Advancing the Profession

In 2021, Strategic Decisions Group celebrated its 40th anniversary. On this page, we recount the genesis of the organization and of the fields of decision science, decision analysis, and decision quality.

HOWARD

The term “decision analysis” (frequently abbreviated as “DA”) was coined in 1964 by Professor Ronald A. Howard of Stanford University to describe the integration and application of decision theory and systems engineering to significant decision problems. In his seminal 1966 paper, “Decision Analysis: Applied Decision Theory”, he defined DA as “the discipline comprising the philosophy, theory, methodology, and professional practice to formalize the analysis of important decisions.” Shortly thereafter, Dr. Carl Spetzler worked, for the first time, with a major corporation to develop a consistent approach to decision making and risk management. Prof. Howard and Dr. Spetzler, along with Dr. Jim Matheson and Mr. Jeff Foran, ultimately founded Strategic Decisions Group, and the firm has since remained at the forefront of decision analysis theory and practice for 40 years.

SDG evolved from the decision analysis group at the Stanford Research Institute (now SRI International), a group established by Dr. Howard in the “teaching hospital” model where decision analysts could learn and advance the then-nascent profession by consulting on actual business and societal decisions. This group developed many of the tools and concepts in use today, including influence diagrams, strategy tables, tornado diagrams, the accepted method for probability encoding, the concept of decision quality, and the Dialogue Decision Process. Many of these early papers were reprinted in a two-volume collection, “The Principles and Applications of Decision Analysis”.

From the outset, Dr. Spetzler, who has led SDG since its founding and is now chairman of the board, set out to create a new kind of management consulting firm—one that would harness the power of normative and behavioral decision analysis to help organizations choose the best course of action in the face of uncertainty, daunting complexity, competing preferences, and organizational complexity.

Now celebrating its 40th year, SDG continues to push the frontiers of the theory and practice of DA, motivated by the real-world issues faced by our clients. The firm’s professional staff includes not only PhD decision analysts but also experienced business consultants, bringing together the creative and analytic skills necessary to best serve our clients. In addition, we maintain our ties to academia with our relationships with Stanford University, The University of Texas at Austin, and RWTH Aachen University in Germany. As a firm, we have developed solutions to complex problems in business sectors as diverse as life sciences, energy technology, R&D, and public policy.

To learn more about how SDG has advanced the field of DA and Decision Quality, visit our Resources Hub and explore:

Foundational Thinking and articles now recognized as core to the discipline
Selected Applications of decision analysis in real-world settings
Latest Research that push the frontiers of the field

In 1981, a team of scientists, engineers, academics and business professionals set out to create a new kind of management consulting firm—one that would harness the power of decision science to help organizations choose the best course of action in the face of uncertainty, daunting complexity, confused preferences, and interrelated variables. The name of the new enterprise: Strategic Decisions Group.

Building on Decision Analysis (DA). Having emerged as a field of practice within decision science in 1964, decision analysis was a relatively new concept when SDG was founded. Dr. Ronald Howard of Stanford defines DA as “the discipline comprising the philosophy, theory, methodology, and professional practice to formalize the analysis of important decisions.”

Decision Quality (DQ). By 1984, DA for specific decision situations had evolved into an established set of practices and tools, and the advances in computer modeling was making it possible to address portfolio decision problems. However, converts to the Total Quality Movement (TQM) were challenging DA’s relevance. In reevaluating its approach to DA, SDG recognized that “if you deal only with analytical complexity, you can get the ‘right’ answer—but nobody cares. Conversely, if you facilitate only in the face of organizational complexity, you can resolve conflicts and gain agreement—but it may be agreement around nonsense.” It takes more than gaining clarity to achieve a good decision.

We use DA to get to the right answer. But we recognize that in complex organizational settings, it is likely that multiple parties with different perspectives, motivations, and biases need to be involved in key decisions. We thus incorporate insights from behavioral science and an understanding of organizational dynamics—the culture, governance structures, processes, and skill-sets that enable organizations to gain alignment and commit to action on complex, high-impact decisions. The role of decision professionals must include responsibility for assuring the quality of the inputs to the decision.

DQ today. With DQ, we approach every problem through the double lens of organizational and analytical complexity, making it possible to find and commit to the course of action that “gets us the most of what we truly want” in difficult decision situations. The principles, practices, and processes of DQ can be applied to individual decisions as well as resource allocation in portfolios of decision situations. Full adoption of DQ for an organization has a transformative effect on the behaviors, governance processes, support staff, and tools related to decision-making. The benefits can be enormous.

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