# Decision Frameworks - Comprehensive Guide
## Strategic Decision Frameworks
### OODA Loop (Observe-Orient-Decide-Act)
```
┌─────────────────────────────────────────────────────┐
│ │
│ ┌──────────┐ ┌──────────┐ ┌──────────┐ │
│ │ OBSERVE │───►│ ORIENT │───►│ DECIDE │ │
│ │ │ │ │ │ │ │
│ │ Gather │ │ Analyze │ │ Choose │ │
│ │ data │ │ context │ │ action │ │
│ └──────────┘ └──────────┘ └────┬─────┘ │
│ ▲ │ │
│ │ ┌──────────┐ │ │
│ │ │ ACT │◄────────┘ │
│ │ │ │ │
│ │ │ Execute │ │
│ └──────────┤ & learn │ │
│ └──────────┘ │
│ │
│ Key: Cycle faster than competitors │
└─────────────────────────────────────────────────────┘
USE WHEN:
- Competitive situations
- Rapidly changing environments
- Need for quick adaptation
```
### McKinsey 7-S Framework
```
STRATEGY
│
┌──────────┼──────────┐
│ │ │
STRUCTURE──────┼──────SYSTEMS
│ │ │
│ ┌─────▼─────┐ │
│ │ SHARED │ │
│ │ VALUES │ │
│ └─────┬─────┘ │
│ │ │
SKILLS────────┼────────STAFF
│
STYLE
HARD ELEMENTS (easier to change):
- Strategy: Plan to achieve goals
- Structure: Organization design
- Systems: Processes and workflows
SOFT ELEMENTS (harder to change):
- Shared Values: Core beliefs
- Style: Leadership approach
- Staff: People capabilities
- Skills: Organizational competencies
USE WHEN:
- Organizational change
- M&A integration
- Performance diagnosis
```
### Cynefin Framework
```
┌─────────────────────┬─────────────────────┐
│ COMPLEX │ COMPLICATED │
│ │ │
│ Probe-Sense-Respond│ Sense-Analyze- │
│ │ Respond │
│ • Emergent practice│ • Good practice │
│ • Enable patterns │ • Expert analysis │
│ • Many unknowns │ • Cause knowable │
├─────────────────────┼─────────────────────┤
│ CHAOTIC │ CLEAR │
│ │ (Obvious) │
│ Act-Sense-Respond │ Sense-Categorize- │
│ │ Respond │
│ • Novel practice │ • Best practice │
│ • Crisis response │ • Standard process │
│ • Act first │ • Clear cause │
└─────────────────────┴─────────────────────┘
Center: DISORDER (not yet classified)
DOMAIN SELECTION:
├── Clear: Use standard procedures
├── Complicated: Engage experts
├── Complex: Run experiments
└── Chaotic: Act decisively first
```
---
## Problem Analysis Frameworks
### Root Cause Analysis: 5 Whys
```
PROBLEM: Customer complaints increased 25%
Why 1: Why are complaints up?
→ Response time increased from 2h to 8h
Why 2: Why did response time increase?
→ Support team is overwhelmed
Why 3: Why is the team overwhelmed?
→ Ticket volume doubled
Why 4: Why did ticket volume double?
→ New product launch had many bugs
Why 5: Why were there many bugs?
→ Testing was cut short due to deadline pressure
ROOT CAUSE: Inadequate testing process under time pressure
COUNTERMEASURE: Implement automated testing + buffer time
TIPS:
- Keep asking "why" until you reach something actionable
- May need more or fewer than 5 whys
- Often reveals systemic issues
```
### Fishbone (Ishikawa) Diagram
```
┌──────────┐
PEOPLE PROCESS │ │
┌────────────────┬───────────────────│ PROBLEM │
│ │ │ │
├── Training ├── Workflow └──────────┘
├── Motivation ├── Bottlenecks │
├── Skills └── Documentation │
│ │
───┼──────────────────────────────────────────┼───
│ │
├── Raw materials ├── Hardware │
├── Suppliers ├── Software │
└── Quality └── Technology │
│
MATERIALS MACHINES/TECHNOLOGY
CATEGORIES (6M):
- Man (People)
- Method (Process)
- Material
- Machine
- Measurement
- Mother Nature (Environment)
```
### Pareto Analysis (80/20)
```
IDENTIFY THE VITAL FEW:
Category Count % Cumulative
────────────────────────────────────────────
User interface 45 45% 45%
Performance 25 25% 70%
Data errors 15 15% 85% ← 80% line
Feature gaps 8 8% 93%
Documentation 7 7% 100%
VISUALIZATION:
100% | ────────────────────●
| ────●
80% |────●─────────────────────────
| ─●
60% |●
|
40% |
|
20% |
|
0% |____|____|____|____|____|____
UI Perf Data Feat Doc
ACTION: Focus on UI (45%) and Performance (25%)
Solving these addresses 70% of issues
```
---
## Decision-Making Models
### RAPID Framework (Bain)
```
R - RECOMMEND
Who proposes a decision?
├── Gathers input
├── Develops alternatives
└── Makes recommendation
A - AGREE
Who must agree for decision to proceed?
├── Has veto power
├── Legal, compliance, policy
└── Escalation if no agreement
P - PERFORM
Who implements the decision?
├── Accountable for execution
├── Needs clear direction
└── Reports on progress
I - INPUT
Who provides information?
├── Subject matter experts
├── Data and analysis
└── Perspectives and opinions
D - DECIDE
Who makes the final call?
