I recently followed a presentation on LinkedIn about decision-making, by Dan Ariely (link). Dan Ariely is a Professor of Behavioural Economics at Duke University (USA), with appointments at the Fuqua School of Business, the Centre for Cognitive Neuroscience, and the Department of Economics. He is also the author of Predictably Irrational, The Upside of Irrationality, The Honest Truth about Dishonesty, Dollars and Sense: How We Misthink Money and How to Spend Smarter and Irrationally yours: On Missing Socks, Pick-up Lines and Other Existential Puzzles.
In his presentation, Dan made an interesting reference to the importance of intuition in the process of decision-making. I wanted to reflect about the decision-making process in project management and see how intuition would fit in.
Decisions in project management
A project is about decisions, related to its scope, its budget, its schedule, its changes, its risks and its opportunities.
In a project we make many project assumptions. An assumption is any factor that in a project is considered to be true, real or certain, without empirical proof or demonstration. It is practically impossible to plan a project without making a few assumptions. A level of certainty or conjecture must be set on the project scope, schedule and budget. Assumptions are beliefs (ultimately, decisions) based on previous experience and on the information available to the project team and the project sponsor. Project assumptions are essential, at the inception of a project and throughout its life cycle.
In addition, a project will have to deal with the uncertainty, or risks (whether as threats or opportunities). Risks challenge the project assumptions: they can become constraints, can pose limitations or dilemmas that the project team has to deal with. Decisions must be taken to allow either acceptance, rejection, embrace, tolerance, transfer or termination.
To complicate the matter further we have: 1) the domains of knowledge and awareness and 2) the cognitive biases.
Affecting the abilities of the project team in the decision-making, there is the body of knowledge at the team’s disposal. This is represented by the knowledge held by the team members, by the project consultants and advisors or by the project sponsors. This knowledge is what we use to take decisions about the project assumptions. We may have an abundance of knowledge (as we might have an experienced team operating in a familiar and well known sector, well supported by experts and advisors). But we may also lack knowledge (as in a project operating in an unfamiliar territory, a new sector or with an unsupported or inexperienced project team).
To make the issue more intriguing, there is the awareness, awareness of what is known or not known (this is an adaptation of the “Johary” window). There is the potential for not being aware. This may be due to the extreme innovative nature of the project (= not being aware of what we do not know) or the naivety in the team, project sponsor or management. Therefore lack of awareness can make us take sub-optimal decisions, with the neglect of blind spots or the oversight of bodies of knowledge potentially in hand.
On top of this, we need to remember those cognitive biases that can so easily affect human behaviour and the approach to decision by individuals or groups of people (link).
The decision process is not exactly straightforward and it is liable to pitfalls.
The Decision Process and the Difficulties
On the process for decision-making, I found the following steps quoted in an web post:
- Identify the decision,
- Gather information,
- Research alternative,
- Weigh the evidence,
- Choose alternatives,
- Implement decision.
The process sounds pretty logical to me and I would like here to reflect on some inherent difficulties. Later I will see how intuition fits the process…
Identify the decision
Clarity about the nature of the decision to be taken is key. It is important to define the objective, scope and the reach. It may seem unnatural, but it is important to focus also on what is not to be included in this decision, what is out of scope.
Defining a problem is a deceptively simple task. Key stakeholders in the project will see issues differently, will be affected by social and cultural factors, will be biased individually. Ultimately, a problem can be framed very differently, therefore it may not be easy to get a clear articulation of the decision, one that is collectively embraced by the team. Time is always a limitation and the type of media used to convey and explain about the decision must be carefully selected in relation to the target audience. For example, a brief notification may be required for the top management, but a very dry note without the context may create false expectations or misunderstanding.
Gather information
This step involves reaching out to several stakeholders or identifying key resources that can provide the information or data required to contextualise the problem and support the decision.
Time and budget can be a real challenge here. The team will surely have limitations. In his LinkedIn presentation Dan presents an interesting approach to when there is abundance of information, which is by setting a definitive time limit to the decision.
