SOAR to better decision-making in projects

Rick Holmes, Consultant, Kepner-Tregoe, Inc.

Sports teams make minor adjustments to the skill sets of their players and reap enormous benefits. Can a project team, bogged down by the myriad of decisions inherent in projects, reap similar benefits through minor adjustments in their thinking? Our organization has researched decision-making through 42 years of advising Fortune 500 clients worldwide. That research suggests effective decisions can be boiled down into four basic concepts: Statement, Objectives, Alternatives and Risks. This paper explores how the above concepts have helped the project teams of these major corporations to dramatically improve their internal decision-making capability.

A project team gets bogged down at a crucial decision point in their project. A manufacturing engineer needs to completely revamp an ineffective monorail system. An R&D team must significantly reduce cycle time associated with new product launches. A school superintendent and his staff are faced with over 130 projects, none of which are being implemented effectively. A bricks and mortar business identifies an opportunity to move into E-commerce that can triple its current revenues over the next three years, but in doing so, will fundamentally change the structure of its current operations. What do these different scenarios have in common? Each represents a situation where rational decision-making plays a critical role in success.

In a recent “Fortune” article, the authors identified that the most valuable quality in a manager is “… a willingness, even an eagerness, to make large, painful decisions” (Colvin, 1997). Because humans have a natural tendency to avoid pain, difficult decisions trigger a chemical response similar to the “fight or flight” syndrome. When that phenomenon occurs, the rational part of the brain tends to shut down. Without a process to turn the rational brain back on, decisions are often made based on a single objective, a favorite alternative, or not at all, rather than through sound judgment.

In today's e-world, project managers are being called upon more often than ever before to make mission-critical decisions formerly made by senior management. They are forced to make those decisions without the appropriate skills necessary to be effective. Examples of this problem include decisions associated with new product launches, resource allocations, purchases, upgrades, shifted priorities, etc. These decisions create bottlenecks that slow projects down unnecessarily and render teams helpless, often in the wake of critical path implementation.

The SOAR process, based on over forty years of research on how the most effective decision-makers think, provides a means to “re-stimulate” rational thinking. SOAR removes the clutter associated with too much information, with irrational exuberance, or with the lack of focus inherent in projects. It provides the guidance necessary to make decisions in areas where a project manager may not have specific expertise. Through the application of a systematic process, the project manager will be able to consistently make more effective decisions, regardless of their nature or impact.

The SOAR acronym describes four basic steps in our decisionmaking process: Statement, Objectives, Alternatives, and Risks. This paper will outline these four steps to help project managers more effectively implement the tough decisions that they encounter daily.

Statement

The decision statement is comprised of three elements—a Choice Word (an action verb such as choose, pick, or recommend), End Result, and one or two Key Modifiers. Although it may seem trivial on the surface, we find that a clear decision statement, which describes the intended result of the decision, is rarely articulated. Yet it is a critical component to effective decisionmaking. The statement's purpose is to keep everyone focused (including the decision-maker) on the same decision. The decision statement should be simple, concise, and as direct as possible. A bricks-and-mortar company recently put together a “skunk works” team to identify potential opportunities in cellular and e-commerce. The team very quickly recognized their capability gaps, and therefore developed a need to partner with other service providers. An endless discussion revolved around service providers to potentially partner with. Finally, the question was raised, “What are we fundamentally trying to decide?” Two categories of partners emerged. The first was “Choose (choice word) a cellular (key modifier) hardware provider (end result),” and the second, “Choose an internet services provider.” At that point, by understanding there were two fundamental decisions to be made, rather than one, the team was able to quickly progress.

Objectives

Once clear on a decision statement, the next step in the process is to develop objectives. By setting objectives, we identify the criteria that will ultimately influence our choice. Objectives provide the means to evaluate and compare alternatives fairly. Key questions that we ask in setting objectives include: “What results do we want? What resources should we use or save? What restrictions influence this choice?” In the above example, the project team established a number of objectives (or criteria) to help them evaluate potential hardware partners. For example, it was important to establish a global presence in their particular markets. Therefore, the hardware provider(s) needed to have an established global market share. Also, the project team wanted a leading-edge product developer. And they needed a forward-thinking company that harmonized with their strategic vision. Finally, they needed to leverage the e-commerce network established by the hardware provider.

Exhibit 1. Objectives and Their Associated Weights

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In this case, and indeed in most cases, the objectives mentioned are not equally important. Once objectives have been identified, they should be classified into Musts (mandatory, measurable and realistic) and Wants. Musts help to identify the minimum requirements. It was clear that a global presence was a mandatory criterion. No potential partner would be considered unless they had an established global presence. However, there were over 30 hardware providers to choose from, all of which had a global presence to some degree. There needed to be further distinguishing characteristics to quickly narrow the playing field. Therefore, the project team decided to refine their objective to state, “global market share of at least 15%.” By doing so, they narrowed the playing field down to three major players.

