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Hard Times Demand Smart Decisions Implemented Quickly – Part II

In this article, Bill Ray, Apian President, discusses the decision-making environment that influenced his development of the DecisionPad software, how his experiences informed that development, and the sort of problems DecisionPad was originally created to address. Read Part I.

I had only been working a few months with that troubled mid-sized company (previous posting) when it was acquired by a Fortune 100 company.  The acquiring company had a diversified offering but most of its profits came from one highly technical flagship product that was very tricky to produce.  Because of the downside risk of a mistake with that cash cow, the corporate culture was highly cautious and analytical.  To fill a strategic product hole this cautious corporate culture bought a Silicon Valley Wild West company in big trouble.  Fortunately they had deep pockets so the high bleeding rate was affordable though hardly acceptable.

One big decision they had to face was plant closures.  There was too much capacity in the acquired company already plus the buyer was bringing new capacity of its own online.  Plants were spread around the world, each with its own strengths and weaknesses.

Being analyticals our senior management meetings on the closure decision began with a large Lotus spreadsheet of financial analysis such as manufacturing costs, transportation costs, boarder-crossing costs, etc.  Over the year that I watched it the spreadsheet got bigger in a endless series of meetings that always seemed to start over at the beginning.  The spreadsheet was so big that the analyst was a beta user for the new Intel plug-in board products to add RAM to the PCs.

Each meeting would begin with the analyst explaining the spreadsheet, but would soon get off course with questions like “what is your assumption behind that costing”, “what about the quality problems at that plant”, “how about the stability of government policies in that country”, “how do we link development engineering efforts half a world away”, etc.  (Remember this was when a FAX machine was state-of-the-art in business communications.)

In other words the tough critical issues in the decision were soft ones, the assumptions, which were not easily turned into financial numbers that could be directly compared to manufacturing costs.  Even when the long-term result will be measured financially, converting all the a priori issues into finance numbers is difficult at best.  People were able to discuss these issues more clearly in subjective terms.

As soon as the discussion moved away from the spreadsheet we lost the superficially objective numerical framework and moved into the purely unstructured verbal.  We needed a framework that could handle the apples and oranges of the real decision criteria.

DecisionPad was motivated by the need to handle a mix of hard and soft information in a way that is satisfying to a wide range of decision participants.  There are fancier analytical methods that are theoretically better but are not useful in practice because they cannot be coupled to real people.  More on how DecisionPad deals with these issues in future articles.

The net result is clear: a framework like DecisionPad can help people converge as information accumulates in the matrix and notes.  Instead of each meeting backing up over old ground,  then scheduling the next meeting, each meeting builds on the last to move forward.

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