Strategic Decision and Risk Management Practicum: Syllabus

Strategic Decision and Risk Management Practicum: Summary
This workshop integrates the concepts, tools, and skills learned in the three other required courses. A comprehensive case exercise provides a realistic setting, giving participants the experience of working on a moderately complex decision problem from start to finish.

Students work on the case in teams of up to six members, coached by an experienced decision consultant, in a high-feedback environment. Specific tasks include:

• Framing a moderately complex problem
• Generating creative alternatives and discovering hybrid strategies through analysis
• Assessing information using probabilities and ranges
• Conducting analyses to produce tornado diagrams, waterfall diagrams, and probability distributions
• Drawing insights from the analyses and synthesizing them to form a clear understanding of the best strategy
• Planning and conducting a decision dialogue to communicate with decision-makers.

Because this workshop builds on the three other core courses, we require that participants either have completed them or have passed the exam for each course:

• Decision Quality in Organizations
• Decision Analysis
• Modeling for Strategic Insight.

Strategic Decision and Risk Management Practicum: Syllabus,
In this experiential learning workshop, the pace is guided to some extent by participants' rate of progress on the case. Therefore, we have broken the course into half-day modules. Each module opens with a discussion of the tasks, deliverables, and tools we expect participants to use in that half day.

Laptop Computers and Software
Each team of four to six participants should have at least two laptops to solve the decision problem and to create presentations. Participants are encouraged to bring a laptop computer with Microsoft® Excel. We use Excel spreadsheets for all the analyses in this course, and participants are expected to be familiar with but not necessarily expert in using Excel.

Excel is supplemented by decision tree software. Several excellent decision tree packages are available, and our faculty does not endorse any particular software. We have chosen to use PrecisionTree by Palisades Software because it provides most of the functionality required and we can teach the necessary skills in about 15 minutes. The software is free for use during the workshop.

The Excel models in this workshop build on those developed in the Modeling for Strategic Insight course. In that course, probabilistic analysis is taught using a Monte Carlo simulation, and participants use Crystal Ball by Decisioneering. Although that software could be used for most of the analyses in the practicum, it is not effective when decision trees are asymmetric and/or we are dealing with "downstream" decisions. We want the graduates of these two closely linked courses to have the experience of using the two most practical approaches — simulation and trees — as dictated by the nature of the problem.

Work Before the Workshop
Before the workshop, we send participants the case exercise, background material on the case, and instructions for downloading the decision tree software. We expect participants to download the software on to their laptops before coming to campus and to read the case exercise and background material.

Introduction and Case Study
We begin the workshop with a case study that reviews the steps in the dialogue decision process, the tools of each step, and types of insights typically produced by the process. This case study illustrates each of the deliverables and the types of insights that participants will generate in the workshop. The case study is a one-hour presentation, based on an actual project conducted within a company. The case study is selected from a portfolio of such cases, drawing on the experience of specific instructors.

Module 1: Frame and Alternatives
After the case study, we introduce the case exercise that is used throughout the workshop. Participants are divided into teams and begin to develop an initial frame for the project using a decision hierarchy. Teams also create a strategy table to clearly define the choices within the scope of the project, as they have defined it. Each team has a coach who provides guidance as needed throughout the workshop.

Module 2: Creativity Session for Alternative Strategies
In this session, teams think creatively and broadly about other strategies to create maximum value in the case. Although they constructed an initial set of alternatives in Module 1, teams can often create better strategies by working through some creativity exercises (e.g., brainstorming, role-playing, or "backcasting") and some structured techniques such as examining corporate challenges and real options.

Decision Dialogue: Frame/Alternatives
At the conclusion of Module 2, teams meet with instructors playing the roles of decision-makers. They discuss their progress on the project to date and receive feedback on the scope and strategic directions they have chosen. The objectives of this session are threefold: for participants to practice clearly communicating what they have learned so far, for them to listen well to the needs and advice of the decision-makers, and for the instructors to guide the teams in a direction consistent with the information and analysis tools to be provided in Modules 3 and 4. At the conclusion of the dialogue, the instructors will provide feedback on what went well in the session and what they would have done differently.

Module 3: Base Case Analysis and Information Assessment — Probabilities and Ranges
A critically important skill in decision analysis is assessing information that is both meaningful and reliable. Excel spreadsheets are distributed to each participant. These are similar to those developed in the Modeling for Strategic Insight course but expanded to encompass the alternatives identified in the decision dialogue on frame and alternatives. Teams use the spreadsheets for base case analysis and developing insight into the primary drivers of value and risk. The teams also produce a tornado diagram (using software provided) to help identify the uncertainties that merit careful assessment and analysis. Teams then interview "experts" who have the content knowledge needed for the case, obtaining probabilities and ranges as appropriate. This gives workshop participants another opportunity to practice the assessment skills taught in the other core courses. At the end of this module, we demonstrate decision tree software that can be used for subsequent analysis.

Module 4: Analysis, Hybrid Strategies, Waterfalls, Probability Distributions
The teams begin this module by producing an expected net present value (NPV) and probability distributions on the NPV for each strategic alternative. From this initial analysis and sensitivity analysis, the teams learn the primary drivers of value and risk in the case. At this point, they may discover better alternatives, or "hybrid" strategies. These are hybrids in the sense that they are combinations of the best features of the initial set of alternatives. The teams also analyze the hybrid strategies, again producing expected values, probability distributions, and deeper understanding of the merits of each strategy. They also use waterfall diagrams to illustrate the sources of value for each strategic alternative.

Module 5: Presentation and Decision Dialogue
One of the more challenging tasks is synthesizing what was learned though information gathering and analysis — gaining clarity about the best course of action — and then planning how to communicate this to decision-makers. About half of this module is dedicated to team discussions about insights and plans for communication, a quarter of it is spent preparing materials to present to decision-makers, and the last quarter is a final dialogue with the decision-makers. As before, the decision-makers provide feedback on the quality and clarity of the presentation and dialogue.

How to Apply This in Your Organization
The workshop concludes with a brief classroom discussion of the results of each team's experience. We then discuss the benefits and challenges of using the decision process in organizations, relating faculty and participant experiences and ideas on what works and what does not.