Smart Choices: A Practical Guide to Making Better Decisions

by John S. Hammond, Ralph L. Keeney, and Howard Raiffa, 1999, Harvard Business School Press, 244 pages, $22.50 list, hardbound. ISBN 0-87584-857-5.

Three well-known experts in problem-solving have written this guide to better decision-making. Their process is prescriptive: helpful techniques even if not as rigorous as some readers may want.

Making trade-offs is a common issue. The authors serve up the "even-swap method." This is an extension of Ben Franklin's advice of more than 200 years ago:

Set up a sheet with two columns: "Pro" and "Con."
For the decision under consideration, list characteristics in the appropriate columns.
When one or more items in one column seem approximately equal in weight to one or more items in the other column, cancel them by crossing-out.
Often, items in one whole column can be eliminated in this fashion. Items that remain suggest the best course of action.

Practical Decisions extends this technique for multiple choices. More advanced scoring techniques, including risk aversion as a "desirability curve," are included.

The authors Keeney and Raiffa are well-known in multi-criteria decision making. I don't recall any mention of net present value (NPV) or expected monetary value (EMV) in the book. Decision trees are described with examples; Monte Carlo simulation is not.

Smart Choices is an excellent introduction to decision-making. I recommend that persons interested in business decisions follow this with by reading more sophisticated books and articles. More-advanced persons can also benefit from some the techniques suggested by these very experienced consultants.

Here is the Contents:

Making Smart Choices. How to think about your whole decision problem: a proactive approach
Problem. How to define your decision problem to solve the right problem
Objectives. How to clarify what you're really trying to achieve with your decision
Alternatives. How to make smarter choices by creating better alternatives to choose from **
Consequences. How to describe how well each alternative
Tradeoffs. How to make tough compromises when you can't achieve all your objectives at once
Uncertainty. How to think about and act on uncertainties affecting your decision
Risk Tolerance. How to account for your appetite for risk
Linked Decisions. How to plan ahead by effectively coordinating current and future decisions
Psychological Traps. How to avoid some of the tricks your mind can play on you when you're deciding
The Wise Decision Maker. How to make smart choices a way of life

**Creating and having better alternatives is more important than good decision-making.

Instead of an index, they provide "A Roadmap to Smart Choices." I would have appreciated an index also.

It's an inexpensive and easy-to-read book, with some good ideas. I recommend it.

Interview with the authors

—John Schuyler, April 1999, revised May 1999