How to solve complex problems and make effective decisions efficiently?

oaking decisions and solving problems is something we do naturally in our daily lives, both personally and professionally. However, the vast majority of people have never been exposed to decision-making and problem-solving methodologies. This is not the case for well-trained leaders and experienced Key Decision-Makers (KDMs), who are often exposed to various JDM and CPS methods that simply do not work. This leads to managerial scepticism towards these methodologies.

When asked about them, managers often argue that JDM and CPS strategies are "mostly theoretical, without any practical implications", "great for generating ideas but not solutions", "not agile and/or structured", "not able to manage paradoxes", "not driven by KPIs", among other equivalent opinions.

Can our capacity to make decisions be developed? Is there a way to solve complex problems and manage paradoxes?

Due to the complexity of the challenges and problems associated with the decision-making process, we do not always arrive at the most appropriate solutions and decisions adequately. Therefore, having the ability to solve problems, manage paradoxes and make effective decisions efficiently is indispensable in our daily lives.

Many argue that the ability to overcome challenges and make the right decisions is innate. Some suggest that challenges have to be solved through the use of intuition and personal experience. Others argue that through a rigorous process of rational choice and methodologies to support decision making, it is possible to manage paradoxes and solve complex challenges. In my view, it is not a question of intuition versus rational. It is a question of finding the best possible combination between the two schools of thought.

Over the last fifty years, a great deal of research has been carried out on problem-solving and decision-making processes. The work of Daniel Kahneman, Nobel Laureate in Economics, systematises several decades of research in this field. From a theoretical point of view, his book Thinking, Fast and Slowtwo types of decision-making processes:

- Type 1 - faster and more intuitive;

- Type 2 - slower and more rational.

According to Kahneman, it is man's ability to integrate the two types, intuition and rationality, that enables him to make the "right" decisions in the "right" way. Any of us can learn how to make the right, effective and efficient decisions every day.

Is there a "formula" for solving complex problems and making the right decisions?

Despite his remarkable and innovative work, with several practical implications, Kahneman does not present the "formula" for solving problems with some complexity. However, several attempts have been made to discover this "formula". One of these attempts, participant-oriented, is the Value Creation Wheel®(VCW) meta-structure.

The VCW scientific method has been published in the Journal of Business Research and has been supported, for over two decades of co-creation with executives and researchers from top universities around the world, including Nova SBE and MIT. For many years, VCW has been applied by KDMs and leaders of diverse organizations, from NGOs and start-ups, to SMEs and Fortune 500s.

In Portugal, numerous organisations have also applied VCW to solve their challenges:

- Believe Portugal-Montepio;

- Aga Khan Foundation;

- Bébécar; Claranet DNS.pt;

- Colégio Sagrado Coração de Maria;

- Ageas Foundation & Impact Hub;

- INCM-Casa da Moeda;

- InvestLisbon;

- IPO Porto;

- Jerónimo Martins Distribuição;

- Mastercard;

- Nova University (Nova Executive Education, Nova SBE, Nova Medical School, Nova Law School, Nova Doctoral School. ITQB & FCT);

- Renova;

- Santander;

- Santa Casa Misericórdia Lisbon.

Can VCW be used to solve complex problems and assist in decision making?

The VCW is a dynamic, planned, decision-making framework that helps systematise the process of innovation and value creation.

"The VCW process does not waste time (...). It allows us to reach consensus on which ideas have the most potential for the topic we are dealing with (...). We focus on the ideas reached by consensus. The VCW can help KDMs make a decision and focus on stakeholder input to find out which actions will have the most impact, (...). (...) It helps a lot to focus on production and time management."

Antonio Gutierrez, Head of GROUND SEGMENT BUSINESS UNIT at Elecnor Deimos Group

To solve a challenge, the VCW's practical framework starts with a diagnostic and defines the baseline and desired KPIs (phase 1). Subsequently, the VCW generates an extensive variety of ideas and criteria/filters (phase 2) that will then be analysed by the decision-makers (phase 3). Next, the various ideas go through the filters defined by the KDMs and leaders, using the Value Creation Funnel and design/prototyping (phase 4). In the last phase, the final solution is implemented and the results evaluated. (phase 5).

Throughout the five phases of the decision-making process, VCW incorporates different perspectives on problem-solving, including views from diverse decision-makers, internal and external stakeholders , including laggards and sceptics.

Is VCW just another pure theoretical model of problem solving and decision making?

Maybe yes, maybe no. Some executives have decided to apply VCW to solve organisational challenges in their organisations and have discovered the impact of this decision-making framework through their own experience.

"At the beginning, I was sceptical about this methodology, and I confess that in the first phase I was not counting on the results we got. At the end of the process we found very practical solutions and achieved the stipulated goals. It was indeed a pleasant surprise."

Paulo Pires, WhyMob CEO, and Oramix board member

Or do the same, as a wide range of individuals, of different ages have applied VCW to solve personal challenges(running their personal and professional lives, solving children's challenges).

"The VCW methodology helped me to select a job (...) that I had never considered. The methodology indicated a path, a trajectory, for me to follow. (...) After the internship I went to work for another institution with renumeration. (...) Everyone in this situation should apply the VCW, particularly when they have no certainties, life is indefinite, the job market is overcrowded." Woman around 50 years old, unemployed for 8 years, found a job after applying VCW

As can be seen from the numerous projects, VCW helps to start by answering questions such as:

- What is the cause of the challenge/problem?

- Who are the KDMs(key decision-makers)?

- How and where to involve the various stakeholders in decision making?

- What resources can be invested in the decision-making process (human, financial and time)?

- What are the various alternatives for overcoming a challenge?

- What criteria should be used to select the most suitable alternatives?

- What are the most appropriate KPIs to ensure that KDMs' decisions have the desired impact?

Which cases does VCW's decision-making process have the most impact?

Learning problem-solving and decision-making methodologies can help develop an individual's innate abilities. The more complex the challenge, the more likely it is to involve a significant number of stakeholders, and to combine intuition with analytical reasoning to make decisions more effectively and efficiently.

In this sense, by combining intuition with technical knowledge about problem-solving and decision-making processes, we will be able to make the right decisions efficiently, both at work and in various areas of our lives.

In short, the greater the number of stakeholders, the greater the uncertainty and ambiguity, the greater the complexity of the problem, and the greater the added value of the VCW process.