Smart Choices

by Howard Raiffa

  Even when the answer isn’t so obvious, the objectives you set will help guide your entire decision-making process, from defining alternatives at the outset, to analyzing those alternatives, to justifying the choice you ultimately make. Specifically:

  •Objectives help you determine what information to seek. You’ve been offered a job at a new employer. In setting out your objectives, you realize that the work environment is critically important to you. You log on to the Internet and browse through your prospective employer’s web site to find out what it indicates about the firm’s culture.

  •Objectives can help you explain your choice to others. Your boss asks you to justify a recent decision to sign a long-term service contract for your company’s photocopying machines. Armed with your list of objectives, you walk her through your thought process, showing how your decision fulfilled the key objectives better than the other alternatives.

  •Objectives determine a decision’s importance and, consequently, how much time and effort it deserves. If the time of tomorrow’s dentist appointment makes little difference in what really matters to you, why fuss over it?

  Whenever you feel that your decision process is bogging down or heading off course, always focus back on your objectives. They’ll keep you on the right track.

  Watch Out for These Pitfalls

  Remember the old saying ‘‘If you don’t know where you’re going, any route will get you there’’? Too often, decision makers don’t take the time to specify their objectives clearly and fully. As a result, they fail to get where they want to go.

  Why? Often, decisions makers take too narrow a focus. Their list of objectives remains brief and cursory, omitting important considerations that become apparent only after they have made a decision. They concentrate on the tangible and quantitative (cost, availability) over the intangible and subjective (features, ease of use). ‘‘Hard’’ concerns drive out the ‘‘soft.’’ In addition, they tend to stress the short term (enjoy life today) over the long term (have a comfortable retirement).

  These missteps occur for two main reasons. First, many people spend too little time and effort on the task of specifying objectives. They feel they already know what they want and need. Without further reflection, they immediately pick an alternative that seems to ‘‘solve’’ their problem and they move on. Only later, when things turn out less well than anticipated, do they realize that they didn’t really understand their objectives after all. By then, of course, it’s too late.

  Second, getting it right isn’t easy. Objectives don’t just pop up in nice neat lists. While you might think you know what you want, your real desires may actually be submerged—buried beneath the desires others have for you, beneath societal expectations and norms, beneath everyday concerns. For important decisions, only deep soul-searching will reveal what really matters—to you. This kind of self-reflective effort perplexes many people and makes them uncomfortable. But the more relentlessly you probe beneath the surface of ‘‘obvious’’ objectives, the better the decisions you’ll ultimately make.

  Master the Art of Identifying Objectives

  Identifying objectives is an art, but it’s an art you can practice systematically. Follow these five steps.

  Step 1: Write down all the concerns you hope to address through your decision. Thrash about as much as necessary. Don’t worry about being disorganized or mixing up major concerns with ones that seem trivial. This early in the process, too much orderliness will only inhibit your creativity. Use as many ways as you can think of to jog your mind about present, future, and even hidden concerns. Don’t worry if you sometimes seem to be saying the same thing in different ways. Rephrasing the same concern may help you uncover important nuances.

  Flesh out your list by trying some of these techniques:

  •Compose a wish list. Describe as completely as you can everything that you could ever want from your decision. What would make you really happy?

  •Think about the worst possible outcome. What do you most want to avoid?

  •Consider the decision’s possible impact on others. What do you wish for them?

  •Ask people who have faced similar situations what they considered when making their decision.

  •Consider a great—even if unfeasible—alternative. What’s so good about it?

  •Consider a terrible alternative. What makes it so bad?

  •Think about how you would explain your decision to someone else. How would you justify it? Your answers may uncover additional concerns.

  •When facing a joint or group decision, one involving family or colleagues, for instance, first have each person involved follow the above suggestions individually. Then combine the lists, using the varied perspectives to expand and refine first-take ideas. By initially freeing each person to search his or her mind without being limited by others’ thoughts, you’ll get a more comprehensive list that more accurately reflects everyone’s concerns.

  Using these techniques and others of your own devising, you’ll accumulate pages of notes describing what you most care about in relation to the decision you face.

  Step 2: Convert your concerns into succinct objectives. The clearest and most easily communicated form for objectives is a short phrase consisting of a verb and an object, such as ‘‘Minimize costs,’’ ‘‘Mitigate environmental damage,’’ and so on. (For an example of identifying objectives, see the case on pages 37–38.)

  Identifying Objectives: Selecting a Primary School

  Mary and Bill needed to select a primary school for their daughter, Kate. To provide a basis for identifying and evaluating the alternatives, each of them made a list of what they felt was important for Kate’s education. Then they combined their thoughts, easily completing, after about ten minutes, the following joint list of objectives:

  •Learn the fundamentals.

  •Enjoy school.

  •Develop creativity.

