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# 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) ```

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