Value-focused thinking: Identifying decision opportunities and creating alternatives

EUROPEAN JOURNAL OF OPERATIONAL RESEARCH ELSEVIER

European Joumal of Operational Research 92 (1996) 537-549

Value-focused thinking: Identifying decision opportunities and creating alternatives Ralph L, Keeney

University of Southern California, Los Angeles, CA 90089-0021, USA

Abstract Conventional approaches to decisionmaking focus on alternatives. However, alternatives are relevant only because they are means to achieve values. Therefore, thinking about decision situations should begin with values. Value-focused thinking describes and illustrates concepts and procedures for creating better alternatives for your decision problems, identifying decision opportunities more appealing than the decision problems that confront you, and articulating and using your fundamental values to guide and integrate your decisionmaking activities. The ideas are relevant to your personal decisions and to the decision situations of organizations. The concepts and procedures are illustrated by an application at British Columbia Hydro and short descriptions of several other applications.

Keywords: Values; Objectives; Value-focused thinking; Alternatives; Decision opportunities

1. Introduction Values are fundamental to all that we do; and thus, values should be the driving force for our decisionmaking. They should be the basis for the time and effort we spend thinking about decisions. But this is not the way it is. Instead, decisionmaking usually focuses on the choice among alternatives. Decision problems are thrust upon us b y the actions o f others: competitors, customers, govemment, and stakeholders; or by circumstances: recessions and natural disasters. Faced with a decision problem, the so-called solving begins. Typically, the decisionmaker concentrates first on alternatives and only afterwards addresses the objectives or criteria to evaluate the altematives. [ refer to this standard problem-solving approach as alternative-focused thinking. Focusing on alternatives is a limited way to think through decision situations. It is reactive, not proac-

five. If you wish to be the master o f your decisionmaking, it makes sense to have more control over the decision situations you face. You do not control decision situations that you approach through alternative-focused thinking. This standard mode of thinking is backwards, because it puts identifying alternatives before articulating values. It is values that are fundamentally important in any decision situation. Alternatives are relevant only because they are means to achieve your values. Thus your thinking should focus first on values and later on alternatives that might achieve them. Naturally there should be iteration between articulating values and creating alternatives but the principle is ' v a l u e s first'. I refer to this manner o f thinking as valuefoCused thinking. This paper is an overview of the main concepts and procedures of value-focused thinking. Full details are in K e e n e y (1992). Value-focused thinking is a w a y to channel a critical resource - hard thinking - to lead to better

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decisions. Better decisions come about both because of insights provided by the thinking and because of specific procedures that view decisions through ' value-focused' glasses. A shift to this way of thinking about decisions can significantly improve decisionmaking because values guide not only the creation of better alternatives but the identification of better decision situations. These better decision situations, which you create for yourself, should be thought of as decision opportunities, rather than as decision problems. The purpose and thought processes of valuefocused thinking are different from those of alternafive-focused thinking. Alternative-focused thinking is designed to solve decision problems. Value-focused thinking is designed to identify desirable decision opportunities and create alternatives. Therefore, the value-focused paradigm for addressing decisions is different from the standard alternative-focused paradigm in three important ways. First, significant effort is allocated to make values explicit. Logical and systematic concepts are used to qualitatively identify and structure the values appropriate for a decision situation. Second, this articulation of values in decision situations comes before other activities. Third, the articulated values are explicitly used to identify decision opportunities and to create alternafives.

2. Making values explicit

Decisionmakers recognize the need for objectives as a key step in developing strategic approaches (e.g., Pearce and Robinson, 1985). However, simply listing objectives is shallow. There is a need for greater depth, clear structure, and a sound conceptual base in developing objectives for strategic decision contexts. On the other hand, identifying and structuring objectives are difficult tasks: ends are often confused with means, objectives are often confused with targets or constraints or even alternatives, and the relationships between different objectives are not specified. Clear objectives are very useful, but how should they be developed? The process requires the use of significant creativity in discussions with decisiomnakers and individuals concerned about the decision.

Decisions often are characterized by multiple objectives. Each objective is a statement of something that one wants to achieve in that decision context. To state an objective explicitly requires three features: the decision context, an object, and a direction of preference. For example, one objective of a forest products company is to 'minimize environmental impacts'. With this objective, the decision context is harvesting natural resources, the object is environmental impact, and less impact is preferred to more. If the direction of preference is not monotonic, so minimize or maximize are not appropriate, the general term optimize can be used. When a quantitative objective function is constructed for this objective, the meaning of optimize is made specific for that objective. We distinguish between 'fundamental objectives' and 'means objectives'. Fundamental objectives concem the ends that decisionmakers value in a specific decision context; means objectives are methods to achieve ends. It is important to recognize that ends and means are not absolute concepts. They are context dependent. If your decision context concems investing your available funds for retirement, to maximize the amount of money available at the beginning of retirement is a fundamental objective. In your decision context of having a good life during your retirement years, maximizing the amount of money available at the beginning of retirement is a means objective. Fundamental objectives for strategic decisions, meaning the broadest class of decisions facing an organization, are defined as strategic objectives. The strategic objectives provide common guidance for all decisions in an organization and form the basis for more detailed fundamental objectives appropriate for specific decisions.

