Value
Propositioning

- - -

Perception and Misperception
in Decision Making 
by Rick Dove

Introduction 

I spent the nineties investigating the physics of agile enterprise, focused on organizational architectures that enable rapid change on any dimension. I came to know that this ability to respond is only one key aspect of enterprise agility. Knowledge of what requires a response is the second key aspect, and deciding how to respond is the third. I have since come to respect the difficulties associated with making that decision effectively.

Value propositioning happens in all conversations that attempt to obtain a favorable decision among alternatives. Sometimes it s done by the Decision Champion who seeks the decision. Sometimes it is done by the Decision Maker who seeks an understanding. Regardless of whether one or both do it, three factors get in the way: human ... decision-making ... behavior.

This book is about how business decisions are really made. It focuses on what really happens, how it really happens, and why it really happens. It does not, like so many new books every year, provide yet another analytical procedure for making optimal selections among alternatives. It illuminates something much more fundamental: Decisions are always made in favor of the choice with the best value...as perceived by the Decision Maker. Perception is everything; but perceptions are formed independent of truth, accuracy, and the best intentions of all parties.

In many respects perceptions are like reflections. They mirror the knowledge, behavior, and psychology of the decision maker. It is the way we are wired.

For sure, this behind-the-looking-glass knowledge will lead to better decisions. But not because it provides a new scoring mechanism for sorting amongst alternatives. Rather because it focuses on the nature of value perception and misperception. Decisions are made by people, whether as sole deciders or as members of a decision-making coalition. No two people perceive the same thing in exactly the same way, whether it is the problem to be solved, candidate solutions, value priorities, or even the importance of a decision.

On the surface this book speaks directly to Decision Champions, as opposed to Decision Makers. A Decision Champion is that person seeking a favorable decision, and therefore responsible for making an effective value proposition. I cast the Champion as the active party and the Decision Maker as the passive party. Not because this always is, or should be, the case; but rather that the Champion is typically in competition to show better value than all other acceptable alternatives. I am tempted to say that the Champion therefore has more to lose if value is not perceived in its best light. But of course this is not true - all parties have a lot to lose.

Champions take on a cause, leading the charge for respect and approval, where causes are projects, purchases, strategies, capital expenditures, or whatever competes for corporate priority and resource. The focus here is on causes of enterprise magnitude, where decision choices have broad implications, and on technology-based causes, which bring special dimensions of confusion and complexity.

The Champion wields a value proposition in competition for approval, much like the Knight wields a sword defending a Lady's honor. The Knight engages in sword play, the Champion engages in value propositioning. In the Knight's competition, the quality of the sword and the quality of the competitor are two independent factors. So it is with the Champion's competition.

The discussion is pragmatic and blunt. It recognizes that Champions appeal to Decision Makers for approval. Approval is the goal. Decision Makers bestow goal-dom. Ergo! A Champion's focus needs to be on the Decision Maker and how decisions are reached, rather than on the righteousness of the thing being championed. This understanding is especially lacking when technology is being championed, as both Champion and Decision Maker are variously seduced, overwhelmed, impressed, humbled, lost, confused, trusting, skeptical, repulsed, and infatuated by technology.

Where technology projects or products are concerned, I find too often no acceptance of responsibility for crafting effective value propositions. There seems instead a belief that technology stands naked for all to see and evaluate, needing only a guided tour of features and obvious benefits; and that an inappropriate evaluation is a fault of the evaluator and not of the Champion. I hope to change this, and will show that an effective value proposition is not about the technology (the solution), but rather about the problem and value perceptions of the people who will choose a solution.

I have sensed for some time that decisions are not based on the surface issues that people argue and evaluate. Just as I've known that return-on-investment is not the positive decision factor its cracked up to be, but rather a gate to pass through, and not much more than a formality at that; and that price and cost savings are much overrated as decision factors. Perhaps you have some of this same tacit knowledge. Not until writing this book, however, have I attempted to articulate consciously and comprehensively what is really going on, and to find out what others think and know. To my surprise, I found documented validity and respected theory based on decades of learned research about decision making. This discussion, however, is based on common sense, rather than expounding the academic theory and research that supports it, though some will peek through when necessary. For those interested, I've provided references to the relevant academic work at the very end.

