A9: VALUES***

... getting clear on what we value and how we value helps us understand the ground we are standing on when making decisions. Usually, values are discussed after or as part of an ISSUE RAISING session. However, the discussion around the DECISION HIERARCHY also involves thinking about values.

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When what we value and how we value is unclear, no analysis can help us know what the right decision should be. Lack of clarity on value keeps us spinning in circles as we do not have a basis for evaluating any alternatives.

Consider the following dialog excerpted from Alice in Wonderland, when Alice meets the Cheshire cat right at a fork in the road:

Alice: Would you tell me, please, which way I ought to go from here?

Cheshire cat: That depends a good deal on where you want to get to.

Alice: I do not much care where–

Cheshire cat: Then it does not matter which way you go.

Alice: –as long as I get SOMEWHERE.

Cheshire cat: Oh, you are sure to do that if you only walk long enough.

This dialog is a wonderful exposition on the problem we face when we are unclear about where we are headed. Embedded in the DECISION HIERARCHY's givens are values. It is important to explicitly recognize what we value and how we value.

A big temptation when having a conversation on values is to conflate values with VALUE METRICS. There is a distinction between a conversation on "being" and a conversation on "doing." In the land of "being," there is no uncertainty, only commitment to what is deeply meaningful. In the land of "doing," there is lots of uncertainty requiring trade-offs. And commitment should be given only after thoughtful deliberation. A useful conversation on values helps tease apart this distinction, identifying who the decision maker wants to be in the matter of the decision. Trade-off conversations only make sense once the question of being has been addressed. Sometimes, when the decision-maker is unclear about who he or she wants to be, a trade-off conversation can serve as a way of inquiring into that question and working backward from implications.

Once there is clarity on who we want to be in the context of the decision, it is time to turn our attention to the doing. We often find ourselves facing complex decisions where it is not clear how our action brings about value. Here, metrics are hugely helpful in driving productive action because of their black-and-white nature. When engaging with metrics, it is important to distinguish those metrics that are most helpful in driving productive action by calling them "direct values," and separating these direct values from all other metrics, labeling these other metrics as "indirect values."

In the context of decision analysis, the purpose of direct values is to help discriminate between alternatives. In business contexts, here are some common value metrics that serve as good direct values:

• The Launch of New Products: NPV of Cash flow
• Venture Capital: Multiple on Invested Capital
• Conservation, Non-Profit: Acres Conserved

On the other hand, indirect values could be employee satisfaction, which would translate into the direct value of profits.

Therefore:

• Find the direct values of the stakeholders first.
  • Suppose the clairvoyant revealed the exact value of one of your direct values, so you cannot change it whatever you do. Would you still care about the other value measures?
  • If your answer is yes, then those value measures are direct values. If your answer is no, then those values are indirect values (Abbas and Howard , 2015, p.521).
• Remove values that are unaffected by your decision from the frame. For instance, if the decision has nothing to do with the environment, but the environment was mentioned in the issue raising session, then remove it from the frame.
• Some values, such as safety, can be constraints. For these values, you can use STANDARDS which would help you assess whether (and how well) an alternative meets these constraints.
• Some values, and in most cases direct values, are hard to quantify. For those values find VALUE METRICS that drive productive action towards the direct values (i.e., higher profit from a product would drive higher shareholder value, so you can base your analysis on achieving a higher profit instead).
  • You can show these relationships in the DECISION DIAGRAM.

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If the decision situation is sophisticated enough to warrant a quantitative analysis, the conversation on values needs to deepen into a DECISION DIAGRAM, which can then be converted into a quantitative model to yield insight. When doing quantitative modeling, one will have to tackle the choice of VALUE METRICS and STANDARDS that will be necessary to ensure the correct use of the metric.

Finally, including values such as time and risk in a single attribute is not an easy task. That is a problem that can be deferred to the modeling phase rather than being discussed as part of the framing conversation.

References:

Abbas, A. E., & Howard, R. A. (2015). Foundations of Decision Analysis. Pearson Higher Ed.