A12: DECISION DIAGRAM***

...with an updated DECISION HIERARCHY that shows the decision to make now and with explicit VALUES and UNCERTAINTIES, you can have a final conversation on the frame by mapping the relationships between them.

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Generating the right frame is an important step to structure the analysis. However, a frame cannot be converted to a model without first clarifying how the parts of the frame relate to each other, which might also lead to revisions of the frame.

For a complex decision problem, it is not clear how decisions and uncertainties are connected to value. We might have a clear scope and the right perspective and might have listed all issues essential to the decision problem. However, in order to understand what drives value and how we can improve it, we need to show the relationships between decisions, uncertainties, and values.

A decision diagram serves two primary purposes. The first one is the facilitation role of showing the relationship between the issues and getting feedback from the stakeholders on the overall frame of the problem. The second one is the technical role of converting the frame into a model that can be analyzed.

Therefore:

Build a decision diagram to represent the relationship between decisions, uncertainties, and values.

• Any thought that is essential to the decision must be represented by an element in the diagram, which means every element on the diagram must correspond to a thought that is essential to the decision.
• There might be many ways to distribute the decisions, uncertainties, and values over the diagram. One way we prefer is to have the decisions on the left, the values on the right, and the uncertainties in the middle. With this setup, you should begin with the values (and from your direct values in particular) and work your way back to the decisions.
• Try to group uncertainties that are relevant to each other or that belong to the same functionality (i.e., marketing) together to make the diagram easier to read.
• Be conservative with relevance arrows and use one only when you believe that there is a strong relationship (i.e., sales and sales price) as every relevance arrow means that you would need to assess conditional probabilities.

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With a clear decision diagram, you are ready to generate ALTERNATIVES as you now know the decision levers, the significant uncertainties and how they might affect value.