(2024-05-01) Causal Decision Diagrams

Uncertainty Project on Causal Decision Diagrams (CDD).

We hear a lot of emphasis today on “data-driven decisions”. In a complex world, this is seen as a methodical approach that can bring scientific analysis to counter ill-informed intuitive decisions. But leading with data can create problems of its own. In many cases, an early emphasis on the data will put the cart before the horse.

Lorien Pratt observed two negative patterns in complex decision-making, and then introduced the Causal Decision Diagram (CDD) to help organizations address these problems and improve their decision making. (cf Diagram of Effects)

The first negative pattern she saw was that when leaders drove their decision making efforts with data collection and analysis, the available data then framed the decision.

The second negative pattern was the absence of a simple visual language for decision making. While she observed some common key elements that people use to describe decisions in complex environments, there was no way to visualize them together:

acknowledges that the output will always be imperfect and incomplete. Its sole intent is to support better decision making.

The CDD is best suited for decision making in complex environments. What constitutes a complex environment? In business settings today, the pace of change in both technology and macro-economic conditions brings complexity into many strategic decisions. (complex system)

A CDD helps a leadership team address complexity by creating a visual language that:

• Shifts in cognitive load from “having to remember everything”, to “getting creative”
• Supports a shared understanding across decision makers and stakeholders

Find feedback loops: draw the loops on the diagram

Remember, the success criteria for this decision-support exercise is only to equip the decision maker with better information than they would have otherwise (i.e. relative to the baseline of their current approach). And from what many executive surveys are telling us, the bar is pretty low today.