3. British Columbia Hydro

British Columbia Hydro and Power Authority (BC Hydro) is a large hydroelectric-based, publicly-owned electric utility supplying power to over ninety percent of the British Columbia population. As a major corporation with billions of dollars in annual sales, BC Hydro faces many complex strategic decisions in coming decades. They must develop additional re-

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sources to generate electricity; site and construct new transmission lines; negotiate international power agreements; mitigate environmental effects; and communicate with the public and interest groups about policies for addressing actual or perceived public risks such as electromagnetic fields and global warming. Such decisions should be made using quality information and sound logic in a coordinated manner that can be clearly justified and openly communicated to stakeholders. Decision making is distributed at BC Hydro. Responsibilities for dams and dam safety lie in one department, responsibilities for high voltage transmission lines lie in a second department, responsibilities for pricing policies lie in a third department, and responsibilities for electricity exports to the United States lie in other departments. To facilitate the desired coordination of such decisions, L,I. Bell, the chairman and CEO of BC Hydro in 1988i appointed Ken Peterson as BC Hydro's Director of Planning. Peterson's assignment was to make BC Hydro the best planning electric utility in North America. To help fulfill this responsibility, Peterson created a Planning Committee composed of senior managers from departments with major decision making roles at BC Hydro. BC Hydro has a published mission statement with broad goals, but these are very general, as is the case in most corporations. Peterson realized that they were too general to provide guidance for coordinating decisions. Subsequently, Tim McDaniels of the University of British Columbia and I began working with Peterson and other members of the Planning Committee to identify, structure, and quantify BC Hydro's strategic objectives (see Keeney and McDaniels, 1992). We met separately with three members of the Planning Committee: Victor de Buen (Senior Systems Studies Engineer), Zak E1-Ramly (Manager, Policy Development), and Ken Peterson and probed their values. We used two devices to insure that the Planning Committee members would think o f objectives not only in the context of business as usual but also for situations that might not be so usual. One was to inquire about particularly undesirable alternafives and then ask why they were so undesirable or what could have gone wrong to make them undesirable. The other was to ask about particularly undesir-

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able consequences, such as the convening of a governmental inquiry to investigate BC Hydro, and then pursue grounds that could have led to such a situation. Both of these devices helped identify objectives that might have been omitted if we had focused only on business as usual. To illustrate the type of discussion that occurs in identifying objectives, I will summarize a small portion of an early meeting I had with Ken Peterson. Early in the discussion about economics, an obvious area of concern to BC Hydro, Peterson stated that one objective was to have efficient and fair pricing. I asked, " W h a t does efficient mean?" He responded that the pricing should reflect the social cost of resources. Then I asked, " W h a t does social cost mean?" After some consideration, he concluded it was a measure of the usefulness of the resources for other purposes and that it included opportunity cost. To get a better feeling for efficiency, I asked, " H o w might you measure efficient pricing?" Peterson's response was in terms of cost per kilowatt-hour. Next I asked the meaning of fair pricing. Peterson responded that this pertained to cost sharing among customers based on the value added to society b y those customers. He mentioned that this concern was important to the regulators in British Columbia. I backed up a step and asked why pricing, be it efficient or fair, was important. Part of the response was that it led to defensible and credible resource allocation. I asked why that was important. It was important to several stakeholders, including regulators, government agencies, and customers. But it was also important because pricing is the means that provides the fundamental good (electricity) for end uses. Also, efficient and fair pricing leads customers to make decisions about energy in a socially responsible manner. That is to say, it leads them to select an appropriate amount of conservation. Pricing policy is also important because BC Hydro contributes cash to the provincial government. I asked, " W h y is this important?" Peterson's response was that it would, among other things, lead to a good relationship between the company and the government and that it would also contribute to lowering public debt. In discussions like this one, I uncovered a wide range of objectives not previously mentioned. The process aims to get deeper than 'motherhood and

