•Social life and recreational activities for Nick
Alternatives
The Morgans recognize that they have two basic alternatives: to Stay, in which Dan refuses the DotCom offer and hopes to keep his current Omega job; or to Change, in which Dan accepts DotCom’s offer and the family hopes to make it turn out well for all of them.
The family is torn. Sarah and Nick strongly advocate staying in Arlington, even though they realize that if their dad loses his job it will affect them severely. They may be forced to work part-time to help support the family; summer vacation plans will be drastically altered; and, most importantly, their choice of college may be seriously limited. Doris has mixed feelings. Even though she would like to leave her job, Arlington has been her home for many years, and both Dan’s and her elderly parents live nearby. Dan tilts toward the move. For him, it represents the excitement of new challenges and a fresh start after a long period of job worries.
Uncertainties
Dan and Doris are both overwhelmed by the uncertainties they must confront.
•How secure is Dan’s present job? Will his commissions grow, hold steady, or continue to diminish? Will he be laid off or forced into retirement? If so, when?
•If Dan takes the new job, how much traveling will he have to do? Will he be up to it? How reliable are the commission estimates? Dan likes Brown, but he’ll also have to work with Brown’s partner, Jack Carney, who seems moody and unfriendly. Will they get along?
•If the family moves, will Doris find a satisfying job in the Amherst area?
•Sarah, upset at the prospect of the move, doesn’t want to leave Arlington. How will she adjust? Will the Amherst school system be comparable to her current one? Sarah takes cello lessons, and she’s made outstanding progress. Will she be able to continue with quality instruction?
•How will Nick adjust? He excels in the honors science and computer programs at his middle school, and he has his heart set on playing football for Arlington High. How will the science and sports programs in Amherst compare with what he has enjoyed in Arlington?
Information Decisions
To help resolve the impasse, Doris comes up with a creative alternative: Explore. To pursue this alternative, Dan investigates the possibility of taking an unpaid leave from Omega to work for DotCom on a short-term trial basis.Hewouldgainsomeinformation—but also take on additional uncertainties. Omega would give Dan a six-month unpaid leave, after which they would probably—but not certainly—rehire him if a pending contract renewal with one of its key clients, the Department of Defense (DOD), comes through in August. If Dan stays with Omega and Omega gets the DOD contract, Omega will guarantee Dan’s further employment for at least three years. DotCom would, in turn, reluctantly accept a temporary arrangement, but it will not guarantee the job to Dan after the six-month trial. He would have the inside track, but DotCom would reserve the right to consider other candidates.
The Morgan family must decide in the next week if it wants to adopt the Explore strategy: a six-month leave without guarantees. The family has given some thought to how it would live for the next several months if Dan took the DotCom job either outright or temporarily. Because it is now February, the middle of the school year, they would remain in Arlington until June. Dan’s commute would be two hours each way, so he would get a studio apartment near DotCom. One or two days a week, Dan could stay home in Arlington and telecommute by fax and modem; he would have to be away from home only three or four days per week.
Doris would take an upcoming school holiday to investigate jobs in Amherst and surrounding communities. Also, if the Explore alternative is selected, the family would sublet a house in the area for the summer. This would give everyone time to get some idea of what a move might entail. If, after the summer, Sarah were to remain adamant about staying in Arlington, she could live during the school year with a good friend of hers until she graduated from high school. Meanwhile, during the summer, her parents would try to woo her to their new home with horseback riding lessons. If the family were to move next September, Nick would have to go with them: he would not be given the choice that Sarah has. Amherst’s football program may not be as good as Arlington’s, but he would likely get to play even if the family moved.
Timeline
If the family decides on either Change or Explore, by August it will know something about Dan’s new job, Doris’s job possibilities, and the children’s responses. They will also know if the DOD has renewed Omega’s contract.
At the end of August, with this additional knowledge, Dan will have another round of choices—future decisions. If he has stayed with Omega and the DOD contract has not come through, he’ll lose his job; he could then try to see if DotCom still had a job available. If he has moved to DotCom and the family or he thinks it has been a mistake, and if the DOD contract has been renewed, he could approach Omega to rehire him. If he has chosen Explore, depending on the circumstances, he might decide either to return to Omega or to stay with DotCom.
By the beginning of September, Dan should have learned whether he has a job and where. If, in September, he ends up with neither job, he will try to get another job somewhere else. At his salary level and with the competition from younger talent, however, the pickings will be slim.
Dan and Doris summarize the sequence of decisions and learning that must take place over the ensuing nine months in the timeline shown on pages 180–181.
Decision Tree
To further help them in their decision, Dan draws a decision tree— shown on page 182—that shows the sequencing of decisions to be made and the information learned along the way from now through early September. He indicates each decision with a square box, each uncertainty with a circle, and each consequence with a letter.