We live in a world abundant in data, valuable, but too often inaccurate, false or irrelevant. Another potential issue is the quality of the data, the level of summarisation and distillation of those key data streams and are really important for helping the team in the effective, timed decision.
Research alternatives
In this step, the decision maker will aggregate information gathered into several choices. It is important to identify the pros and cons across each of the alternatives. We have many tools to help in this process.
Here it is important to limit the alternatives. A time limit may be useful when there is abundance with alternatives (see Dan’s presentation).
Weigh the evidence
Once options are sorted, the decision maker needs to determine which criteria are the most important in the decision-making process. Then a weight is added to each of the defined measures. There can be direct criteria weighting methods (scaling, ranking-weight, point allocation procedures) or an indirect approach (weight derived from theories and mathematical models). The next step would be to assign the scoring model to each of the alternatives/choices identified. We have various approaches to help in this process, via a decision matrix that can take various names (such as, Pugh matrix, decision grid, selection matrix or grid, problem matrix, problem selection matrix, opportunity analysis, solution matrix, criteria rating form or criteria-based matrix).
It can be quite complex to find a suitable approach to weighting and scoring, and the team should discuss it to choose a sensible method. At this stage it may be also appropriate to consider the various “What-if” scenarios, look at the possible consequences in adopting one option over the others. It is not natural, but we should look at the worst case scenarios, should the option chosen be sub-optimal.
Choose alternatives
This step entails selecting the option that best meets the need of the decision. It is when the decision is effectively taken, hopefully helped by the process conducted so far…
It is probably important to limit the options to a short list. I like the magic number of three!
It should be a shared decision, with the project team united behind the choice. It is also important that the choice is documented and there is a track record.
Implement decision
This is about executing the decision or taking the recommended option to solve the project problem.
It is important to keep unity in the project team and sense any possible problem with the implementation and with the communication with the various stakeholders. A decision is often about change and change is often difficult to accept, especially when there is a lot at stake.
The role of intuition
How would intuition fit into the very rational and logical decision-making process highlighted above?
Intuition – the ability to understand something instinctively, without the need for conscious reasoning.
Oxford Languages
Intuition develops by doing the same thing over and over, but in slightly different variations and getting feedback – says Dan. It implies building experience.
According to Dan, intuition comes into play when facing a decision that needs to be taken with limited information, no time or resources to gather supporting data. It is the decision based on the ‘gut feeling’, instinctively, without reasoning.
I would say that this would probably be a frequent and recurring situation for most projects in these difficult times, in the volatile, uncertain, complex and ambiguous circumstances in which projects are executed.
In many project circumstances we will not have the benefit of the experience and any previous constructive feedback – we will have to take possibly many decisions driven by gut-feelings! Imagine a brand new innovation project, a project in a new sector, a new team or a junior project manager at his/her first project. There is no experience. Imagine a project that lasts 5 years: the experience (and the feedback to the project team’s operations) will be matured over a long period of time. Little constructive feedback may be available during the course of the project, coming to full fruition maybe only for the following project. The project circumstances are also likely to change, frequently, often in unexpected and unpredictable manner. Remember, we live and work in a VUCA world (I mentioned this in a previous article).
In any case, Dan values intuition. I particularly liked the two important pieces of advice he provided when someone is pushed to use intuition.
Analyse
Dan argues that even though there might be limited information about a particular situation (therefore, we might be on the path for a decision based on intuition), we should think about the factors that could influence the situation.
It is important to try to understand and analyse the “forces” that might influence the situation and, of course, influence the outcome of the possible solution.
To me, this implies a very structured approach to the project environment review and, to an extent, a very analytical approach. There is some preparation for the project team, education and training to be considered!
Prepare
The second piece of advice provided is about the preparation of the possibility that the decision was wrong.
