FREE MANAGEMENT CONSULTING COURSE on www.oeconsulting.be Decision-making How ? Multiple-criteria decision technique is an evaluation method in order to make rationally a choice between several alternatives on the basis of more than 1 criteria. The steps are : List of alternatives or choices List of important criteria required for your decision Give a score (e.g. on 10) on each criteria for each alternative Give a % weight to each criteria if one criteria is more important than the other (sum of criteria weight is 100%) Multiply each score with its weight and sum up to have the total for each alternative Rank all alternatives from high to low Tip : A bad result does not automatically indicate a bad decision, or vice versa (maybe external factors!) We rely too often on emotions instead of research (but remember plain things, plain decision!) Having an influence on decision making, don’t be easily convinced for : Nice plausible stories that are told : Reject the easy and obvious answers that someone comes up with. Not everything that seems plausible is true. Don’t judge outcomes without looking at underlying forces : sometimes what is presented as the root cause, is actually the consequence and vice versa. E.g. beautiful women advertising for cosmetics We don’t detect what is absent – we see the success but what about the ‘hidden’ failures? Often success is attributed to ability, while failure is caused by external factors. Big contrasts compromises our judgement: Big contrasts between things can be misleading : We judge something if we have something completely the opposite in front of us. We have difficulty with absolute judgments. We don’t notice small gradual changes. When a single aspect dazzles us, it affects how we see the whole picture. E.g. a single quality that produces a positive or negative impression and that outshines everything which make the overall effect disproportionate. We see what we want to see: People choose numbers for a lottery thinking it makes a difference or people throw dice harder thinking it makes a difference for a high number. We identify or just invent a pattern and ‘believe in it’ without considering it first as pure chance. We interpret new information so that our prior conclusions remain intact. E.g. reading opinions on the internet, illusion of “no pain no gain” where there is no concrete result,…

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How ?
Multiple-criteria decision technique is an evaluation method in order to make rationally a choice
between several alternatives on the basis of more than 1 criteria. The steps are :
1. List of alternatives or choices
2. List of important criteria required for your decision
3. Give a score (e.g. on 10) on each criteria for each alternative
4. Give a % weight to each criteria if one criteria is more important than the other (sum of criteria
weight is 100%)
5. Multiply each score with its weight and sum up to have the total for each alternative
6. Rank all alternatives from high to low
Tip :
• A bad result does not automatically indicate a bad decision, or vice versa (maybe external factors!)
• We rely too often on emotions instead of research (but remember plain things, plain decision!)
Criteria 1 …….(…%) Criteria 2 …….(…%) Criteria 3 …….(…%) Total score (100%)
Choice 1 : …………… ………(x……%) ………(x……%) ………(x……%) =………
Choice 2 : …………… ………(x……%) ………(x……%) ………(x……%) =………
Choice 3 : …………… ………(x……%) ………(x……%) ………(x……%) =……….
Choice 4 : …………… ………(x……%) ………(x……%) ………(x……%) =……….
Choice 5 : …………… ………(x……%) ………(x……%) ………(x……%) =……….

3. Having an influence on decision making, don’t be easily convinced for :
1. Nice plausible stories that are told :
– Reject the easy and obvious answers that someone comes up with. Not everything that seems
plausible is true. Don’t judge outcomes without looking at underlying forces : sometimes what is
presented as the root cause, is actually the consequence and vice versa. E.g. beautiful women
advertising for cosmetics
– We don’t detect what is absent – we see the success but what about the ‘hidden’ failures? Often
success is attributed to ability, while failure is caused by external factors.
2. Big contrasts compromises our judgement:
– Big contrasts between things can be misleading : We judge something if we have something
completely the opposite in front of us. We have difficulty with absolute judgments. We don’t notice
small gradual changes.
– When a single aspect dazzles us, it affects how we see the whole picture. E.g. a single quality that
produces a positive or negative impression and that outshines everything which make the overall
effect disproportionate.
3. We see what we want to see:
– People choose numbers for a lottery thinking it makes a difference or people throw dice harder
thinking it makes a difference for a high number. We identify or just invent a pattern and ‘believe in it’
without considering it first as pure chance.
– We interpret new information so that our prior conclusions remain intact. E.g. reading opinions on the
internet, illusion of “no pain no gain” where there is no concrete result,…
– Overconfidence of prediction: future predictions can be different from the predictions in the past.
Focus on what is important to you and lower expectation for things that is beyond your control.
– Tip: Challenge your predictions! Actively search for a case or logic in order to prick the balloon.

4. 4. We want to be in conformity with a group (urge for consistency):
– If someone claps - suddenly the whole room joins you
– A product is not suddenly better because it is selling more and more. Look at the product
independently!
– Many start-ups or projects have a pressure to continue unwillingly: “we can’t stop now, we have
invested so much money in it. Otherwise it will all have been for nothing.”
– Due to involvement we cannot judge objectively.
– Tip: Examine the result only, ignore the effort. If necessary, accept the loss for the lesson in return.
Rational decision-making requires you to forget about costs in the past, no matter how much you
have invested. Only your assessment of the future costs and benefits matter. Split the teams: one who
is doing the effort and one who is doing the rating of the result objectively
5. Free is not always free:
– Our behavior is difference when it comes to free things
– People have extreme difficulty being in another’s debt.
– “first give for free, and then later take”
6. Fear of regret or ‘panic’ situation (urge to take action) :
– When we are denied from an option, we suddenly want it more.
– “Last chance offer” selling technique, same for auctions, bidding on internet, ‘only by invitation’,…
– There can also be pressure from an higher authority in order to impose an action: When you are
about to decide, think of what higher authority figure might be exerting an influence on your
reasoning.

