Characteristics of Good Alternatives

In our decisions, we select the alternative with the greatest value as we see it. Thus, to reach decision quality (DQ), the list of alternatives should be large and varied enough to include a full range of possibilities. They should be good alternatives, meaning they are:

• Creative. The decision should include creative alternatives that are not immediately obvious or in line with conventional thinking. They are outside the box. Creative thinking often uncovers alternatives with enormous and unexpected potential value.
• Significantly different. Alternatives should not be minor variations but significantly different from one another in ways that truly matter. A significantly different alternative challenges current ways of thinking and approaches the problem in a novel way.
• Representative of a broad range of choices. Two alternatives are seldom sufficient. Alternatives should cover the full range of possible choices because one never knows in advance where the greatest source of value may be hidden.
• Reasonable contenders for selection. Each alternative should be one that could actually be selected. In a good set of alternatives, there is no place for decoys, patently inferior alternatives which serve no purpose but to make some other alternative look good by comparison. Nor is there a place for outlandish alternatives that will surely be rejected. However, we shouldn't be too quick in dismissing an alternative just because we assume it will be vetoed. An alternative that is logical, represents real value, and is properly presented may be competitive with other options.
• Compelling. Every alternative should represent enough potential value that it will generate interest and excitement. An alternative is compelling when it inspires at least one person to say, “We really should take a careful look at this.”
• Feasible. A feasible (doable or actionable) alternative is one that can actually be implemented. If it isn't feasible, it doesn't belong on the alternatives list. That said, half-baked alternatives should not be dismissed too early before feasibility has been explored appropriately.
• Manageable in number. Three alternatives are generally better than two, and four are likely to be better than three. It doesn't follow, however, that 20 alternatives are better than 4. As we'll see later, each alternative must be analyzed, evaluated, and compared with other choices. What we need is a manageable set of alternatives—one that covers the range of distinctly different choices while being within our ability to analyze and compare. In relatively simple decision problems, three or four alternatives may be enough, whereas more complex decision problems may require four to seven, or more.

The objective at this stage of the game is to generate a set of alternatives that are so compelling, creative, and potentially valuable that decision makers will want to evaluate every one of them before deciding. The alternative-generating task has two distinct phases: expansion and contraction. The expansion phase aims to get as many good ideas on the table as possible within a reasonable amount of time. This phase is not concerned with evaluation. Indeed, creativity and evaluation are very separate activities that do not mix well. Generating alternatives involves creative thinking, by both individuals and groups. Individuals can often do this by persistently wrestling with ideas and even sleeping on promising thoughts. When groups are involved, brainstorming and the nominal group technique are often useful, and resources describing these techniques are available.²

Effective idea generation typically produces a sizeable set of reasonable alternatives but, since no one has the time or resources to evaluate a dozen or more, we enter a contractive phase, in which the list is reduced to a manageable set. That set should include feasible ideas that are most compelling and representative of the range of choices.

In the case of SDG's office move, early discussions generated a list of six alternatives. That list was examined further and then contracted to three choices that captured the breadth of options and preserved the creativity of the initial list.

The Strategy Table: A Tool for Defining Alternatives

The end of the contractive phase leaves us with a manageable list of alternatives and the general ideas behind each. Before proceeding, a solid understanding of each alternative is required. A strategy table can help us do that. The strategy table clarifies what related choices would be made if a specific alternative were chosen. It shows exactly how each alternative fits within the frame, and it highlights similarities and differences between alternatives. It is most useful for strategic alternatives that involve several related decisions.

Figure 5.2 illustrates how a strategy table is typically organized. Each decision in the problem's focus on category becomes a column heading across the top of the table. These come from the middle section of the decision hierarchy (in this example, see Figure 5.1). The column beneath each decision contains the set of choices that could be considered for that decision. The strategy names, or themes, are listed in a new column to the left. In Figure 5.2, these are the strategies associated with SDG's change in office location: “Remain in Current Space,” “Design for Downtown,” and “Reduced Office Footprint.” To complete the table, we string these strategies across the columns. The objective is to mark a set of consistent and coherent choices—one from each column—that define each strategic alternative.

