Case 2.

MUTUAL LENDING

This is a description of the process with a lot of text from the guidebook by Baker et al. 2002.

Step 1: Define the Problem

Problem definition is crucial for making a good decision. This step identifies

 root causes,
 limiting assumptions,
 system and organizational boundaries and interfaces, and
 any stakeholder issues.

A good problem definition expresses the issue in a clear, one-sentence statement that
describes both the initial conditions and the desired conditions. Everybody involved in the
decision-making process needs to agree on a written problem definition before proceeding.

Step 2: Determine Requirements

Any acceptable solution to the problem must meet the requirements. Requirements describe
what the solution to the problem must do.

Step 3: Establish Goals

Goals are broad statements of intent and desirable programmatic values. Examples might be:
reduce
weight, lower costs, lower health risk, etc. Goals go beyond the minimum essential must
have’s (i.e. requirements) to wants and desires. Goals should be stated positively (i.e. what
something should do, not what it shouldn’t do).

Step 4: Identify Alternatives

Alternatives offer different approaches for changing the initial condition into the desired
condition. Generally, the alternatives vary in their ability to meet the requirements and
goals.

Step 5: Define Criteria

It is necessary to define discriminating criteria as objective measures of the goals to measure
how well each alternative achieves the project goals. Each criterion should measure
something important, and not depend on another criterion. Criteria must discriminate among
alternatives in a meaningful way and should be:

 Complete – include all goals

 Operational – meaningful to the decision maker’s understanding of the implications
of the alternatives
 Non-redundant – avoid double counting
 Few in number – to keep the problem dimensions manageable

Input from the decision-maker(s) is essential to the development of useful criteria. Moreover,
the decision-maker’s approval is crucial before the criteria are used to evaluate the
alternatives.

Step 6: Select a Decision-Making Tool

The method selection needs to be based on the complexity of the problem and the
experience of the team. Generally, the simpler the method, the better. There are several
decision-making tools available, they will be part of one of the next blog postings.

Step 7: Evaluate Alternatives against Criteria

Alternatives can be evaluated with quantitative methods, qualitative methods, or any
combination. Criteria can be weighted and used to rank the alternatives. Both sensitivity and
uncertainty analyses can be used to improve the quality of the selection process.

Step 8: Validate Solution(s) against Problem Statement

After the evaluation process has selected a pre- ferred alternative, the solution should be
checked to ensure that it truly solves the problem identi- fied. Compare the original problem
statement to the goals and requirements. A final solution should fulfill the desired state,
meet requirements, and best achieve the goals within the values of the decision makers.

The eight step method describes a process with 8 activities, all using the verb noun notion.
The front-end is very clearly described. The separation between requirements and goals may
be fuzzy for a few criteria, but they are included in one of the two ways. The selection
process is described in many detailed activities and the evaluation is linked to many possible
tools and techniques.The last step is a review of the results, whether they fulfill the problem
statetement. The linked decisions tools and the description is short and meaningful.

Implementation and feedback steps are completely missing in this process. The process is
very complete in the front-end part of the process, but the decision execution is completely
missing.

More information about different decision making processes: List of all reviewed decision-
making processes. See the comparison of the optional decision-making methods for further
study.

Step 1: Identification of the purpose of the decision

In this step, the problem is thoroughly analysed. There are a couple of
questions one should ask when it comes to identifying the purpose of the
decision.

 What exactly is the problem?

 Why the problem should be solved?

 Who are the affected parties of the problem?

 Does the problem have a deadline or a specific time-line?

Step 2: Information gathering

A problem of an organization will have many stakeholders. In addition,
there can be dozens of factors involved and affected by the problem.
In the process of solving the problem, you will have to gather as much as
information related to the factors and stakeholders involved in the problem.
For the process of information gathering, tools such as 'Check Sheets' can
be effectively used.

Step 3: Principles for judging the alternatives

In this step, the baseline criteria for judging the alternatives should be set
up. When it comes to defining the criteria, organizational goals as well as
the corporate culture should be taken into consideration.

As an example, profit is one of the main concerns in every decision making

process. Companies usually do not make decisions that reduce profits,
unless it is an exceptional case. Likewise, baseline principles should be
identified related to the problem in hand.

Step 4: Brainstorm and analyse the different choices

For this step, brainstorming to list down all the ideas is the best option.
Before the idea generation step, it is vital to understand the causes of the
problem and prioritization of causes.