  •Develop discipline.

  •Learn good work habits.

  •Learn to work with other people.

  •Participate in physical activity.

  •Learn about different people.

  •Be intellectually challenged.

  •Know the joy of learning and knowledge.

  •Participate in and develop an appreciation for art.

  •Learn to function in our society.

  •Develop options for the future (secondary schools).

  •Develop lasting friendships.

  •Deepen a commitment to basic values (honesty, helping others, empathy).

  They followed the same two-step procedure to compile a second list, this time focusing on what they wanted from the school. In combining their two lists this time, however, they found an area of apparent disagreement: Mary had listed ‘‘No uniforms’’ and Bill, ‘‘Uniform required.’’

  In discussing their reasons, Mary said, ‘‘I hate uniforms for kids. It reminds me of militarization. I think diversity of dress is much healthier.’’

  ‘‘But,’’ Bill countered, ‘‘you surely don’t want competition in dress. It’s not fair to the kids who can’t afford every new inthing.’’

  They reconciled their positions by sorting out the essential element in each perspective. This effort yielded the following additions to their original list of requirements for a good primary school choice:

  •Minimize annual school cost.

  •Minimize travel time to school.

  •Encourage diversity in styles of life (dress, interests).

  •Discourage competitive behavior for material possessions (clothes, bikes).

  •Encourage respect for and understanding of all kids, regardless of family circumstances.

  Step 3: Separate ends from means to establish your fundamental objectives. Having drawn up your initial list of objectives, you now want to organize them. The challenge is to distinguish between objectives that are means to an end (having leather seats in your new car) and those that are ends in themselves (having
a comfortable and attractive interior).

  Separating means from ends is like peeling an onion. Each new layer looks different. The best way to do it is to follow the advice of the common Japanese saying ‘‘You don’t really understand something until you ask five times ‘Why?’’’ Simply ask ‘‘Why?’’ and keep asking it until you can’t go any further. The U.S. Environmental Protection Agency (EPA), for example, uses the objective ‘‘Minimize emissions’’ for evaluating many proposed programs to reduce air and water pollution. But is this objective an end or a means? Let’s ask ‘‘Why?’’ and find out.

  So why do they want to minimize emissions?

  Because it will reduce pollutant concentrations.

  Why is this important?

  It will limit human exposure to the pollutants.

  Why is this important?

  Because exposure can damage people’s health.

  And why is health damage an important concern?

  Health damage just is important. It’s the end the EPA wants to arrive at; everything else is a means of getting there.

  Asking ‘‘Why?’’ will lead you to what you really care about—your fundamental objectives, as opposed to your means objectives. Means objectives represent way stations in the progress toward a fundamental objective, the point at which you can say, ‘‘I want this for its own sake. It is a fundamental reason for my interest in this decision.’’ Fundamental objectives constitute the broadest objectives directly influenced by your decision alternatives.

  Consider this example. Your initial notes on developing a plan for constructing your company’s new distribution center include the objectives ‘‘Minimize construction time’’ and ‘‘Minimize time needed to get permits.’’ You ask yourself ‘‘Why?’’ and realize that these are means objectives; they lead to the two fundamental objectives ‘‘Minimize time before the distribution center is operational’’ and ‘‘Minimize cost of the facility.’’

  Your fundamental objectives depend on your decision problem. A means objective in one decision problem may be a fundamental objective in another. Suppose you’ve just turned 55, and you plan to retire in ten years, at 65. You face two related decision problems: how to invest your retirement funds now and what to do during your retirement years. In the first case, a fundamental objective would be to accumulate as much money as possible for your retirement. In the latter case, having money is only a means objective. Asking several ‘‘Why?s’’ will lead you to the fundamental objective: achieve and maintain a good quality of life.

  Separating means and fundamental objectives is critical because both kinds of objectives play important but different roles in the decision-making process:

  •Each means objective can serve as a stimulus for generating alternatives and can deepen your understanding of your decision problem. Asking how you might minimize construction time for the distribution center, for example, could lead to several good alternatives for shortening the time before the distribution center is operational, such as moving all needed construction materials immediately to the site.

  •Only fundamental objectives should be used to evaluate and compare alternatives. Sure you want to do better in terms of your means objectives. But why? Only to do better in terms of your fundamental objectives. If you use a fundamental objective and its supporting means objectives to evaluate decision alternatives, you will give too much weight to that particular fundamental objective in your final choice.

  Step 4: Clarify what you mean by each objective. You should at this point have a solid list of fundamental objectives. Now, for each fundamental objective, ask ‘‘What do I really mean by this?’’ Asking ‘‘What?’’ enables you to clearly see the components of your objectives. Clarification will lead to better understanding, which in turn will help you to state the objective more precisely and see more clearly how to reach it. In addition, when it comes time to choose, you’ll be better prepared to appraise whether or not the objective is being met.