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apple pie' objectives, which everyone can agree to, but which provide little strategic guidance. The discussions with de Buen, E1-Ramly, and Peterson each resulted in two preliminary products. One was a strategic objectives hierarchy and the other was a means-ends objectives network that related the strategic objectives to all other objectives identified in our discussions. Three subsequent discussions with Peterson reviewed the ideas presented by de Buen and E1-Ramly, pursued the logic of related objectives, developed measures for the strategic objectives, and prioritized them. The major purpose was to establish a logical and understandable set of strategic objectives for BC Hydro. Table 1 presents Peterson's revised strategic objectives hierarchy for BC Hydro, and Fig. 1 presents his objectives network. In the objectives network, the strategic objectives hierarchy is presented using abbreviated terms in the column in the middle of the figure. The interrelationships between corresponding objectives are also illustrated in the figure. A n arrow from one objective to another indicates that achieving the former has an influence on achieving the latter. Consider the following subtle but potentially important distinctions that can be identified by an in-depth discussion of objectives. For many organizations, one strategic objective is to 'minimize environmental impact'. Peterson's strategic environmental objective was to 'act consistently with the public's environmental values'. This objective indicates a concern for both the possible environmental impacts and the relative values attached to those impacts by the public. Peterson also mentioned objectives regarding both corporate image and public service in the discussions. To be recognized as a public service-oriented company might enhance the c o m p a n y ' s image, but these are not identical. Also, being recognized is not the same thing as being a public service-oriented company. After careful consideration, Peterson concluded that BC Hydro was a public service-oriented company and the strategic objective was to be recognized as such. Our initial discussions identified many environmental objectives concerning flora, fauna, and land use. When Peterson and I thought about appropriate ways to measure these environmental objectives, it became clear that the loss of environmental re-

Table 1 Peterson's strategic objectives hierarchy for BC Hydro 1. Maximize conlribution to economic development. 1.1. Minimizecost of electricity use. 1.2. Maximize funds transferred to government. 1.3, Minimize economic implications of resource losses. 2. Act consistentlywith the public's environmental values. 2.1. About local environmental impacts. 2.1.1. To flora. 2.1.2. To fauna. 2.1.3. To wildlife ecosystems. 2.1.4. To limit recreational use. 2.1.5. To aesthetics. 2.2. About global impacts. 3. Minimize detrimental health and safety impacts. 3.1. To the public. 3.1.1. Mortality. 3.1.2. Morbidity. 3.2. To employees. 3.2.1. Mortality. 3.2.2. Morbidity. 4. Promote equitable business arrangements. 4.1. Equitable pricing to different customers. 4.2. Equitable compensation for concentrated local impacts. 5. Maximize quality of service. 5.1. To small customers. 5.1.1. Minimize outages. 5.1.2. Minimize duration of outages. 5.2. To large customers. 5.2.1. Minimize outages. 5.2.2. Minimize duration of outages. 5.3. Improvenew service. 5.4. Improveresponse to telephone inquiries. 6. Be recognizedas public-service oriented.

sources such as forests or fisheries had economic as well as environmental implications. This led t o the specification of the economic objective addressing resource losses. The environmental and social impacts of resource losses remained accounted for within the environmental objectives. The next task was to identify which strategic objectives are the most important and why. To do this logically, we selected measures to indicate achievement in terms of the various objectives. Then we identified ranges of possible impacts in terms of these measures. This provided the basis to quantify Peterson's values by assessing a multiattribute utility

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two other main objectives are also relatively insignificant. Global environmental impact accounts for only 7% of the environmental impact and is less important than any of the five separate local environmental impact categories. Regarding service quality, the impacts of outages account for 94% of the concern, with the impacts on new service and inquiries together accounting for the other 6%. Therefore, 95% of the relevant achievement of objectives has to do

function over the strategic objectives (see Keeney, 1988). From this, we calculated the relative importance of the ranges of impacts for the objectives. The implications of Peterson's value judgments for BC Hydro, shown in Table 2, indicate that the major strategic objectives concern economics, the environment, health and safety, and service quality. The combined weight on equity and public-service recognition, given their ranges, is less then 2%. Parts of

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Fig. 1. A means-ends objectives network for British Columbia Hydro (strategic objectives are listed in the boldface box).

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Table 2 Priorities for BC Hydro's strategic objectives Objective 1.1. Levelizedcost 1.2. Annualgovernmentdividend 1.3. Resourcecost 2.1.1. Flora 2.1.2. Fauna 2.1.3. Wilderness 2.1.4. Recreation 2.1.5. Aesthetic 2.2. Globalimpact 3.1. Publichealth and safety 3.2. Employeehealth and safety 4.1. Equitablecompensation 4.2. Equitablepricing 5.1. Smallcustomerservice 5.2. Largecustomerservice 5.3. New customerservice 5.4. Inquiryresponse 6. Public-servicerecognition

Percent weight 25.3 5.3 8.8 2.3 4.6 9.3 4.6 2.3 1.9 4.5 4.5 0.8 0.4 11.1 12.5 1.0 0.5 0.4

