Finance From A-Z: Delphi Method

Term: Delphi Method (pronounce DEL-fy)

Definition: The Delphi Method is a structured communication technique developed, by the RAND Corporation, as a systematic, interactive forecasting method which relies on a panel of experts.

What does this mean to you?

The Delphi Method, in the extreme, is a structured think tank of experts that through a process of unbiased review and elimination reaches a decision or a forecast. However, this method can help a business owner look for potential solutions to a business problem or opportunity. Leaders can assembly an impromptu team to explore a solution. Usually the team answers two or more rounds of questions regarding the topic. A facilitator provides an anonymous summary. The summaries are anonymous so not to influence the group. Also, it is important that the facilitator is not bias and doesn’t influence the process. After a few rounds of questions and summaries a consensus is reached. This consensus can be the basis for developing a strategic plan, business objectives and action plan.

The method does have some weak points. It involves human interaction so it isn’t perfect. Also, it is dependent on individuals not being influenced or manipulated. Nonetheless, it can be effective if deployed correctly.

Summary:

The Delphi method doesn’t require a room full of Nobel laureates. This method could be used by a small business owner, consulting a few trusted advisors and a skilled facilitator. The main purpose is to gather alternative views on an issue, weight them against each other and come up with the best course of action. The Delphi method is based on the principle that decisions formed from a structured group is more accurate than those formed by an individual.

“ Where there is no guidance the people fall, But in abundance of counselors there is victory. Proverbs 11:14 (NASB)”

Let me know your thoughts on the Delphi Method. There are a few blogs that believe it’s just a tool for manipulation; I believe it’s a structured method to consult wise counsel.