Again, according to Dan, lots of decisions go in one direction and do not take into account (or allow for) the possibility that they are wrong. The risk we run with intuition-based decisions is that we tend not to re-evaluate and we go along with the decision, regardless of its value and appropriateness.
If we make decisions in situations with very little knowledge, it is best from the beginning to set up a proper review at a suitable time and set aside conditions for the re-examination of the decision. An interesting advice is to make sure there is recording of the conditions for the re-evaluation and prepare for the possible correction of the original stand. It is important that we set clearly from the beginning the fact that the decision was based on little information and we create the conditions and the mechanisms to stop, measure, evaluate and maybe redirect.
How would this work in a project? It may be tricky . There will be decisions that will be extremely difficult to revert or to “undo”. Also the project circumstances may not be conducive to a re-evaluation. Think about those rigid commitments on scope or schedule with project beneficiaries or contractual conditions that can be rather inflexible.
In summary, intuition-based decisions in project management are very common and they are tricky (so I think!). A decision based on intuition assumes that there has been no information to develop a ‘good’ proven ground, therefore this could lead to a sub-optimal, poorly grounded decision, also potentially difficult to justify (especially retrospectively). Imagine at an important project review, when we say that we acted on gut instinct and … we got it wrong. How would this be received? Although in challenging times intuition-based decisions might be the only option available, they may be hard to sustain and to explain to stakeholders. A solution might be to have a suitable and accommodating project environment where the risks of relying on such decisions are fully understood and accepted. There is a need for a strong stakeholder management. Important is also to have clear and transparent change controls mechanism, which is sometimes difficult to adhere to. I see lots of challenges!
I hope this article was interesting and thought-provoking. I found Dan Ariely’s proposition really interesting and I am pretty sure I will read some of his books and read other posts on intuition-based decision making. Let me know if you have any feedback.
Marco Bottacini, Senior Portfolio Manager at GALVmed
The views and opinions expressed in this blog are those of the author and do not necessarily reflect the views and opinion of GALVmed.
Useful Links (as of 04 Jul 2022)
- Dan Ariely on Making Decisions – http://www.linkedin.com/learning/dan-ariely-on-making-decisions/dan-ariely-on-making-decisions/
- Top Ten Behavioral Biases in Project Management: An Overview – journals.sagepub.com/doi/full/10.1177/87569728211049046#:~:text=Second%2C%20we%20list%20the%20top,(10)%20escalation%20of%20commitment.
- Weighting Methods for Multi-Criteria Decision Making Technique – http://www.ajol.info/index.php/jasem/article/view/189641/178866#:~:text=There%20are%20various%20weighting%20methods,%2C%20VIKOR%2C%20TOPSIS%2C%20etc.
- What is a Decision Matrix? – asq.org/quality-resources/decision-matrix
- Project management decision making: blending analysis and intuition – http://www.pmi.org/learning/library/pm-decision-making-analysis-intuition-7492
- Critical decision-making skills for project managers – http://www.pmi.org/learning/library/critical-decision-making-skills-project-managers-5798
- The Essential Guide to Robust Project Decision Making – onlinepmcourses.com/robust-project-decision-making/
- What is the Decision Making Process? – http://www.pm4dev.com/pm4dev-blog/entry/what-is-the-decision-making-process.html
- Nailing the Decision-Making Process: A Project Manager’s Guide – http://www.researchgate.net/publication/353934618_Nailing_the_Decision-Making_Process_A_Project_Manager’s_Guide
- The 10 Best Books for Better Decision Making – http://www.deanyeong.com/article/decision-making-books
- Is VUCA Really The Enemy Of Good Decision-Making? – http://www.forbes.com/sites/eriklarson/2021/12/28/is-vuca-really-the-enemy-of-good-decision-making/?sh=13e5a14254ea
- Wise Decision Making in VUCA Environments – http://www.hrdsummit.com/wp-content/uploads/sites/6/2017/02/D2_1235BusinessTransformation_RebeccaWinter.pdf
Project Management Discussion Group 