Dan and Doris take a hard look at the decision tree. Their first decision (decision 1) has three alternatives: Stay with Omega, Change to DotCom, or Explore (a temporary move to DotCom using a six-month leave from Omega.) If Dan were to Stay, he would learn in mid-August whether Omega’s DOD contract had been renewed (uncertainty 4). If yes, he would continue to work for Omega (decision 8). If no, he would lose his job at Omega, and he would then see if the job with DotCom were still available (decision 9), finding out the answer in early September (uncertainty 16). If yes, he takes the job. The consequence of following this path is labeled B. If no job is available, the consequence would be C—presumably at this point he would be in deep trouble, and he would have to look for another job, which he might not find.
If Dan chose the Change alternative at decision 1, he would know by the beginning of August whether working at DotCom and living in Amherst suits his family (uncertainty 3). If the situation is bad, and the DOD project comes through for Omega (uncertainty 7), Dan would approach Omega for his old job (decision 14). If the contract doesn’t come through, Dan, with consequence Q, will continue at DotCom but begin looking for a new job.
A Timeline for the Morgan Family Decision
* * *
Even the more complex set of circumstances of the Explore alternative can be clearly followed using the decision tree.
After tracing each branch of the tree, Dan and Doris take a break for a well-earned cup of coffee. ‘‘Well, darling,’’ Dan says, ‘‘what should we do?’’
‘‘The tree’s been very helpful,’’ Doris responds. ‘‘It shows our decision problem at a glance—what we know and don’t know, when more information will become available, and what we do next. But it leaves out my career and the kids’ adjustment.’’
‘‘Those things are very important, of course, but to keep the tree workable, I combined them under the grand uncertainty: What’s good or bad for the family as a whole?’’
‘‘So where are my and the kids’ concerns taken into account in this decision tree?’’ Doris asks.
‘‘Your concerns, as well as mine, and the impacts of our decision on the family as a whole are accounted for by consequences A through Q at the end of the
decision tree,’’ Dan explains. ‘‘Each of these consequences should summarize how well off we are having traveled along the corresponding path of alternatives and outcomes in the tree.’’
‘‘I see. Consequence A for the family is great, B is OK, and M is awful. But some are a lot more uncertain than others. Take E.We explore, get good vibes from DotCom, the DOD contract materializes, and you approach Omega, but they’ve given the job to someone else. So with E you would try to get DotCom to make a long-term commitment. But what if they won’t?’’
A Decision Tree for the Morgan Family Decisions
* * *
‘‘That’s the penalty they’re imposing to get me to accept their offer now.’’
‘‘And it may work out that you’re happy with them but they aren’t so happy with you,’’ Doris teases.
Dan smiles. ‘‘I suppose so. OK, life goes on with E. We could always extend the tree out from there, grow it taller—except that it’s on its side—or bushier, with more options. What we really need to do is to rate A through Q on how desirable they are to us, as a family. I think that would be easy to do.’’
‘‘If we stay, we have to be scared stiff of ending up with C.’’
‘‘And if we move, we could end up with disastrous consequences P or Q. But these still aren’t as bad as C, since I can keep my job at DotCom even if we all hate it. What we need to think about, it seems, are two things: first, how likely are the uncertainties? And, second, what is the relative desirability of the various consequences?’’
‘‘Agreed,’’ says Doris.
‘‘If we can’t decide just using this tree to think things through, we’re going to have to quantify some things to really see how they compare. But we shouldn’t have to quantify everything—just enough to decide. As I see it, we have two key uncertainties in our situation. I’ve thought pretty hard about them, trying to assign probabilities. Ready?’’
Doris nods, and Dan continues. ‘‘First, what’s the chance that Omega will get the DOD contract? I’d been thinking it was an even-money bet, but most people around the office think that’s optimistic. So I dropped my estimate to about 30 percent.’’
‘‘That’s disturbing. I’d been thinking that the chances were closer to 80 or 90 percent. For me, that makes our choice much clearer.’’
‘‘Yes,’’ Dan agrees, ‘‘I thought it would. And the probability for my second key uncertainty might be the clincher.’’
‘‘That’s where you explore, like what you find, and end up asking DotCom to make the arrangement permanent?’’
‘‘Exactly. I have to say that the chances are around 25 percent that they would refuse. They might find someone else better or cheaper, or decide that I’m not as good as they think. I might not get along with Carney, and he might blackball me. Yeah, 25 percent sounds right.’’
‘‘That’s enough for me,’’ Doris says. ‘‘I know what I want to do. I’m going to write down my choice.’’
‘‘I guess I know, too: We opt to accept DotCom outright. Is that what you wrote down?’’
‘‘It sure is. But I have some process advice. Let’s tell the kids and our folks our decision, but hold off telling Omega and DotCom for a few days. Let’s see how we sleep the next few nights. If we have second thoughts, then, as much as I hate to do it, maybe we’ll need to do a bit more quantification.’’
Lessons from the Application
Dan and Doris approached their linked decision problem in a manner consistent with the six-step process outlined in this chapter. Let’s review their experience to see the process in action.