Rank 1 6 5 11 7 4 7 11 13 9 9 15 17 3 2 14 16 17

with the twelve objectives addressing economic impacts, local environmental impacts, health and safety, and outages. The value assessment comprised several separate tasks: listing the objectives, distinguishing between means objectives and fundamental objectives, identifying measures for the objectives, and prioritizing them. The results of each task helped us to articulate company values and use these to suggest decision opportunities that might be worthwhile to pursue. The following examples are illustrative of decision opportunities that we generated by value-focused thinking. 1. Investigate implications of resource losses on economic activity. The prioritized objectives indicated that the reduction in economic activity due to resource losses, such as the loss of productive forests or fisheries, was potentially significant. This suggests that it would be useful to examine the relationship between resource losses and reduced economic activity, because the 8.8% weight in Table 2 pertained to a $20 million range for economic resources lost. 2. Determine public environmental values. This decision opportunity involves assessing the public's values about possible environmental impacts and their value tradeoffs between economic implications

and those environmental impacts. One way to obtain the public's values would be to appoint a select committee of individuals representing the public and assess their values. Another way would be to assess values from various public stakeholder groups and combine these in some fashion. The intent would be to develop a logical measure to appraise the values that the public attaches to environmental losses that might result from different alternatives in various decisions. 3. Develop a database on public and employee health and safety. It should not be too difficult to create a statistical database for all health and safety implications related to BC Hydro equipment or activities. Using this to promote thinking, one could generate and compare alternative actions that might reduce the number of fatalities, injuries, and illnesses attributable to BC Hydro operations. It might also suggest particular educational programs for the public or employees that might improve safety. 4. Develop a quality-of-service index. Quality of service was weighted approximately 23% in the value assessment. This suggests that it would be worthwhile to develop a comprehensive measure of quality of service. Such a measure would address the number, duration, and magnitude of outages to both small and large customers. A quality-of-service index would provide information for examining the strategic alternatives of BC Hydro to improve service and reduce the likelihood of outages. Since this recommendation, this decision opportunity has been pursued (see Keeney, McDaniels and Swoveland, 1995). 5. Negotiations to sell power. At this stage, it might be useful to examine possible future negotiations to sell power to the United States. For such negotiations, information on the overall cost of developing the power would be relevant. This would include the equivalent cost due to environmental damage, health and safety impacts, and the impacts on equity, quality of service, and perception of acting in the public interest as well as economic costs per se. Better information about the overall cost of power would put BC Hydro in a stronger negotiating position. The intent of this list is to demonstrate a simple but critical point. The strategic objectives of an

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organization can guide the identification of decision opportunities that enhance both the likelihood of achieving those objectives and the degree to which the objectives are achieved. This process, part of value-focused thinking, helps to put the decisionmaker in control of the decisions being faced rather than leave that control to others and to happenstance.

4. Procedures of value-focused thinking Almost all experts on decisionmaking say that it is crucial list your objectives. But they are not specific about how to do it or how to use the objectives to guide your thinking. Value-focused thinking includes numerous procedures to assist you. First, several techniques help compile an initial list of objectives. Second, these objectives are categorized as m e a n s or ends objectives and logically structured, Third, several procedures assist you in using the objectives to create alternatives. Fourth, the objectives are examined to identify worthwhile decision opportunities. ldenu'fying objectives. T h e most obvious w a y to identify objectives is to engage in a discussion o f the decision situation. The process requires significant creativity and hard thinking, You begin b y asking the decisionmaker, " W h a t would you like t o achieve in this situation?" The responses provide a list o f potential objectives and a basis for further probing. There are several techniques listed in Table 3 that stimulate the identification of pOssible objectives. These techniques provide redundant guidance for identifying objectives, but redundancy is not a shortcoming. It is much easier to recognize redundant objectives when they are explicitly listed than it is to identify missing objectives. When asking an individual to express objectives, make it clear that what is needed is a list of objectives without ranking or priorities. To expand the list, you may ask, " I f you had no limitations at all, what would your objectives b e ? " Similarly, y o u may ask what elements constitute t h e bottom line for the decision situation and for the decisionmaker. Many words, such as tradeoffs, c o n s e q u e n c e s , impacts, concerns, fair, and balance, should trigger questions to make implicit objectives explicit. If a decisionmaker says "Tradeoffs are necessary", ask

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Table 3 Techniques to use in identifying objectives 1. A wish list. What do you want? What do you value? What should you want? 2. Alternatives. what is a perfect alternative, a terrible alternative, some reasonable alternative? what is good or bad about each? 3. Problems and shortcomings, what is wrong or right with your organization? What needs fixing? 4. Consequences. What has occurred that was good or bad? what might occur that you care about? 5. Goals. constraints, and guidelines. What are your aspirations? What limitations are place upon you? 6. Differentperspectioes. What would your competitoror your constituencybe concerned about? At some time in the future, what would concern you? 7. Strategic objectives. What are your ultimate objectives?What are your values that are absolutely fundamental? 8. Generic objectives. What objectives do you have for your customers, your employees, your shareholders, yourself?. what environmental, social, economic, or health and safety objectives are important? 9. Structuring objectives. Follow means-ends relationships: why is that objective important, how can you achieve it? Use specification: what do you mean by this objective? 10. Quantifying objectives. How would you measure achievement of this objective?why is objective A three times as important as objective B?