If Musts help to identify which alternatives to consider, Wants help to determine which ones will provide the most benefit. Wants are weighted (on a 1–10 scale) to reflect their relative importance to each other. Looking across the remaining objectives, determine which is most important and benchmark it with a score of 10. From there, determine the relative importance of the remaining objectives on a scale of 1 to 10. The digital project team (see Exhibit 1) assigned the following weights to their Wants (please note other objectives were identified, but for the sake of brevity, were not included in this paper).

Note that “harmony with strategic vision” was weighted higher than the other two objectives. The beauty of the SOAR process rests in its inherent subjectivity. That is, another team, faced with a similar decision, could have developed an entirely different set of objectives for the same decision statement, could have weighted them differently, and still ended up with a satisfactory decision for them. The process is only a framework, not an end in itself, to enhance and leverage one's own thinking. It was designed to help people run their business, whatever that business is, more effectively.

In most decisions, people begin by looking at alternatives, discussing their individual pros and cons, and ultimately reaching a decision. Fundamentally, there is nothing wrong with this approach. However, in our experience, meetings where this type of decision-making occurs often manifest rolled eyes, yawns, and a general sense of frustration. Ironically, people don't know why they are frustrated, but the reason is because they had no framework on which to make their decision. Therefore, a pro of one alternative is compared against a con of another alternative that may be completely unrelated. By providing a set of weighted objectives, the team knows exactly what data to consider. All other data becomes irrelevant.

Alternatives

The next process step involves generating alternatives. In this step, we're fundamentally identifying possible choices. This is one step where creative thinkers can play a key role because they are the ones who will often think out of the box. The fundamental question to ask is “What choices do we have?” In doing so, the decision statement itself, key objectives, and other information sources can aid in the process. However, it's the creative thinker who will often look at the objectives and say, “What if we try this approach that may take us into a completely different direction?” In another client company, a team was tasked with developing a product to meet the motherboard needs of a computer hardware supplier. During the meeting, one team member suggested, “What if we offer a fiber-optic solution versus a copper solution?” This alternative had never been explored, and ultimately took the team in a completely different direction than originally planned.

Once alternatives are identified, the decision-maker has clear guidance about the specific data to gather for each alternative. The first set of data to consider involves determining whether or not a given alternative meets the Must objectives. In the skunk works example, the project team was able to quickly access the Internet and download market share information on all of the potential hardware partners. By doing so, they eliminated 28 potential partners from their list of alternatives. Without that single Must objective to guide their efforts, imagine the interminable length and depth of discussion necessary to arrive at a final choice—whereas 90% of the potential players were eliminated in one fell swoop!

Exhibit 2

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Once alternatives have been screened through the Musts, the next step is to gather data necessary to compare them against Want objectives. To reiterate the power of good objectives, the only data one needs to gather is that information which relates to each objective. This is especially important when purchasing any sort of physical good that has numerous features to it. Having decided what is important, the other extraneous “goodies” that flashy marketing brochures or talented salespeople try to sell are put into their proper perspective. On the other hand, if a given feature is deemed important, then it should be developed as an objective. For example, by asking “What need does this feature provide?” one may uncover a need that can be satisfied in one way or another by ALL alternatives, and can then compared fairly across all.

In the cellular example, one company had recently developed a roll-ball type feature that made scrolling through lists and letters on one's phone much more efficient. This functionality played a major role in the degree to which people would use cell phones to access web “content,” and therefore could play a major role in the decision. Because it was such a unique characteristic, the team was initially drawn to it as a “cool new feature,” and quickly began to shift their decision. However, one team member pointed out that other manufacturers might be able to accomplish the same thing, in different ways. Therefore, the team decided to add “Maximum functionality to quickly scroll through data” as another objective. Not as important as the other objectives, the team assigned a weight of 3 to this objective. By stepping back to look at what specific benefits this feature offered their project, the team was not swayed towards a foolish decision, but instead brought the roll-ball attribute into its proper context, ultimately leading towards a more rational choice.

At this point, decision-making actually becomes a simple mathematical exercise, and spreadsheets can be easily developed to do the math. The data that has been gathered about each alternative provides the means to score its relative performance (on a 0–10 scale) against the others. Again, best performer is benchmarked at 10, and all others are compared to it and scored accordingly. Once each alternative has been scored against each objective, then objective weights are simply multiplied times alternative scores. Weighted scores from each alternative are added, and the overall best performing alternative becomes clear. Exhibit 2 shows how each potential cellular partner compared against the others.