For this, you can make use of Cause-and-Effect diagrams and Pareto Chart
tool. Cause-and-Effect diagram helps you to identify all possible causes of
the problem and Pareto chart helps you to prioritize and identify the causes
with highest effect.

Then, you can move on generating all possible solutions (alternatives) for
the problem in hand.

Step 5: Evaluation of alternatives

Use your judgement principles and decision-making criteria to evaluate
each alternative. In this step, experience and effectiveness of the
judgement principles come into play. You need to compare each alternative
for their positives and negatives.

Step 6: Select the best alternative

Once you go through from Step 1 to Step 5, this step is easy. In addition,
the selection of the best alternative is an informed decision since you have
already followed a methodology to derive and select the best alternative.

Step 7: Execute the decision

Convert your decision into a plan or a sequence of activities. Execute your
plan by yourself or with the help of subordinates.

Step 8: Evaluate the results

Evaluate the outcome of your decision. See whether there is anything you
should learn and then correct in future decision making. This is one of the
best practices that will improve your decision-making skills.

Conclusion
When it comes to making decisions, one should always weigh the positive
and negative business consequences and should favour the positive
outcomes.

This avoids the possible losses to the organization and keeps the company
running with a sustained growth. Sometimes, avoiding decision making
seems easier; especially, when you get into a lot of confrontation after
making the tough decision.

But, making the decisions and accepting its consequences is the only way to
stay in control of your corporate life and time.

Loan officers primarily used deliberative analysis and secondarily

intuitive analysis when making lending decisions.

Loan officers reported more difficulties with soft information than with
hard information.

Both situational and organizational factors influence loan officers’

decision making.

Summary
Using the critical incident technique, we investigated how 88 loan officers
at four Swedish banks perceived their decision making in evaluations of
commercial loan applications. First, we found that our sample of loan
officers primarily used deliberation and less intuition when making
 decisions. Second, that the loan officers had greater difficulty in making
decisions that involved soft information (e.g., client relationships) than
decisions that involved hard information (e.g., financial information).
Third, most decision making situations involved existing rather than new
clients and low rather than high risk levels. Finally, we found a potential
effect of organizational factors such as lending practices on lending
decisions. Our findings have general implications for research on
decision making processes. For the banking industry, this research
identifies and elucidates the difficulties loan officers face in decision
making of commercial loans

linch
klin(t)SH/
verb
gerund or present participle: clinching
1. 1.
confirm or settle (a contract or bargain).

In sensing, you ask practical questions:

o How did we get here? How did this situation develop?

o What are the facts, and can they be verified?
o What is the current situation?
o What has already been done, and by whom?
o What is already working?

In the intuition function, questions are more creative:

o How can the facts be interpreted?

o What insights can be gained from this situation?
o If there were no restrictions, what would our options be?
o What other avenues can we explore?
o What does this problem remind us of?

Once facts are gathered and options determined, you move to the thinking function, with its
logical and objective approach:

o What are the pros and cons of each option?

o What are the possible consequences of each option?
o What objective criteria need to be met?
o What are the costs and benefits associated with each option?
o Which option provides the most sensible strategy?

Finally, the feeling function involves people, and involves the following questions:

o How does the result affect people?

o How do I feel about each option?
o How will others react to each option?
o What values are behind each option?
o Who will implement the decision?

Understanding Decision-Making Can Lead to Better Decisions

The Z model enables decision-makers to use practical tools to make better decisions. By learning to
gather the right facts, consider options and weigh the impact of a decision on people, you can significantly
improve the quality of your decisions. This process is easier than making decisions on your own, with little
buy-in or consideration of long-term impac

prod

präd/
verb
past tense: prodded; past participle: prodded
1. poke (someone) with a finger, foot, or pointed object.
"he prodded her in the ribs to stop her snoring"
synonyms: poke, jab, dig, elbow, butt, stab
"Cassie prodded him in the chest"
o stimulate or persuade (someone who is reluctant or slow) to do something.
"he has been trying to prod the White House into launching an antipoverty program"
synonyms: spur, stimulate, stir, rouse, prompt, drive, galvanize; More

MORAL OBLIGATION. A duty which one owes, and which he ought to

perform, but which he is not legally bound to fulfil.These obligations are of
two kinds 1st. Those founded on a natural right; as, the obligation to be
charitable, which can never be enforced by law. 2d.

torn between, be. Be distracted by two conflicting choices,