tradeoffs between what and what. If a decisionmaker says " T h e consequences should be fair", ask fair to whom, and what is fair. If the decisionmaker seems to stop and think, ask what the thoughts are. Responses to these questions may lead to other queries as appropriate. Often one begins to think hard about a decision situation only after some alternatives become apparent. Articulating the features that distinguish existing alternatives provides a basis for identifying some objectives. For example, in considering alternative sites for an airport, one feature that differentiates the alternatives might be the disruptions to citizens due to high noise levels. This suggests the obvious objective of minimizing disruption from noise. You might ask respondents to list desirable and undesirable features of alternatives and use these to stimulate thought about objectives. Structuring objectives. T h e initial list of objectives will contain many items that are not really objectives. It will include alternatives, constraints, and criteria to evaluate alternatives. With thought,

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each item on the list can be converted into objectives. Now the list of proposed objectives will include both means objectives and fundamental objectives. It is important to separate these types of objectives and establish their relationships by examining the reasons for each. Two important concepts are repeatedly used. One involves linking objectives through means-ends relationships; the other involves specifying fundamental objectives. Tracing ends objectives from specific means objectives should lead to at least one fundamental objective in a given decision situation. For each objective, ask " W h y is this objective important in the decision context?" Two types of answers are possible. One answer is that the objective is one of the essential reasons for interest in the situation. Such an objective is a fundamental objective. The other response is that the objective is important because of its implications for achieving some other objective. In this case, it is a means objective, and the response to the question identifies another objective. The " W h y is it important?" test should now be given to this objective to ascertain whether it is a means objective or a fundamental objective. Consider the decision situation involving the transportation of hazardous material. One objective may be to minimize the distance the material is transported by trucks. The question should be asked, " W h y is this objective important?" The answer may be that shorter distances would reduce both the chances of accidents and the costs of transportation. However, it may turn out that shorter transportation routes go through major cities, exposing more people to the hazardous material, and this may be recognized as undesirable. Again, for each objective concerning traffic accidents, costs, and exposure, the question should be asked, " W h y is that important?" For accidents, the response may be that fewer accidents result in fewer highway fatalities and less exposure of the public to the hazardous material. And the answer to why is it important to minimize exposure may be to minimize the health impacts of the hazardous material. To the question " W h y is it important to minimize health impacts?", the response may be that it is simply important. This indicates that the objective concerning impacts on public health is a fundamental objective in the decision context.

Another important concept in identifying fundamental objectives is that of specification. The intent is to break an objective into its logical parts. For instance, one fundamental objective for shipping hazardous materials may be to minimize impacts on the natural environment. To make this more specific, ask " W h a t environmental impacts should be minimized?" The response, which may be one specific environmental impact or many, should clarify the objective and better focus both thinking and action. It is often worthwhile to pursue several questions aimed at specification. Suppose the CEO of a service finn identifies one objective as 'to minimize nonproductive time spent by employees'. To better understand this objective, you might ask the executive to be more specific, or to list characteristics of nonproductive time. You might ask how nonproductive time occurs and whose nonproductive time is of concern. All of the responses should help specify the objective. Creating alternatives. The range of alternatives people identify for a given decision situation is often unnecessarily narrow. There are several reasons for this. There is a tendency in problem solving to move away from the ill-defined to the well-defined, from constraint-free thinking to constrained thinking. There is a need to feel, and perhaps even measure, progress toward reaching a 'solution' to a decision problem. To get that feeling of progress, one often quickly identifies some viable alternatives and proceeds to evaluate them, without making the effort to broaden the search for alternatives. The first alternatives that come to mind in a given situation are the obvious ones, those that have been used before in similar situations and those that are readily available. Once a few alternatives - or perhaps only one, such as the status quo - are on the table, they serve to anchor thinking about others. Assumptions implicit in the identified alternatives are accepted, and the generation of new alternatives, if it occurs at all, tends to be limited to a tweaking of the alternatives already identified. Truly different alternatives remain hidden in another part of the mind, unreachable by mere tweaking. Deep and persistent thought is required to jar them into the consciousness. Focusing on the values that should be guiding the decision situation removes the anchor on narrowly defined alternatives and makes the search