For instance, if SDG's strategy is to remain in the current space, decisions will include renewing the lease and continuing to give employees the same type of workspaces. The downtown alternative will require renovation but recreate the same style of workspace in an urban setting with an eclectic vibe. If the smaller office footprint strategy is chosen, some dedicated offices will be eliminated in favor of an on-demand hoteling system of workstations for the firm's road warriors.

The strategy table provides an organized way to lay out the alternatives, to understand exactly what decisions each includes, and to compare them. The table also makes it easy to check for duplicates, that is, alternatives that involve all the same choices, or gaps in the set, such as when a choice in one of the columns is not selected in any alternative.

Things That Can Go Wrong

One of the challenges encountered in generating high-value alternatives is the human tendency to latch onto the first acceptable course of action—the good enough syndrome described in earlier chapters. As noted, psychologists use the term satisficing. We are all satisficers to some extent and have to fight the temptation to accept the first course of action that meets the basic requirements of the situation. Venturing outside the box and digging deeper for greater potential value doesn't come naturally to most of us.

Good enough may be the easiest and swiftest course of action, but it's seldom the most rewarding, because it leaves us oblivious to other, perhaps better, possibilities. People who don't consider non-obvious alternatives move forward with a huge blind spot, leaving substantial value on the table. In business, good enough decision makers may cut the value of their decisions in half. We can all have more success by developing a habit of pursuing the maximum value in important decision situations—and that means generating a good set of alternatives before the decision is made.

Judging the Quality of Alternatives

There is no substitute for a good set of alternatives. Before a decision is made, the alternatives should be rated at 100%, meaning it's not worth doing more work on them. How can we be certain we've achieved that goal? In judging the quality of alternatives in a complex situation, a skilled decision maker checks the alternative set against the definition of good alternatives and probes further. He or she asks questions such as:

• “What is the wildest idea that has been considered?”
• “Who from outside the usual cast of characters has contributed to these alternatives?”
• “Have we expanded the alternative set beyond our comfort zone?”
• “Does this alternative set cover all of the potential sources of value? Are we sure the best alternative is in there somewhere?”
• “Does the list include the alternatives favored by all of the key stakeholders?”
• “Have we acknowledged disagreements and incorporated them into the alternative set?”
• “Are the differences between these alternatives clear and significant?”
• “Is the momentum strategy (maintaining the status quo) on the list so that we can calculate a change in value for any new decision?”
• “Do we have a manageable set of alternatives that we can compare meaningfully?”

The answers to these questions can help decision makers to judge the quality of this requirement of DQ and to strengthen the alternative set by replacing weak alternatives with more attractive ones. This is the right time for making those changes—before the hard work of evaluating each of the final alternatives begins.

Later in the decision process, sound reasoning will be used to help us iterate through the DQ requirements a couple of times. After information has been gathered and sound reasoning has been used to evaluate the alternatives, additional questions can be asked to explore the insights from the analysis:

• “Which alternative looks best given our analysis?”
• “Why does one alternative look better than another? What drives the differences in value?”
• “How might we leverage insights from reasoning to improve the best alternative even further?”
• “What could drive the value of the best alternative either up or down? Can we influence or control those factors?”

In the end, the final alternatives can be improved by understanding where value is created, and what impacts it. To do that, we need a high-quality set of alternatives before evaluating them with sound reasoning. Even before that process starts, the alternatives should be made as strong as they can be.

Alternatives at this stage of the decision process are roughly defined ideas. We cannot really know which are most promising without doing some homework. For the SDG office decision, the downtown Palo Alto location was ultimately chosen, after the additional work of gathering information, clarifying values, and applying sound reasoning to compare the alternatives. These topics are addressed in the chapters that follow.

Key Points to Remember

• The value of a decision can be no greater than the value of the best available alternative. Developing a good set of alternatives is critical.
• Good alternatives are creative, span the range of possibilities, are significantly different from one another, are reasonable contenders for selection, are compelling and feasible, yet manageable in number.
• Settling for good enough leaves enormous value on the table.
• A strategy table builds on the focus on category from the decision hierarchy and clarifies the choices that logically define each alternative.
• Conflicting points of view and out-of-the-box thinking play important roles when identifying and improving alternatives.
• Decision makers have responsibility to define a high-quality set of alternatives now, before further work is done to evaluate that set.