Risks

Although we have seemingly made a decision after evaluating alternatives, the task is not yet complete. One must identify future threats for the best performer(s) in order to understand the risks associated with choosing it. So the simple question “If we choose this, what could go wrong?” should always be asked at this stage. In our experience, risks are often glossed over, and poor decisions tend to result. However, we consider simple risk analysis a part of every decision. It takes little time, and the benefits can be tremendous.

In the consulting business, client appearances often have huge impact on relationships, both short and long term. A colleague, Ned, recently wanted to purchase a car. In the back of his mind, he wanted a BMW—he had wanted one for many years, and finally had saved enough money to substantially reduce his payments. However, being true to process, he decided to develop objectives, weight and score them, etc. Sure enough, the “Beamer” scored much higher than his other alternatives. But before buying, he forced himself to think through potential problems with such a purchase.

In this case, Ned had a few clients in Detroit, one of which was a Big Three car company. Since Ned lived nearby, he often drove his car to client meetings. Having asked the simple question “If I choose a BMW, what could go wrong?” he realized that driving a foreign-made car into an American car company to consult with them might not send the right message about his commitment to being a partner! In the end, he decided that maintaining good client relationships was more important to his career, and ended up buying American instead. A difficult decision indeed, but had he not thought through the risks, he could have positioned himself for disaster at his next client visit.

Sometimes it helps to qualify risks, particularly if there are still a few alternatives remaining, or if many risks have been identified as a result of the above question. In these cases, two follow-up questions are asked. “What is the probability that the risk will occur?” provides us with the likelihood of occurrence, and “How serious is the risk?” gives us an idea of the impact the risk will have, should it occur. Using a simple High/Medium/Low scale, we can then make an informed, best-balanced choice through the final question.

With the cellular hardware team, the highest performing company (Alternative 2) had just lost its CEO. This raised serious concerns, since the CEO had taken the organization from a startup to major industry player. The team listed “New CEO may change strategic direction” as a risk, with Medium probability and Medium-High impact should it be true. During subsequent discussions, this issue was raised. The hardware company assured the team that the new CEO came from within, and had been a major influencer in its recent strategy development work. Additionally, they allowed provisions in the partnership agreement to minimize the risk for the project team. Had the discussion not been raised, no provisions would have been made. Instead, the team protected its company from inherent disaster.

Within the context of this example, the decision was clear, and the project team signed an agreement with the highest performing hardware vendor. However, the decision is not always so clear. Therefore, one final question is addressed. Looking at the best performing (highest scoring) alternative, ask, “Are we willing to accept the risks in order to gain the benefits for this choice?” If so, select it and take action. If not, repeat the question for the next best alternative. Again, a seemingly obvious question, but more than once we have seen clients hesitate to ask this question, resulting in “analysis paralysis.” That is, they are afraid to actually commit to a choice.

Conclusion

A small university wanted to add a satellite campus in another part of its county. A project team had been put together to study different sites, and had finally narrowed its options down to two. The first was a vacant parking lot that would have been donated to them for free, and the second was a recently closed bank building that they could move into and set up operations within six months (the following fall semester). The team had been going back and forth, over-analyzing the issue for approximately nine months, before asking us to come in and facilitate. Within three hours, using easel sheets, they had stated the decision, agreed on objectives, used those objectives to compare the two alternatives, and identified risks. Laying the easel sheets on the floor in front of them, we asked, “For this site, who is willing to live with the risks in order to gain the benefits it provides?” Eight people slowly raised their hands. Laying out the second alternative's information, we asked the same question. No one spoke or gestured. Suddenly the team realized what had happened, and looked around at each other in shocked amazement. Within just over three hours, the dean and his staff had made a decision that they had previously talked around for nine months!

Ironically, this example is fairly typical of project teams we encounter. Without a framework to fairly analyze and evaluate decisions, political battlefields are developed, or often worse, favored alternatives are chosen that lead to disaster. Intelligent, hard working people scratch their heads in amazement at their seeming lack of ability to take action, or to feel comfortable about the action they do take.

Through Stating a decision, developing Objectives, evaluating Alternatives, and assessing Risks, teams cannot only harness their individual skills, but can also work through the myriad of complex decisions inherent in today's projects with a greater sense of accomplishment and satisfaction. By using this process, your team will SOAR to greater heights of project decisionmaking, ultimately leading to more high performance, on time, and within budget plans.

Reference

Colvin, Geoffrey. (1997, June 21). Value driven: The most valuable quality in a manager. Fortune 136 (12), 279+.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

Proceedings of the Project Management Institute Annual Seminars & Symposium
September 7–16, 2000 • Houston, Texas, USA

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