1. Our brains can only handle about 7 plus or minus 2 elements.
George Miller of Harvard University and others have performed research that has shown that the human brain can only cope with, remember, or distinguish among about 7 plus or minus 2 elements. Most business decisions not only have more than 7 things to consider, they also involve intuition, rationality, and risk and uncertainty.
Most association business decisions are more complex; i.e., they have many more than 7 elements.Association Project Portfolio decisions are probably the most complex decisions association managers have to make, and in the face of limited resources, it’s so important to get them right.
2. Decision makers need to make trade-offs among conflicting objectives.
For example, when we consider purchasing an airline ticket, we want to consider price and also the number of stops or plane changes. We want to be able to say whether price is more important or non-stop is more important. We might want the $400 fare but would consider paying more because our time is valuable.
This is known as compensatory decision-making.
3. Business decisions involve both quantitative and qualitative objectives.
Even in a simple decision, we often have conflicting objectives, such as good taste versus good health when choosing what to eat for lunch. Decisions in associations, business and government are much more complex, of course.
How do you value customer trust versus revenue? How do you weigh the importance of social responsibility versus economic gain? Social responsibility is qualitative; economic gain is quantitative.
How can associations make complex portfolio decisions productively and accurately, without succumbing to the loudest voice or the lateness of the hour? They can use the decision approach called the Analytic Hierarchy Process developed by Thomas Saaty and employed by thousands of corporations, governments and academic institutions worldwide. See how using the Association Hub PPM Toolkit.