•Step 1: Understand the basic decision problem. The Morgans’ basic decision was whether Dan should stay at Omega or change jobs to work for DotCom. Talking things through, Dan and Doris listed objectives for each family member, as well as the dozen or so uncertainties they faced. They then reduced the uncertainties to just four, to focus their problem and make it more manageable.
•Step 2: Identify ways to reduce critical uncertainties. Dan and Doris developed the Explore alternative as a means of gathering information about several of the uncertainties they faced. By taking a temporary position with DotCom and by spending the summer in Amherst, the family would get information relevant to them all. A lot of creative thought and negotiation went into fashioning the Explore alternative to be acceptable to Omega and DotCom.
The Morgans focused on only one Explore alternative, although others could have been developed. Dan might have tried working for DotCom without moving to Amherst for the summer, or the family might have moved for the summer while Dan maintained his job at Omega. Dan could also have sought another job in the Boston area while remaining at Omega, but he chose to keep it simple and not to add that alternative to the problem.
•Step 3: Identify future decisions linked to the basic decision. After the basic decision about a job now, the Morgans included future decisions about the possible need to switch jobs again based on whether the initial choice was working out or still available. Since this information would become clear by the end of the summer, they chose September as their time horizon.
•Step 4: Understand relationships in linked decisions. To get the timing in the problem straight, the Morgans constructed a timeline, which helped Dan sketch a decision tree. Following the Explore branch, Dan could have drawn a dozen or so learning outcomes, depicting what each member of the family might learn. To keep the decision tree simple, however, he chose to include only two branches: a good or bad outcome for the family. In the Morgans’ tree, only one branch was exhibited at each of the decision points from 8 to 15—except for point 10, where the choice between Omega and DotCom was not obvious. Not including alternatives that are obviously poor choices avoids unnecessarily complicating the tree.
The Morgans felt they could easily visualize the consequences at each end position and therefore didn’t need to write out the consequences in detail. Instead, they talked about how good or bad some of the consequences would be. They were scared stiff about ending up with consequence C on the decision tree, for example, because of the bleak job-hunting prospects in the future.
•Step 5: Decide what to do in the basic decision. By thinking ahead and working back, the Morgans clarified their choices in their basic decision. For the alternative ‘‘Stay with Omega,’’ the plan would be to stay if Omega got the DOD contract and to approach DotCom for a job if it didn’t. If that didn’t work out, Dan would try to find work elsewhere.
The Morgans faced many uncertainties, but Dan and Doris were able to make their basic decision after quantifying just two: the chance of the DOD contract award and the chance that DotCom would hire Dan if he chose the Explore alternative. Their judgments about these probabilities gave them the confidence to go forward without further quantification. But, occasionally, your decisions may require more quantification, perhaps to the extent of using the even swap method (see Chapter 6) to make tradeoffs between consequences.
•Step 6: Treat later decisions as new decision problems. Dan and Doris opted in February for the DotCom job and the move to Amherst. By late August, however, they’ve learned a lot. Dan isn’t completely happy with his new job: there’s too much traveling, and Carney is a pain in the you-know-what. Doris is ecstatic, though: she’s found a job as a substitute teacher in Holyoke, near Amherst, and in her spare time plans to take courses in history at the University of Massachusetts, working toward an advanced degree that will allow her to teach high school. Sarah has broken up with her boyfriend in Arlington and would just as soon move far, far away. Nick, preparing to enter high school, has attended football tryouts but doesn’t much like the coach, and he misses the kids on his old block. The family hasn’t yet put its Arlington house on the market. Omega, to everyone’s surprise, was awarded the DOD contract. Dan thinks he can get his old job back. Should he try?
Our advice to him is to consider this as a new decision. Dan and Doris should rethink the family’s situation, looking further
into the future and examining in more detail those aspects that matter now.
Maintain Your Perspective
Building an awareness of linked decisions is a good news–bad news situation. The bad news is that, because they are so complex, linked decisions will be among the most difficult you will face— and, typically, they will also be among the most important. The good news is that, as complexity and importance increase, the value of systematic, qualitative thinking also increases significantly. Just knowing how sets of decisions are linked and using a modest amount of foresight can help considerably in making a smart choice and can practically guarantee avoiding many, if not all, of the dumb ones.
So, maintain your perspective. Your comfort level with your choices may not be as high on linked decisions as on simpler ones, but your accomplishments may be much greater. Skiing the beginner slopes is relatively easy, but skiing the expert runs gives you a much greater sense of accomplishment—even if your form is less than perfect. Over time, making smart choices on linked decisions will affect your life and career more positively and profoundly than making perfect choices on all your simpler decisions put together.
CHAPTER 10
Psychological Traps
THIS WHOLE BOOK HAS BEEN ABOUT how to think systematically about tough, important decisions. By now you’re much better prepared to identify and avoid the eight most common and most serious errors in decision making:
•Working on the wrong problem
•Failing to identify your key objectives
•Failing to develop a range of good, creative alternatives
•Overlooking crucial consequences of your alternatives
•Giving inadequate thought to tradeoffs
•Disregarding uncertainty
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