Saturday, May 29, 2010

Book Review: "Smart Choices" - a practical guide to making better life decisions

"Smart Choices: A Practical Guide to Making Better Life Decisions"

by John Hammond, Ralph Keeney, Howard Raiffa

Originally published 1999, Harvard Business School Press

Link to review on Amazon

There are a lot of books about decision making and problem solving, and the vast majority of them are mediocre. There are a number of decent, readable accounts that give some simple tips and teach you about psychological principles, but these typically have very little in the way of solid tools. We all know it gets boring when the math starts or when we have start doing drills to learn basic skills. And the more specific they get with their methods, the less useful it becomes for our own problems. Books that cater to our creative side can help us learn how to break out of ruts, but they are weaker on helping us make good decisions more consistently.

Then there are systematic formal approaches by academics based on mathematical techniques, and these tend to be the equivalent of textbooks. Decision theory, mathematical modelling, strategy, optimization, probability, statistics, etc.. Great stuff. You can get a lot out of them if you put in the study, as far as useful tools and skills for hypothetical problems, but actually applying their lessons when you face a real problem is another matter. And as with most academic learning, practical transfer is left as an exercise for the reader. Also applying formal methods in situations where we already have good instincts, that often rubs us the wrong way. Using a spreadsheet to choose a mate? If you actually were to study systematic decision making and acquire the skills and habits for using those tools, you would surely make more decisions more consistently. But would you be wiser at knowing when to use these methods?

Smart Choices is closer to the first type of book, a practical guide to principles, but it has the soul of a textbook. No footnotes, bibligraphy, or exercises. But it does treat the subject matter very seriously. Maybe that's also part of why many of the reviewers on Amazon found the book boring. The authors' discipline in focusing on what really works while building on solid theory is clear throughout the book. As a result of this unique approach, this book has two great strengths in my opinion.

First, it is a surprisingly concise and admirably simple presentation of decision theory, with virtually no mathematics required. That's a signficant accomplishment in itself. The authors are deep experts in the technical aspects formal decision making, but have chosen a small set of simple tools to illustrate very general principles. When dealing with uncertainty, you create a risk profile for each alternative, listing the likelihood and consequences of each outcome for that alternative. Ok, not exactly rocket science, but who among us ever thinks of actually doing that to help them think through uncertainty? If you can't decide from the risk profile, you create a decision tree by identifying the things you can control and the things that remain uncertain, and their consequences. Very basic tools and advice and very powerful, with some practical advice for dealing with the messy details. It isn't so much the tools themselves that are the point here, it is the straightforward advice the authors offer on how and when to use them. There is a lot of experience condensed into a small book here.

The second strength of this book is that the authors make an unusually successful effort to bridge the different kinds of decision making genres, offering not only the outline of a formal process to guide you and specific tools to use within the process, but very clear practical explanations of why the steps are done as they are. The book begins with the usual mantra of systematic decision methods: having a process is better than not having a process. Sort of like having a map is better than not having a map. Ok. But before they jump into the how-to part that makes this a small practical guide, they also make their process criteria explicit. The process must help you to:

1. Focus on what's important
2. be logical and consistent
3. acknowledge objective and subjective factors, and blend analytical with intuitive thinking
4. require only as much information and analysis as neccessary to resolve the dilemma
5. encourage and guide the gathering of relevant information and informed opinion
6. be straightforward, reliable, easy to use, and flexible

This sounds great, but how can a formal decision process accomplish these things? And do the authors really provide one that manages this feat? It is their systematic and serious attempt to actually meet these 6 criteria, and their relative success at achieving it that makes for the greatest strength of this book.

The way they attempt this is to define each of their process step in very flexible terms, focusing on the critical relationships between the factors. Some trigger leads you to a loose problem definition with its associated concerns. The problem definition helps you identify means objectives (how you intend to meet your concerns). Means objectives help you figure out your more fundamental objectives. The objectives help you generate alternatives that meet those objectives. Analyzing consequences in various ways helps you evaluate the alternatives and even go back to generate new ones. Alternatives often have consequences that meet different objectives in different ways, so we have ways of helping to make tradeoffs.

There is a lot of theory and experience buried into these seemingly simple ideas, and it would be very easy to miss the value of this if the reader hasn't seen decision theory done less expertly in many other books. It is very easy to make the process too simple, too complicated, too rigid, or not provide enough guidance. I think the authors get it pretty much just right.

The reason it works in this book, in my opinion, is that by explaining the process in clear terms and not just providing the tools, the flexibility of the process becomes much clearer. It becomes obvious from the examples why you want to keep looking for better alternatives even in the later stages of the process, even as you eliminate alternatives that just won't work or just aren't as good as others. It becomes clear where and how to consider uncertainty. It becomes more evident where various thinking traps make their way into the process by causing us to persevere at the wrong problem, by not considering important objectives, but not looking closely enough at the consequences of each alternative, by not considering tradeoffs, by missing relationships between decisions, or by failing to account for your own personal risk tolerance. The guidelines for the process help you avoid each of these problems by helping you focus on the right things at the right point in the process, but without making it so rigid that you fall into a completely different trap.

There is no magic problem solving or decision making method that will solve your problems for you, but following the advice in this book will at the very least help you focus on the right things, ask the right questions at the right time during the process, and help explain your decisions better to others as well as to yourself. There are books that provide more details on specific tools, but this book stands out for its clear and practical presentation of the overall process of making decisions.

No comments:

Post a Comment