Decision Analysis for Management Judgment, 6th Edition

17Combining scenario planning with decision analysis

Introduction

Despite the advantages of scenario planning, the evaluation of strategies against objectives is often carried out relatively informally. When a number of objectives, such as maximizing profits, minimizing pollution, and maximizing employee welfare, are involved, there are clear dangers in this approach. We saw in Chapter 2 that unaided decision-makers often respond to complex decision problems by using simplifying mental heuristics, such as lexicographic ranking, when evaluating options against multiple objectives. As a result, the evaluation of strategies may be incomplete or distorted because undue attention is paid to particular objectives at the expense of others.

In this chapter, we develop and apply a systematic approach to help the decision-maker evaluate strategies against scenarios. The idea is that the decomposition of objectives should sensitize planners to the substantive issues involved with the evaluation of strategies. This may yield deeper insights and possibly enhance the ability of planners to create and design strategies. In addition, decision analysis provides a common language of communication between different stakeholders and hence allows the communication of minority views.¹ It allows for specialist inputs into the planning process when problems are multi-faceted so that there are no overall experts.² The result should be a common understanding of problems,³ or at least a common ...