├── Single decision-maker
├── Considers all input
└── Accountable for outcome
EXAMPLE:
Decision: Launch new product feature
R: Product Manager
A: Legal (privacy), Security
P: Engineering team
I: Customer Success, Sales, Marketing
D: VP Product
```
### Decision Matrix (Weighted)
```
CRITERIA & WEIGHTS:
Criteria Weight Option A Option B Option C
───────────────────────────────────────────────────────
Cost 30% 3 5 4
Speed 25% 5 3 4
Quality 25% 4 4 5
Risk 20% 3 4 3
───────────────────────────────────────────────────────
Weighted Score 3.65 4.05 4.05
CALCULATION (Option A):
(0.30 × 3) + (0.25 × 5) + (0.25 × 4) + (0.20 × 3)
= 0.9 + 1.25 + 1.0 + 0.6
= 3.75
SCALE:
1 = Poor
2 = Below Average
3 = Average
4 = Good
5 = Excellent
```
### Pre-Mortem Analysis
```
CONCEPT: Imagine the project has failed.
What caused it?
PROCESS:
1. Assume the decision was made
2. Fast-forward: "It's one year later and this was a disaster"
3. Each person writes reasons for failure
4. Share and discuss all potential failure modes
5. Develop mitigation strategies
TEMPLATE:
┌────────────────────────────────────────────────┐
│ DECISION: Launch new pricing model │
├────────────────────────────────────────────────┤
│ ASSUMED FAILURE DATE: 6 months from launch │
├────────────────────────────────────────────────┤
│ POTENTIAL CAUSES OF FAILURE: │
│ │
│ 1. Customers churned due to price shock │
│ Mitigation: Grandfather existing customers │
│ │
│ 2. Sales couldn't explain new value │
│ Mitigation: Training + collateral │
│ │
│ 3. Competitors undercut us │
│ Mitigation: Add bundled value │
│ │
│ 4. Implementation had billing errors │
│ Mitigation: Extended QA + phased rollout │
└────────────────────────────────────────────────┘
```
---
## Prioritization Frameworks
### MoSCoW Method
```
MUST HAVE (Critical)
├── System fails without it
├── Non-negotiable requirements
├── Legal/regulatory requirements
└── Core functionality
SHOULD HAVE (Important)
├── High priority
├── Not critical for launch
├── Workarounds may exist
└── Deliver if at all possible
COULD HAVE (Desirable)
├── Nice to have
├── Small improvement
├── Include if easy
└── First to drop if needed
WON'T HAVE (Not now)
├── Explicitly out of scope
├── Maybe future version
├── Helps manage expectations
└── Not "never," just "not now"
DISTRIBUTION GUIDELINE:
Must: 60% of effort
Should: 20% of effort
Could: 20% of effort
```
### ICE Scoring
```
FORMULA: ICE = (Impact + Confidence + Ease) / 3
IMPACT (1-10)
How much will this move the metric?
10 = Massive impact
1 = Negligible impact
CONFIDENCE (1-10)
How sure are we about impact and ease?
10 = Data-backed certainty
1 = Pure guess
EASE (1-10)
How simple is implementation?
10 = Trivial (< 1 day)
1 = Massive (> 1 quarter)
EXAMPLE:
Feature Impact Confidence Ease ICE
─────────────────────────────────────────────
Checkout fix 8 9 7 8.0
New dashboard 7 5 4 5.3
Mobile app 9 4 2 5.0
Email redesign 5 8 9 7.3
PRIORITY ORDER:
1. Checkout fix (8.0)
2. Email redesign (7.3)
3. New dashboard (5.3)
4. Mobile app (5.0)
```
### Value vs. Complexity Matrix
```
HIGH VALUE
│
┌───────────┼───────────┐
│ QUICK │ BIG │
│ WINS │ BETS │
│ │ │
│ Do first! │ Plan │
│ │ carefully │
LOW ├───────────┼───────────┤ HIGH
COMPLEXITY │ COMPLEXITY
│ FILL │ MONEY │
│ INS │ PITS │
│ │ │
│ Do if │ Avoid or │
│ time │ redesign │
└───────────┼───────────┘
│
LOW VALUE
PLACEMENT CRITERIA:
Value: Revenue impact, user satisfaction, strategic fit
Complexity: Time, cost, risk, dependencies
```
---
## Risk Assessment
### Risk Matrix
```
IMPACT
Low Med High
┌──────┬──────┬──────┐
High │ M │ H │ H │
├──────┼──────┼──────┤
L Med │ L │ M │ H │
I ├──────┼──────┼──────┤
K Low │ L │ L │ M │
E └──────┴──────┴──────┘
L
I L = Low (accept/monitor)
H M = Medium (mitigate)
O H = High (avoid/transfer)
O
D
RISK REGISTER:
Risk Likelihood Impact Score Response
─────────────────────────────────────────────────
Data breach Low High M Transfer (insurance)
Key person Med High H Mitigate (cross-train)
Delay High Med H Avoid (buffer time)
Budget Med Med M Accept (contingency)
```
### Expected Value Analysis
```
FORMULA: EV = Σ (Probability × Outcome)
EXAMPLE: New Product Launch
Outcome Probability Value Expected
─────────────────────────────────────────────────
Big success 20% $5M $1.0M
Moderate 50% $2M $1.0M
Break-even 20% $0 $0
Failure 10% -$1M -$0.1M
─────────────────────────────────────────────────
Expected Value $1.9M
Investment required: $1.5M
Net Expected Value: $400K → Positive ROI
DECISION RULE:
EV > Investment → Proceed
EV < Investment → Reject (or reassess)
```