With risk, uncertainty and trade-offs always in play, tough executive decisions are a daunting challenge for even the most seasoned managers. Just sitting in a conference room, discussing the issues, and eventually selecting what is believed to be the best course of action rarely yields the best result. And as a result, competitive advantage can be lost and the bottom line can suffer.
In his Managerial Decision Making course, Dr. Phil Rogers shows MBA, GEMBA and Executive Education students how to take a more structured approach to decision making. Students learn techniques that are at once sophisticated, yet relatively easy to learn and apply to real-world, complex business problems.
By the end of the classes, attendees are able to take the tools and techniques they’ve learned and apply them to solve a wide variety of practical problems, explicitly accounting for inherent elements of risk, uncertainty and trade-offs. Plus, they have the chance to solve their own particular decision-making problems they bring to the classroom.
Examples of recent student projects include:
- Optimizing the allocation of a $100M capital budget;
- Determining the deposit requirement for organ transplant patients in the face of uncertainties in hospital and surgical costs and insurance coverage;
- Selecting the best fuels to burn and the price to charge for power, subject to constraints on fuel-switching capability;
- Predicting potential future exposures and costs associated with credit risk.
Inevitably, students walk away impressed with what they have learned, as these comments from former students attest:
- “This course is timely for anyone who has to justify projects or resource budgets.”
- “This was a great course. My personal belief is that simulation and modeling will rather rapidly become more mainstream in the business world as people continue to realize that we do not live in a deterministic world.”
- “The professor used his real-world experience in the energy industry as examples of how to use decision-making software. The course is very applicable for engineers and business, financial and planning managers and analysts in the energy industry (or any other industry for that matter).”
- “Extremely useful and interesting course. One of the MBA courses that I think I will be using a lot in the future.”
Rogers’ career history includes a long and distinguished tenure with ExxonMobil, where he applied these techniques to a wide variety of business problems in manufacturing, finance, human resources, tax, corporate planning, and marketing. Rogers is passionate about the potential for his students to improve their decision-making skills and contribute to an improved bottom line. “There is an incredibly quick payoff to using these powerful, user friendly, PC-based tools. Students, working in small teams, are immediately able to use these tools and techniques to solve problems they are currently dealing with at work.”
Rogers has particularly enjoyed the challenge of teaching the course to GEMBA students in Beijing. Despite the language barrier, by the end of the four-day class, the students from two of the world’s largest petrochemical companies were able to apply what they learned. For one student team, that meant figuring out whether or not the current funding of the corporate pension plan will provide adequate coverage for retirees in 25 years. For another, it meant determining how much tankage to lease in the face of uncertain product demand and price.
The end result? An enhanced ability to make optimal decisions despite being faced with unpredictable and often conflicting issues. “Besides enabling decision makers to take uncertainty and risk into account, these tools allow users to account for qualitative as well as quantitative factors that influence decisions,” Rogers says. “And perhaps even more importantly, the sensitivity analysis that comes with these tools enables users to test their assumptions and assess the impact of changes in assumptions.”
By Julie Bonnin
About the University of Houston
The University of Houston, Texas’ premier metropolitan research and teaching institution, is home to more than 40 research centers and institutes and sponsors more than 300 partnerships with corporate, civic and governmental entities. UH, the most diverse research university in the country, stands at the forefront of education, research and service with more than 35,000 students.
About the Bauer College of Business
The C.T. Bauer College of Business has been in operation for more than 60 years at the University of Houston main campus. Through its five academic departments, the college offers a full-range of undergraduate, masters and doctoral degrees in business. The Bauer College is fully accredited by the AACSB International – the Association to Advance Collegiate Schools of Business. In August 2000, Houston business leader and philanthropist Charles T. (Ted) Bauer endowed the College of Business with a $40 million gift. In recognition of his generosity, the college was renamed the C.T. Bauer College of Business.