My perceptions have been shaped by a career of start-up ventures, turn-arounds, and change management. I learned early that with impatience the venture capitalist will interrupt you before 10 minutes is up and demand "What is the value proposition"? And don't come back until you can articulate that clearly. In this context the value proposition stems from innovative features that provide preemptive benefits to a defined market. This value proposition must be articulated by every company that addresses a competitive market with some service or product. Development people proposing a new innovative product learn this. Marketing people trying to differentiate their company learn this. Sales people trying to explain their product learn this. What they all learn has set them off in the wrong direction for making good value propositions to Decision Makers. The difference is that value propositions which justify products in markets are static general statements, whereas value propositions that influence a specific Decision Maker must be custom fit to that Decision Maker's situation, done so in real time, and redone continuously as the Decision Maker's perceptions evolve.

The thing a Champion must accomplish is to win approval from those who control corporate priorities and strategy, those who commit funds and resources. This may mean an engineering project manager winning approval for an internal development project, an account manager seeking selection as an external supplier of products or services, or a business manager seeking budget, capital, or strategy approval. In all cases the process is fundamentally the same. In this respect we see that some key responsibilities and skills of technically-focused people, business-focused people, and sales-focused people are identical (we pause while all parties shudder at this repulsive thought). They are all successful only to the extent that they can be effective Champions of the projects and products they want Decision Makers to value and select. When they play the role of the Champion effectively, they are indistinguishable. All face the same Decision Makers employing the same decision logic, and all win with the same skills, perspective, and argument strategy.

The second book in this series is currently in process, and addresses the personal development of a Champion's competency and talent at value propositioning, consistent with the fundamentals contained in Book One. Book Three will address the same for the Decision Maker; for though value propositioning is a game played between Champion and Decision Maker, it has a win-win or lose-lose outcome.

Book One, under your eyes now, is organized in two parts. The first lays groundwork by introducing fundamental concepts, and the second shows how these concepts relate to each other, coalescing as behavioral models of decision making logic and knowledge development. You will develop insight based on common sense and cause-and-effect models that reflect the way decisions are really made, instead of the way popular advice suggests they ought to be. You will understand how things work like few others do. This understanding will have an immediate effect on your appreciation and approach to the process of value propositioning and decision making.

"And since I know that many people have already written about these matters, I fear that I shall be considered presumptuous in writing about them, too, the more so because in treating this subject I depart from the rules set down by others. But since it is my intention to write something of use to those who will understand, I deem it best to stick to the practical truth of things rather than to fancies."  [Niccolo Machiavelli , The Prince, Chapter 15, as translated by Daniel Donno , Bantam Classic reissue, 2003.]

 

Table of Contents

Acknowledgements

Introduction

Part 1 - Concepts That Form the Core of Value Propositioning

       1      On The Nature of Value and Value Propositions

       2      On The Nature of Decision Makers and Champions

       3      On The Nature of Problems and Solutions

       4      On The Nature of Knowledge and Context

       5      On the Nature of Trust and Risk

       6      On The Nature and Effect of Competition

       7      On The Nature of Competency and Talent

Part 2 - Logic That Structures Core Concepts and Drives Decision Making

       8      The Logic of Core Concepts

       9      The Logic of Misperception  (pdf-file sample chapter)

     10      The Logic of Individual Decision Making

     11      The Logic of Group Decision Making

     12      The Logic of Perception Formation

     13      The Logic of Multi-Benefit Valuation

     14      Confusion With Technology and ROI

Conclusions

References

Index

Book Two - Never written, doubtful it will be.  

Additional Information

Paper: Decision Making, Value Propositions, and Project Failure, Proceedings of the International Council of Systems Engineering Region II Conference, Sep 2004.

Presentation: Decision Making, Value Propositions, and Project Failure, Presented at the International Council of Systems Engineering Region II Conference, Sep 2004.

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