5. 7. Referencing to an anchor point for unknown territory :
– E.g. “Recommended” prices/products/….
– First impression is also an anchor point for unknown territory : if someone tells you that the new boss
is shy, it will be difficult for you not to see him as a shy person
8. Group decisions :
– When it goes unnoticed, we hide because there is ‘no responsibility of the risk’ (risk is shifted from the
individual person to the group)
– Tip: “Six Thinking Hats” role game
10. Generalizing assumptions (‘organized blindness’) :
– E.g. “that’s is impossible”
– Prejudice and aversion to people who are outside of your group/small community
– Do not assume that those who think differently are idiots. Before you distrust them, question your
own assumptions.
11. Our memory:
– We are confident that we notice everything that takes place in front of us. In reality, we often see
only what we are focusing on
– It is safe to say that half of what you remember is wrong. When pointed out to you, don’t shoot the
messenger. Truth is different on everything

6. 12. Framing
– We react differently to identical situations, depending on how they are presented. It is not the best
offer that wins – it is the one that looks best on paper (“hot air”)
– “Cherry picking of information” : e.g. anecdotes told, publicity on TV, hotel brochures,…
– E.g. the news: we get influenced by “disproportionate slogans” while the truth is more complex. Our
brains react disproportionately. We think dramatically and not statistically. Tip: no news, no influence.
– “Statistical averages”: Look at the distribution. Outliers can give a wrong image!
– Unwanted advice: always check the source, maybe it’s framed for a hidden agenda (propaganda?)
– “A neat story” : the real issues with stories-they give us a false sense of understanding. Events that
look connected today were not at the time in the past. Events are not linear. Who is the sender? What
are his intentions? What omitted elements may have been relevant?
– To rebuff an anecdote is difficult – Do we hear bad news from responsible persons and take
responsible for it or are they blaming it on external factors?
– Avoiding explanations by using empty words like “because of …” which gives a false sense of
explaining the situation
– “flattery words” : technique is used to sell more, e.g. “for you”, “I like you”, etc.
– Simplicity is the key, the end goal and not the starting point.

7. 13. We systematically forget to compare an existing offer with the next best alternative:
– E.g. searching for a hotel in a city on the internet
– There is no such thing as the best option. Good enough is the new optimum because there are too
many choices for a profound decision analysis. Exclude options that are not needed.
– Learn to love the choice that you have made. No regrets and be comfortable with that
14. We are irrationally more sensitive to ‘losses’:
– Change comes from desperation and not from satisfaction, that‘s why we prefer status quo or the
default option because losses hurt us much more than gains.
– “focus on how something helps to prevent a disadvantage”
15. Envy for people who might outdo you :
– unfortunately you can get used to everything: happiness diminishes after 3 months
– Hire people who are better than us. We could benefit from them. Invest in friendships.
16. ‘General experts’:
– Your circle of competence is not transferable to other domains, e.g. book smart vs street smart
– It does not matter how large the circle is so long as you stick to your own circle of competence
– Tip: True experts know the limits of what they know and more important what they don’t know

8. 17. “Conflict of interests” (subconscious interest), incentives, who benefits?
– System thinking is the analysis of the ‘hidden structures : no single factor leads to a sudden
unforeseen event
– E.g. volunteering has another ‘hidden’ reason than goodwill, like social contact, leisure, etc.
– E.g. rewarding people for every dead rat, actually increased rat population as many were bred for this
purpose. Reward becomes the objective instead of the overall goal.
– Tip: distinguish independent events (like gambling games) and interdependent/balancing events (like
weather)
18. Nothing that grows exponentially grows forever :
– Tip : when it comes to growth rates - don’t trust your intuition. Divide the % by 70 in order to know
the number of years to have the double of it (growth of 5% means having the double in 14 years)
19. Beginners luck vs talented in prediction :
– If you are much better than others over a long period of time
– Tip: keep a diary of predictions in order to look back.

9. Thinking errors when making decisions :
• Even true stories or anecdotes are fairy tales
• Detect what is missing or not there to see (otherwise your risk calculation is wrong)
• Mixing causality and correlation: for example advertising for cosmetics where someone
beautiful makes advertising and not the product that makes someone beautiful
• Urge to take action in stress situation (ask yourself if this is normal!)
• Influenced by an emotional story or anecdote
• Mixing effort and end result : due to involvement, your judgment is compromised
• Wanting the ‘best option of all options’: less is more, because most doors are not worth
entering. TIP : Exclude what is not needed (funnel effect) : Michelangelo: “What is the secret
of your genius?” “Simple. I removed everything that is not David.” Do not focus on what is
David. Focus on what is not David. Eliminate errors.
• Planning is not a demand but a preference : Too long to do lists narrows your focus and
distracts you from anticipating the unexpected (external factors!)
• Framing by using specific words as anchor points: example “Father, may I smoke while I pray?
(No)” vs “Father, may I pray while I smoke? (Yes)”. Be skeptical for “That’s impossible” or
“That’s temporarily”
• Contrary to popular belief, saying “I don’t know” is honest
• Take a deep dive in order to understand the true underlying reasons : alcohol is popular in
(under aged) student parties because the secret ingredient is…. crime