Making Great Decisions in Business and LifeThe phrase "work smarter, not harder" has been repeatedly ridiculed in the Dilbert comic strip and elsewhere, not because it is a bad idea, but because it is thrown like a brick lifesaver to drowning employees. To tell someone to work smarter is like telling someone to be happier, healthier, and richer. It's not much help to merely repeat the objective; what people need is a plan for achieving the objective.In Making Great Decisions, we show our readers how to achieve their objectives. We write to help those in business and those in the business of life--i.e., everyone--to work smarter. Our ideas are both simple and powerful. We offer a better way to look at problems so that the solutions are easier to find. We help supplement our readers' clear thinking by summarizing some of the most powerful techniques we have discovered.Have you ever driven through corn country? From a distance, all you see are corn stalks and more corn stalks in a jumbled mess. Then suddenly, when you get closer, your perspective changes, and you can see down the rows and realize that the corn was planted perfectly in straight lines. Your perception of the crop changes from a messy jumble to a clear picture simply because you're in the right spot. This book puts readers in that ideal spot. So many problems seem like hopeless jumbles but then, when you start using the techniques we discuss here, they start to look as straightforward as the straightest line in an Iowa cornfield.What motivated us to write this book is that, over the years, both of us have regularly come across people in organizations--often bright people with MBAs or other graduate degrees--who don't think they have time, energy, or skills to make good decisions. They have many clues but don't know how to put them together. They regularly face situations that they could analyze with some of the tools they learned in their courses, but they don't realize that. We don't hold ourselves apart from this group, and stories of our successes and failures are sprinkled throughout Making Great Decisions in Business and Life. |
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Contents
THINKING WORKS | 1 |
Ronnie Lotts Finger | 6 |
Saving My Fathers Life | 7 |
The Case of the Corporate Printers | 9 |
The Expensive 65 Muffler | 10 |
Turning Lead Into Gold | 12 |
The Dishonest Mortgage Application | 13 |
The Cornfield of Life | 15 |
Reality Versus Fantasy | 130 |
Focus on the Inputs You Control | 136 |
The Lessons Learned | 137 |
CONSCIOUSLY SELECT THE BEST ALTERNATIVE | 141 |
Consequences | 144 |
What Did I Learn? | 148 |
Make Effort Proportional to Importance | 149 |
Options | 150 |
Why We Mix Business with Personal | 16 |
THINK CLEARLY | 19 |
I Must? | 23 |
A Good Reason is Not Good Enough | 24 |
Making Distinctions | 28 |
The Lessons Learned | 31 |
THINK VALUE | 33 |
What Constitutes a Good Deal? | 34 |
The Missing Postcard Stamps | 36 |
Opportunity Costs | 37 |
Sunk Costs | 41 |
Value is Subjective | 48 |
Is the Value of Human Life Infinite? | 49 |
Micromorts and Real Life Safety Decisions | 54 |
The Value of Your Time | 56 |
The Lessons Learned | 57 |
ASK WHAT CHANGED | 59 |
The Malfunctioning Barbecue | 60 |
The NASA Code | 61 |
Rising Gas Prices | 62 |
We Deliver Maybe | 63 |
The Lessons Learned | 64 |
KNOW WHAT YOU WANT BEFORE YOU CHOOSE | 67 |
The Customer is Always Right? | 68 |
Focusing on Costs | 73 |
Getting There Efficiently | 75 |
Look at the Big PictureIs Something More Important? | 78 |
What is Your Objective? | 79 |
Is it an Expense or an Investment? | 80 |
Maximize the Ends Not the Means | 85 |
