laced into an organization in such a way that value is created for the organization by helping organization members make choices that have a high chance of improving their strategy and operation. We recommend a process that interweaves a decision board and a strategy team as they work together through six steps. The process focuses on alternative generation, evaluation, and implementation, and is grounded in decision analysis. Tools for structuring of analysis and creativity enhancement are crucial to success, and much of this chapter is about creativity. Collaborative efforts to frame the assessment of risk and make explicit value tradeoffs are integral to the process. Risk-management techniques expand the set of alternatives to add value and reduce risk. Companies—in the pharmaceutical, oil-and-gas, and other industries—have been very successful with this process.

Organizations exist to add value to their owners and other stakeholders. Value creation requires leadership in the three areas shown in Figure 1: strategic management, change management, and operations management. Organizations will be successful to the extent that leaders can select an appropriate path, move onto that path's direction, and then move effectively along that path. Organizational decision analysis succeeds to the extent that it anticipates these needs and provides a process that will flow through all three components.

The main focus of this note is an organizational decision process that will be described in detail. Along the way, we describe how creativity can enhance this process, a topic that can be overlooked in formal decision analysis.

. . .

Keywords: decision analysis, change, management of, risk management

Suggested Citation

Bodily, Samuel E., Organizational Use of Decision Analysis. Darden Case No. UVA-QA-0655. Available at SSRN: https://ssrn.com/abstract=912055

Samuel E. Bodily (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4813 (Phone)
434-293-7677 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/bodily.htm

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