The reason that decision makers are often the most powerful and well-paid people in business is because decision making is inherently difficult and risky. Analyzing a multitude of probabilities takes skill, experience, and courage. And it especially involves the analysis of cause-and-effect relationships. None of this is easy.

We all know that what goes up must come down. But in fact, most of us don't -- at least not in a practical way, says Gerald R. Wagner, Ph.D., Distinguished Research Fellow at the Peter Kiewit Institute at the University of Nebraska-Omaha (UNO), the founder of several software companies, and a widely recognized expert in data visualization and decision-support technology.

Dr. Wagner has spent his career trying to understand decision making and decision makers. He has come to the conclusion that most businesspeople, in fact most people, don't understand the rules of cause and effect as they apply to decision making. Computer models, however, can be made to do just that.

Dr. Wagner's latest venture is a software program called the Planners Lab, created with UNO student interns. The software helps users build decision-making models by allowing them to input their assumptions in their own language and to meet their own needs. Then the program evaluates and analyzes cause and effect. It's a spare brain with tremendous analytical skill.

In this interview, Dr. Wagner discusses why humans can't comprehend complex probabilities, why businesses need models to make informed decisions, why he chose Planners Lab as the capstone to a highly successful career -- and why he's releasing the software to a limited audience -- for now.

GMJ: You used to do a lot of work with group decision-support software, but you're not involved much with group decision making these days, right?

Dr. Wagner: That is right. It just did not accomplish much. I've done hundreds of these sessions, and they're fun. I've facilitated everything from the naming of new products to corporate strategic planning. You may bring in employees or customers, and you might learn something from them, but in the end, a few key people make the final call.

So even though these sessions were fun for everyone and ended up with really impressive final reports, I don't think much ever came of them. That's probably why group decision making went out of fashion. But, collaboration per se is a different issue.

GMJ: What do you mean by "collaboration"?

Wagner: I recently spent a week in Washington, D.C., at a conference on creativity and cognition, and almost every presenter talked about collaboration and the importance of it -- not in the old group decision-support system style, but collaboration in general. It's a problem that many people are still coping with, but we haven't made much progress in providing technology to assist the collaboration process.

The kinds of technology we do have are pretty trivial. You can do brainstorming with paper and pencil, and you can do it with flipcharts -- you don't need software, which essentially is replacing what was already being done. It's paving the old cow trail rather than coming up with something new and inventive. But some things we're working on now -- modeling and visualization -- are far more encouraging.

GMJ: Models for what?

Wagner: Business models. For budgeting purposes, investment purposes, strategic planning, purchasing planning, whatever the case may be, but mostly it's for business activities. All decisions, whether it is realized or not, come down to a model of some kind. Every business decision has variables, equations, and cause-and-effect relationships, so underlying anybody's thinking process is a model. They may not know it -- it probably isn't explicit -- but it's there.

If you're putting together your personal budget, you're thinking about the loan on your house, the payment on your car, food and medical [expenses], etc. There's a complicated dynamic. In business, it's somewhat more complicated. There are cause-and-effect relationships between those variables. If I increase this one, for example, it will have an impact somewhere else. If I increase that one, it will have an impact somewhere else.

Well, when you start to think about that sort of thing, it becomes more complicated than the human mind can handle. So we're developing modeling languages that help the end user identify and write out those types of relationships one at a time and in their own words. Once they've done that, then our software supports them with visualization tools -- with interactive charts and graphs and engaging animations. So the user can ask, "Well, if I change this number, what impact does it have on these other numbers?"

Copyright Ó 2007 The Gallup Organization, Princeton, NJ.  All rights reserved.  Reprinted with permission.  Visit The Gallup Management Journal at http://gmj.gallup.com/

Article from The Gallup Management Journal