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for new alternatives a creative and productive exercise. Numerous guidelines facilitate the search for alternatives, or more precisely, the search for good alternatives. The principle is that alternatives should be created that best achieve the values specified for the decision situation. Both the qualitative objectives and the quantitative statements of values (e.g., priorities) should be systematically probed to initiate creative thought. Ideally, you create the best possible alternative using the least amount of time, effort, and resources. But realistically, in complex decision situations, the practical aim in creating alternatives is to generate a set of very promising ones. The objectives in the fundamental objectives hierarchy list all aspects of consequences that are important in a decision situation. Hence, thinking about how to better achieve these objectives can suggest altematives. To begin, take one objective at a time and think of alternatives that might be very desirable if that were the only objective. Consider every objective, regardless of its level in the hierarchy. This exercise is likely to generate many alternatives (see Jungermann, yon Elardt and Hausmann, 1983), most of which evaluate rather poorly on some objectives other than the one for which they were invented. If this is not the case, you have not been very creative in generating the alternatives. This process should provide a broad range of potential alternatives. The next step is to consider objectives two at a time and try to generate alternatives that would be good for both. These alternatives are likely to be refinements or combinations of those created using single objectives. Then take three objectives at a time, and so on, until all objectives are considered together. Next, examine the alternatives you have generated to see if it is possible to combine any of them into a single alternative. The means objectives are also a fruitful grounds to stimulate thinking about alternatives. Any alternative that influences one of the means objectives should influence at least some of the associated fundamental objectives. More complicated decision situations tend to have more means objectives, which should suggest more alternatives. Consider a rather simple fundamental objective of a firm to maximize profits from the sale of a product. Means objectives, in this case, might address sales volume, price of the

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product, cost of manufacturing the product, cost of distributing the product, and overhead cost. Altemafives could be created that influence each of these. A decisionmaker's broadest objectives are the strategic objectives. These provide the foundation for creating any alternatives or identifying any decision opportunities based on values. Sometimes the question of what can be done to contribute to the achievement of each strategic objective is worth pondering. Applying the ideas above to each strategic objective should suggest some worthwhile alternatives. Using the strategic objectives in this way, without a decision context, is similar to identifying decision opportunities. Descriptive research on decisionmaking has made it clear that the processes typically used to arrive at decisions are often not as logical or systematic as we would like them to be (see Russo and Schoemaker, 1989). Thus, at the end of a decision process, when you are about to choose an alternative, you should once more think about new alternatives. At this stage, you know how good that about-to-be-chosen alternative is. You should also have a good idea of the time, money, and effort necessary to implement it. Thus, carefully search for some new alternative that can better achieve the fundamental objectives by using the same or fewer resources in a different way. Decision opportunities. Who should be making your decisions? The answer is obvious: you should. Well then, who should be deciding what decision situations you face and when you face them? The answer here is the same: you should. At least you should control far more of your decision situations than many of us do. Controlling the decision situations that you face may have a greater influence on the achievement of your objectives than does controlling the alternatives selected for the decisions. Decisionmakers usually think of decision situations as problems to be solved, not as opportunities to be taken advantage of. Thus, it is not surprising that decisionmakers do not systematically hunt for decision situations. Who needs yet another problem? One of the main ideas of value-focused thinking is that perhaps you need another 'problem', because a decision problem may not be a problem at all but an opportunity. A decision opportunity may alleviate some decision problems o r perhaps allow you to avoid many future problems. In this sense, recogniz-

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ing and following up on decision opportunities is analogous to prevention, whereas dealing with decision problems is analogous to cure. There are two ways to create decision opportunities. One is to convert an existing decision problem into a decision opportunity. Often this involves broadening the context of the problem (see Nadler and Hibino, 1990). The other way to create decision opportunities is from scratch. Use your creative genius, which can be stimulated by value-focused thinking, to examine how you can better achieve your objectives. The strategic objectives of an organization are the foundation from which decision opportunities can be identified. But how many organizations have carefully written and organized their strategic objectives. In how many organizations do the employees know and understand these strategic objectives? The answer to both questions is ' v e r y few'. The chance to state and clarify these strategic objectives is itself a decision opportunity. The decisionmaker should develop specific procedures to initiate the search through the strategic objectives for decision opportunities. Some of these procedures should be independent of decision situations currently being addressed. For example, you could set up a procedure to seek potential decision opportunities on the first day of every month. To implement this procedure, the decisionmaker will have to unambiguously state and structure its strategic objectives. Then, each month the decisionmaker should verify that the strategic objectives are appropriate and make any necessary changes. There should usually be no changes since we are talking about broad, high-level objectives. Then the decisionmaker should use each strategic objective to help think of decision opportunities to do things better. Decision opportunities can be very helpful to you when you do not have direct control over a decision that you care about. In an important class of such decisions, one stakeholder wishes to have a certain altemative selected, but a different stakeholder has the power to make the decision. A firm wants its proposal to supply a product to another firm accepted, a govemnient wants another government to sign an agreement, an executive wants his proposal for a sabbatical accepted by the organization, and so on.