  For many objectives, the bottom-line meaning will be obvious. ‘‘Minimize cost,’’ for example, means just that: spend the least possible number of dollars. The meaning of other objectives can be more elusive. You want to ‘‘Minimize damaging health effects’’ from a certain air pollutant. But exactly which health effects? And to whom? You might want to ‘‘Maximize prestige’’ in your professional field. But what do you mean by prestige? In whose eyes? Clarifying the meaning of an objective will help you achieve it.

  Step 5: Test your objectives to see if they capture your interests. Having clarified each of your objectives, it’s time to test them. Use your list to evaluate several potential alternatives, asking yourself if you would be comfortable living with the resulting choices. If not, you may have overlooked or misstated some objectives. Reexamine them. A second useful test is to see if your objectives would help you explain a prospective decision to someone else. If using your objectives as reasons and explanations would be difficult, you probably need to spend more time refining the objectives. What’s unclear? What’s missing?

  Practical Advice for Nailing Down Your Objectives

  You will more readily identify your fundamental objectives if you keep the following considerations in mind.

  Objectives are personal. Different people facing identical situations may have very different objectives. For example, a single person investing for retirement may care only about a mutual fund’s long-term value, whereas a married person might also care about the fund’s interim value, as it would help support her family in case of her early death.

  Different objectives will suit different decision problems. People tend to forget this obvious point. (It’s easier, after all, to recycle objectives than to reformulate them for each decision.) Hospitals should use different objectives when hiring a chief fundraiser, for example, than when hiring a chief financial officer.

  Objectives should not be limited by the availability of or ease of access to data. Many people mistakenly focus on immediate, tangible, measurable qualities when listing objectives, but these may not reflect the essence of the problem. Using easy-to-measure but only partially relevant objectives is like looking for a lost wallet under a streetlight because there’s more light there, even though you know you lost the wallet around the corner in a dark alley. Easily measurable objectives won’t always illuminate what really matters. Watch out for this trap!

  Unless circumstances change markedly, well-thought-out fundamental objectives for similar problems should remain relatively stable over time. The key phrase here is ‘‘well-thought-out.’’ Clearly, with deeper reflection, objectives will change if they were not carefully derived in the first place. But given thoughtful objectives and an absence of major changes in health, finances, and so on, fundamental objectives for similar problems will remain the same or change only slowly.

  If a prospective decision sits uncomfortably in your mind, you may have overlooked an important objective. Such late discoveries may strike you as a sign of sloppy thinking, but that isn’t always the case. Sometimes you must stare a decision in the face before a previously unrecognized objective leaps out. Consider this example. A committee established by a local school board was asked to organize a day-long citizens’ conference on the future of the town’s schools. The committee drafted an agenda using a list of objectives set by the board. To the committee’s dismay, however, the board rejected it. Even though the agenda met all of the board’s specified objectives, further discussion revealed a previously unrecognized objective: avoid highly controversial topics. The board saw this objective only when it was confronted with a decision about the meeting agenda.

  APPLICATION

  To Renovate or Move?

  Drew and Darlene Mather now have two possibilities for getting adequate space for their growing family: to renovate or move.

  ‘‘OK,’’ Drew says, ‘‘if we’re really serious about this, let’s draw up lists of why we should move and why we shouldn’t. What do we really want
?’’

  Darlene takes out a pad and pencil, and after about an hour of lively discussion, she has filled up a couple of pages with their ideas. During this conversation, their son, John, appears and, seeing what they’re doing, contributes a few ideas of his own.

  What We Want in a House

  Objectives Subobjectives

  1. Good location Commute time for Drew

  Commute time for Darlene

  Distance to school for John

  Distance to shops

  2. Quality of school

  3. Quality of neighborhood Crime

  Traffic

  Playgrounds

  Athletic facilities (swimming pool, tennis courts, bike path)

  4. Quality of house Size (number of bedrooms, bathrooms)

  Kitchen

  Family room

  Required maintenance

  General aesthetics

  5. Yard Size

  Landscaping (trees, lawn, garden)

  6. Cost

  The next day, Darlene organizes her notes into a list: ‘‘What We Want in a House.’’ Through further discussion, the Mathers refine their list of concerns (they called them objectives), arriving at the set shown above. Satisfied with the result, Darlene and Drew decide they are ready to begin looking to see whether there are houses on the market that would better fulfill their objectives than their current residence would, once renovated.

  (To be continued in Chapter 4.)

  Lessons from the Application

  The Mathers did a lot of things right in thinking through their concerns and translating them into a list of objectives. They took the time to write them down, and they pushed themselves to define their main objectives in terms of their subobjectives. Their process might have been improved, however, if they had followed these guidelines in working up their list: