“Decision making is a complex and deliberate process. The decision-making process cannot be left to chance, as the quality of decisions we make determines our outcomes.”
Each day, Managers make numerous arbitrary decisions through mental shortcuts, oftentimes with far-reaching consequences. These mental shortcuts emanate from past experiences, intuition, beliefs or cultural inclinations or a blend of these factors.
Poor managerial decisions are due to one or a combination of reasons. This includes strict deadlines, pressure to deliver stakeholder value, missing or incomplete data, analysis paralysis, too many viable options, information overload and Groupthink.
Indeed, the science of decision-making is linked to the field of neuroscience. Nonetheless, the quantitative approach to decision making is a scientific mechanism that leverages numerical and statistical data and analysis.
Conversely, the art of decision-making employs the qualitative approach to decision making. This is a detailed analysis of all the associated factors related to the problem besides the numerical and statistical analysis that can influence the decision-making process.
Specifically, the Course, Analysis of Business Problems is a systematic approach to decision making in solving business problems.
THE DECISION-MAKING PROCESS
- Understand the situation. An in-depth understanding of the situation is pertinent. Context is key in decision-making, as decisions are not made in a vacuum.
- Identify and define the problem. It is critical to note that symptoms are different from problems. For example, decreased profits and declining sales in an organization may be symptoms, whereas the root problem could be poor market research.
- Define the objectives. There must be clarity of the objective of the decision. What does success look like? What is the goal to be achieved?
- Establish the criteria. If a manager needs to decide whether to purchase a piece of equipment, what are the criteria to consider in making the decision? For example, price of the equipment, maintenance cost, ease of use, production volume and speed?
- Generate alternatives. This involves using the relevant data available to identify the principal options in solving the problem. Usually, a problem has more than one possible option to meet the objective.
- Analyze the alternative. Appraise the implication of each alternative. Apply weights to each of the criteria and then rate each of the alternatives identified vis a vis the criteria. The result would highlight the most viable of the alternatives based on the set criteria.
- Make a choice. Take the decision and act on it.
- Develop an action plan. Implement the decision by developing an action plan.
- Evaluate the decision and the implementation of the decision. Examine the outcomes, as well as feedback from stakeholders.
Whilst ‘establishing the criteria’ is an art, ‘analyzing the alternatives’ is a science.
Clearly, today’s fast-paced and highly competitive marketplace requires managers that are agile in decision-making. Key alternatives should be the focus, rather than considering all the possible alternatives. Analyzing all the possible options can be time-wasting and may result in analysis paralysis.
In conclusion, the best methodology to making optimal decisions is a delicate mix of both the qualitative and quantitative approaches to decision making. None supersedes the other.
Reflections of an HSP
The Future Executive