Suppose you are the stakeholder who wants a particular altemative selected by another stakeholder, whom I will now refer to as the decisionmaker. You should recognize your decision opportunity to take control of the decision situation. Rather than simply allow the decisionmaker to choose an alternative that may not be the one you desire, you should create altematives that modify your desired alternative so that it maintains its essential features for you and is better than the existing alternatives for the decisionmaker whose decision is required. The key to 'solving' a problem of this nature is to view it from the perspective of the decisionmaker. First structure her values as much as possible. Indeed, she should have little objection to your efforts in this regard, as she may end up better off as a result. In this process, begin by identifying the negative impacts of your desired altemative relative to the status quo in terms of her values. These impacts probably affect the means objectives. Follow their implications through a means-ends objectives hierarchy to the fundamental objectives of the decisionmaker. Now you should be able to create modified altematives that can improve matters in terms of her fundamental objectives while maintaining the key consequences desired by you. In many cases the modified alternatives should be better than the status quo to the decisionmaker. It is worth noting that the strategic objectives of a decisionmaker are likely much broader than the set of fundamental objectives influenced by your desired alternative. Thus, an alternative distinct from the original altemative may be used to 'satisfy' her when used in conjunction with the original altemative. From your perspective, the decision alternatives include the status quo and any others you can create. From the decisionmaker's perspective, the alternatives are the status quo and the alternative that you eventually suggest. The problem may be characterized as an empathetic negotiation. You negotiate for the decisionmaker and make sure that she gets enough to support your desired alternative, and you negotiate for your side as well. This situation may also be viewed as removing constraints to action. The interplay between the descriptive and prescriptive aspects of decisionmaking in empathetic negotiations is interesting. You use your description of the decisionmaker's values both to create new alternatives and as

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a basis for negotiating her position prescriptively. Also, you balance overall impacts to the decisionmaker and to yourself in a manner that is prescriptively reasonable to you, and that the decisionmaker will view as descriptively fair and responsible. In simple terms, your goal is to create a win-win alternative.

5. Applications of value-focused thinking In addition to the BC Hydro case which was outlined in some detail, value-focused thinking has been applied to a number of other important situations. The brief descriptions below are representative of its relevance. Providing professional service. A premier organization concerned with negotiations and dispute resolution is Conflict Management, Inc. (CMI), located in Cambridge, Massachusetts. CMI provides training in negotiation skills to corporate and public managers and executives and advises clients on the processes of negotiation and dispute resolution. As part of their overall review of the firm, CMI asked Howard Raiffa of the Harvard Business School and me to help them articulate their strategic objectives and identify opportunities that they should consider. Raiffa and I held discussions with each of nine principals of CMI to specify and critically examine their objectives. Integrating the results of these individual meetings, we developed a strategic objectives hierarchy and a means-end objectives network for the organization. The strategic objectives and the means objectives were used to generate new alternatives and decision opportunities for CMI (see Keeney, 1994). Developing mineral resources. Coal has been discovered in a remote rainforest of Sabah, a State of Malaysia located on the island of Borneo. A major international company is seeking permits from the government of Sabah to assess the value of those reserves and develop them if resource appraisals indicate it is financially worthwhile to do so. Because the area has a high environmental value, the government chose to formally examine the request for permits using what was referred to as a draft environmental impact statement (EIS). The problem

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is that few EISs provide guidance for making decisions and many do not address the different viewpoints which often are based on different values. Working with a Canadian consulting firm under the auspices of the Sabahan government, Robin Gregory of Decision Research (Eugene, Oregon) and I designed and conducted a three-day workshop to outline the EIS to address the substantial issues. In attendance were various stakeholders, including the resource company, the World Wildlife Fund of Malaysia, the Sabah Foundation (a powerful and respected local foundation concerned with the longterm economic and environmental quality of life in Sabah), and State agencies concerned with finances, water resources, agriculture, mining, tourism, indigenous people, and the environment. Collectively, we outlined a set of fundamental objectives addressing economic, environmental, health and safety, political, and international concerns. From these, we created distinct alternatives that involved declining the permit request (i.e., status quo), active conservation of the area, development of the coal with many controls to mitigate potential environmental consequences, and eventually opening the area for tourism. Combinations of these alternatives were also designed (see Gregory and Keeney, 1994). Creating a compensation system. Strategic Decisions Group (SDG) is an international consulting firm with headquarters in Menlo Park, California. Its mission is to improve the quality of decisionmaking by applying decision knowledge to help clients make sound decisions and achieve effective actions. As with many consulting organizations, the compensation system for professionals is important. It should promote action in the interest of the finn and its clients and be fair to the individuals. To help create possible improvements t o SDG's compensation system, I held separate discussions with four partners of SDG to identify the objectives of their compensation system. There were numerous means objectives to support the fundamental objectives, which were organized to focus on three stakeholders: the individuals at SDG, the firm, and its clients. The intent was to provide a sound basis to facilitate discussion of compensation systems, identify issues of agreement and disagreement among partners and suggest ways to resolve any conflicts, and to create and evaluate potential compensation systems.

