| BUSINESSWEEK ONLINE : FEBRUARY 15, 1999 ISSUE | ||||||||
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| BOOKS
C'mon, Decide SMART CHOICES A Practical Guide to Making Better Decisions By John S. Hammond, Ralph L. Keeney, and Howard Raiffa Harvard Business School 244pp $22.50 Can ordinary people improve their decision-making skills? The answer is yes, according to John S. Hammond, Ralph L. Keeney, and Howard Raiffa, the authors of Smart Choices: A Practical Guide to Making Better Decisions. The three are all well-known as heavyweight consultants and academics. For example, Raiffa, an emeritus professor at Harvard business school, was one of the founders of the field of decision analysis. The writers want to show how the decision rules used by consultants and taught in MBA programs can be applied to everyday decisions, such as changing jobs, buying a house, or investing in a new product. Unfortunately, their attempt to lay out a simple road map for better decision-making must be rated only a partial success. The authors break down the decision-making process into eight steps. The first is to make sure the decision is framed or defined in the right way. Other steps include broadening alternatives and dealing with uncertainty. Nevertheless, the book is dry and uneven, and some sections are less useful than others. After stressing the importance of identifying the right questions to ask, the authors' discussion of how to do that is vague and disappointing. In other sections, such as the one on making trade-offs, the authors lapse into hard-to-follow, B-school jargon such as ''dominated alternatives'' and ''even swaps.'' Even so, some of the chapters in Smart Choices are real gems. For instance, the authors provide concrete guidelines for understanding the consequences of different alternatives. One suggestion is to project your mind into the future as you think about each alternative. ''Instead of imagining you might choose it,'' say the authors, ''imagine that you have chosen it.'' For example, in deciding whether to move to the suburbs from the city, it's not enough to reflect that you would be lengthening your commute. Instead, you must think concretely about details--that the commute would take about an hour in good weather, that it would require buying a second car, and so forth. Perhaps the most useful chapter is on what the authors call ''psychological traps'' in decision-making and how to avoid them. They warn, for example, against ''the overconfidence trap,'' which hurts people who are too sure of the accuracy of their predictions. Another important danger is ''the anchoring trap''--the apparent tendency of most people to be excessively swayed by previous events, decisions, and outcomes. ''Particularly in situations characterized by rapid change,'' the authors note, ''the historical anchor can lead to poor forecasts and, in turn, to misguided choices.'' For example, it is a bad idea to base spending decisions on the assumption that stock prices will continue to rise. But beyond any particular technique, Hammond, Keeney, and Raiffa emphasize that it is indeed possible to make better choices--if you're willing to devote the time to work at it. ''Procrastination is the bane of good decision-making,'' say the authors. And in the end, that may be the book's most important lesson. BY MICHAEL J. MANDEL _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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