Oh Really? Revenues Are That Important? | 89 |
ShortTerm Versus LongTerm Focus | 90 |
The Lessons Learned | 91 |
BIASES AFFECT THE BEST OF US | 93 |
The Crowded Uncrowded Store | 95 |
The City Bus Mystery | 96 |
Nose Rings and Personal Appearance | 98 |
Overcoming Biases | 99 |
Coincidences | 100 |
Check Your Base | 102 |
Market Share is Always Seventy Percent? | 105 |
The Lessons Learned | 107 |
REALIZE WHATS IMPORTANT | 109 |
Lean Manufacturing | 111 |
Employees Are Your Largest Cost | 112 |
First Find FirstOrder Effects | 113 |
The Soviets Make Nails | 115 |
Constrained Resources | 116 |
If This is Fraud Im Guilty | 118 |
WitchHunts and Probabilities | 119 |
The Lessons Learned | 120 |
CREATE BETTER ALTERNATIVES | 123 |
Can You Sit in the Hallway? | 124 |
Closing the School | 125 |
The Online Payroll Service | 126 |
Positions and Interests | 127 |
Writing Off Yard Work | 128 |
Interested in a Relaxing Vacation | 129 |
Choose the Best Alternative | 152 |
Decision Analysis by Dirty Harry | 153 |
The Airplane Ticket Decision | 156 |
Hamlets Decision Tree | 159 |
How Should You Assign Probabilities? | 160 |
The Lessons Learned | 162 |
RISK IS PART OF GROWTH | 163 |
The Drug Dealers Risk | 164 |
Your Risk Tolerance | 166 |
The Risk of Business Failure | 167 |
Accounting for Risk | 169 |
Buying Insurance | 180 |
Fail Earlier or Fail Later? | 184 |
Probabilities Are Subjective | 186 |
The Lessons Learned | 188 |
EXPLOIT INEQUALITY | 189 |
Paretos Law and Factor 16 | 191 |
Profiting from NonLinearity | 196 |
Surprising Growth Rates | 200 |
How to Allocate Your Time | 202 |
Fifteen Times as Much Money | 206 |
The Lessons Learned | 207 |
KNOW THE VALUE OF INFORMATION | 209 |
The OnePercent Rule | 213 |
The Data Trap | 216 |
The Right Amount of Information | 217 |
The Lessons Learned | 220 |
THINK SIMPLE | 221 |
Thresholds | 222 |
Breakeven Analysis | 225 |
Persuading Others | 226 |
Hopes Dreams and Wishes | 227 |
Expert Direction | 228 |
The Powerful Simplicity of Analogies | 229 |
The Lessons Learned | 230 |
THINK ARBITRAGE | 231 |
The Old Ford Tempo | 232 |
Los Gatos Square Footage | 233 |
Billy Beane Baseball | 234 |
Looking for Arbitrage | 235 |
Saving Costs | 237 |
An Investment Your Leftovers Will Love | 238 |
Friedmans Secretary | 239 |
DO THE RIGHT THING | 241 |
Your Own Constitution | 244 |
Being on Top for Once | 249 |
The Case for Honesty | 250 |
The Eventual Awkward Truth | 251 |
Honesty in Business? | 252 |
When Is Dishonesty Acceptable? | 255 |
OUR FINAL THOUGHTS | 259 |
APPENDIX | 261 |
About the Authors | 265 |
Acknowledgements | 267 |
End Notes | 269 |
277 | |
Other editions - View all
Making Great Decisions in Business and Life David R. Henderson,Charles L. Hooper Limited preview - 2006 |
Common terms and phrases
20 percent alternatives Approach arbitrage asked average behavior better Billy Beane bottle buy insurance California chance Chapter choose CLH’s company’s consider customers Decision Analysis decision tree decision-making Dirty Harry discount rate doctors dollars drive drug economics economist employees example expenses fire focus Ford forecast friends Here’s hire important investment lean manufacturing Lessons Learned live look lose marginal market share Merck micromorts million minutes mountain lion Net Present Value never non-linearity Objective Insights One-Percent Rule opportunity cost outcome perfect information person pharmaceutical Present Value probability problem profits purchase realize reason result revenues risk tolerance risky Ronald Howard sell shows simply situation someone spend story sunk costs things ticket Tickle Me Elmo Wall Street Journal what’s workers worth