The Decision Analysis Profession is celebrating 50 years of addressing important decisions in the face of complexity and uncertainty. On November 8, hundreds of professional practitioners and academics came together in San Francisco to honor two seminal figures, Howard Raiffa from Harvard, who made great advances in applying statistical decision theory to real-world problems, and Ronald Howard from Stanford, who turned this into an engineering approach to dealing with complex problems and named the field “Decision Analysis.” In their honor the Society of Decision Professionals established a new award, the Raiffa-Howard award, for Organizational Decision Quality.
Chevron received the first such award for integrating decision analysis principles and practices throughout their organization, thereby outperforming their competition, a performance that shows up in substantially higher market valuation. Chevron’s valuation is worth $50 billon more than the second best oil company and $100 billion more than the third best. The “Chevron Way” is a collaborative search for more value using embedded decision analysis processes. The award is given based on a careful evaluation by an independent panel of experienced decision professionals. The examining panel determined that Chevron deserves the award based on a review of Chevron’s adoption in six categories.
- The culture that makes Decision Quality an organizational competency.
- Decision makers have the knowledge, clear roles, and behaviors to use Decision Quality constructively.
- Professional Decision Support staff members have the appropriate capabilities and the trust and respect of the decision makers.
- Effective fit-for-purpose Decision Processes engage the right people and have the rigor to achieve Decision Quality.
- Tools fit the decision needs, are theoretically sound, and are adequate to meet many decision needs.
- Demonstrated Benefits are apparent from Organizational Decision Quality. Chevron has outperformed its peer group in total shareholder return for both the last five- and 10-year periods.
SmartOrg congratulates Chevron. We help organizations reach higher decision quality performance and that naturally leads to higher profitability, by installing and coaching organizations to use modern decision systems that enable consistently great decision quality.