Four types of decisions every manager should know

The Analysis of Business Problems course has some very interesting articles. I went through one of them recently and learned very useful and practical lessons. I think that the materials in the course are a good complement to the classroom sessions.

One of the lessons I have learned from the readings is that decisions can come from anything. There are a variety of circumstances that could necessitate decision-making. Therefore as a Manager, I should be able to recognize that decisions differ and should be able to choose the corresponding approaches for any decision scenario.

I also learned that there are two dimensions to decision-making. These are control and performance. Control addresses the question “How much can I influence the terms of the decision and the outcome?” Do I have to choose from the options presented to me? Do I have some control over how things play out after I have made the decision? The second dimension, performance, addresses how I measure success. Do I just want to do well, not minding the outcome for others? Or do I want to do better than the others? In other words, is performance absolute or relative?

My knowledge of these dimensions will help me understand how decisions differ. Also, I am now able to categorize my decision-making scenarios or circumstances.

I learned from the reading that there are four types of decisions. These decision types stem from the dimensions discussed earlier.

Types of Decisions

Making routine choices and judgments: typical examples of decision scenarios in this category would be shopping at a supermarket. At the supermarket, I see different options but I cannot change, influence, or improve any of the options. I simply have to choose. This is the Control dimension. For the performance dimension, performance here is absolute; I would pick an option that suits me the most. The choices of other shoppers will not matter to me.

So many decision circumstances can fall under this category, even in the business environment. With this knowledge, I can already assess a workplace situation and ascertain if it falls under this category.

Influencing outcomes: This category states that there are other decision scenarios that I can influence. For example, if I have a project to do, leveraging my skills and abilities, I can influence the outcome of the decision. I can decide whether to get the project done or not; I can decide how long it will take to complete the project. This is the control dimension. For the performance dimension, performance here is relative. For example, it is subjective to my belief in my ability to succeed in the project, my motivation, and so on.

Placing competitive bets: this category introduces competition to the mix. Like the first two categories, we also have some decision scenarios that require the knowledge of the competition. Hence it is how well I do in relation to my rivals. The writer also stated that I am able to make the best decisions when I anticipate the moves of my rivals. I have learned though, that knowledge of the competition is good but it has its limitations – players cannot alter the terms of the game.

This will lead to the last type or category of decision: managing for strategic success!

Managing for strategic success: Every business manager should have their eyes on this type of decision. The decisions in this category are mostly challenging for managers hence, more effort is required.

This category states that I can actively influence the outcome of the decisions and success means doing better than my rivals. This I have learned, is the essence of strategic management.

As a manager in my organization, I am sure to face decision scenarios that would require critical thinking and the application of strategy. I have learned two important points for decisions that fall under this category. The first thing is that I need to have a talent for careful and dispassionate analysis; the second is that I need to have the willingness to push beyond boundaries.

Reference

What makes strategic decisions different. Harvard business review. November 2013