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Managing wastewater. The Municipality of Metropolitan Seattle, referred to as Metro, is a regional governmental agency responsible for water pollution control in the Seattle metropolitan area. The agency collects and treats wastewater and discharges or recycles the remaining liquids and solids. Facilities for carrying out these functions are planned, designed, constructed, and operated by Metro. The decisionmaking authority of Metro is a board consisting of elected and appointed officials. In mid1992, working with Tim McDaniels and Vicky Ridge-Cooney, who was the Metro project manager, we met individually with several people on the Metro board to elicit values appropriate for Wastewater 2020 Plus, a project to protect water quality through the first half of the 21st century. From our discussions, we constructed a list of over 200 objectives. These were organized into categories of fundamental, means, and process objectives for Wastewater 2020 Plus. An important insight from the structured objectives was that there are two distinct decision contexts that are simultaneously faced by Metro. One concerns decisions about wastewater facilities that will be constructed and operated. The other concerns how those decisions are made. This second decision context includes whom to involve in the decision-making process and when to involve them. What role should the various stakeholders play? How does one communicate effectively with stakeholders? How do you determine what information is relevant and how do you obtain it and use it? How do you coordinate decisions with all of the other governmental units in the region? The focus on values has facilitated communication. The Metro board had decisionmaking authority, but a staff had responsibility for developing recommendations for actions. The majority of communication was from the staff to the board; the board mostly reacted. A mechanism was needed to provide guidance from the board to the staff. The Metro objectives provide such guidance for all of the staff's actions. The objectives also indicate how best to communicate the implications of alternatives to the board in the terms that they care about, namely, their values. California Seismic Safety Commission. Major earthquakes have occurred in the past and they will

occur in the future in California. We cannot stop the earthquakes, but we can prepare for them and act wisely to minimize the loss of life and property damage. Recognizing this, the Legislature of California created the Seismic Safety Commission to provide a consistent policy framework and the means for coordinating all earthquake-related programs of agencies at all government levels. The Commission is composed of 17 commissioners and a permanent staff of roughly eight full-time employees. In the early 1990's, the Commission decided to create a common set of strategic objectives that would be supported by the staff and all the commissioners. At a two-day workshop in April 1993, the values were articulated in a meeting of the commissioners and the staff. To ensure that each individual contributed his or her thoughts, I first asked them to separately write down the values that they thought should be pursued by the Commission. Then I asked them to write down the values they thought were appropriate for commissioners, and then the values appropriate for the staff. Next we created a common set of values for each of the three cases. The role of the Commission is defined by its values, specified by the objectives, and pursuing Commission values should be the entire focus of Commission activity. One major use of the objectives is to facilitate communication at the Commission, among commissioners and staff, and between anyone affiliated with the Commission and all potential users of Commission information. The Commission objectives also provide a basis for creating alternatives to pursue those objectives for evaluating alternatives when there are several possibilities, and for identifying decision opportunities in areas of importance.

6. Value-focused thinking and your organization The fundamental point of this article is that value-focused thinking can help you and your organization. Clarifying and explicitly stating your strategic objectives should have a high benefit-to-effort ratio. Even if your objectives are fairly clear but not written down, writing them down should lead to further clarification. These strategic objectives will not only help you make wiser decisions but, more

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importantly, they should help you recognize and create new decision opportunities. It may initially be difficult to articulate, review, and revise your objectives. You may get the feeling that you are not 'solving' your decision problems when you are just thinking about objectives. You may feel it is merely a philosophical exercise to articulate your values, whereas the decision problems facing you are real. But whether or not you label thinking about your values as an exercise, the results can help with any of the real decisions that you make. One good decision opportunity can repay you for a lot of 'philosophical' thinking. As you gain experience, thinking about your objectives should get easier and the results should get better. There are three reasons for this. First, as with all endeavors, practice makes perfect, or at least, practice makes better. It is useful to practice by articulating your values for easier decision situations if you plan to use value-focused thinking for difficult decisions. Second, as you structure your values, you will necessarily tackle some complex and involved value issues. As you sort these out, you will have a better understanding of your values which makes it easier to clarify difficult value issues. Third, as you continue to structure and understand your values, they will begin to form a coherent pattern. Numerous frames of reference based on previously articulated values facilitate thinking about your values in a new decision context. To recapitulate, value-focused thinking will help you in three major ways: to recognize and identify decision opportunities, to create better alternatives

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for your decision problems, and to develop an enduring set of guiding principles for your organization.

Acknowledgements This work was supported in part by NSF Grant SBR-9308660. Parts of the paper were adapted from Keeney (1992, 1994).

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