As a manager, one is frequently faced with problem-solving decisions that will require critical analysis to be able to arrive at a good decision. No wonder the MBA program at Lagos Business School choose Analysis of Business Problems (ABP) as one of the first courses in the program. Analysis of business touched on business decision-making and the steps one could take to arrive at such decisions. Let’s look at the steps one needs to follow in making a good business decision.
Defining the business decision-making process
The business decision-making process is a step-by-step process allowing professionals to solve problems by weighing evidence, examining alternatives, and choosing a path. It can help you make more deliberate, thoughtful decisions by organizing relevant information and defining alternatives. This approach increases the chances that you will choose the most satisfying alternative. This defined process also provides an opportunity, in the end, to review whether the decision was the right one
Step 1: Identifying the problem
The first step is to identify the problem you need to solve or the question you need to answer. The problem to be solved must be clearly defined. In a bid to identify the problem, the following question may come to mind.
- What is the problem that needs to be solved?
- What is the goal you plan to achieve by implementing this decision?
- How will you measure success?
When the problem is clearly defined, you then have more information to come up with the best decision to solve the problem.
Step 2: Gather relevant information
Problem identification is followed by information gathering. An internal assessment of the organization will be necessary. Find out if there are historical data from your organization on the issue. This is to uncover the areas relating to this issue, your organization has had success or failure in the past. Also, you may seek information from external sources, including studies, market research, and, in some cases, evaluation from paid consultants to widen your scope of the problem.
Step 3: Identify the alternatives
This step requires you to look for many different solutions for the problem at hand. Finding more than one possible alternative is important when it comes to business decision-making, because different stakeholders may have different needs depending on their roles. In this step, you will list all possible and desirable alternatives.
Step 4: Weigh the evidence
This is the stage where all the alternatives are critically analyzed as to how each would address the problem. It could start with identifying the pros and cons of each option and eliminating alternatives from those choices. You could also use a SWOT analysis or a decision matrix to analyze all the alternatives. Finally, place the alternatives in priority order, based on your own value system.
Step 5: Choose among the alternatives
This is where you decide on which alternatives best suit a solution to the problem. Consider all the information you have gathered and how this decision may affect each stakeholder. Sometimes the right decision is not one of the alternatives, but a blend of a few different alternatives. Effective decision-making involves creative problem-solving and thinking out of the box, so avoid tilting to clear-cut options.
Step 6: Act
Once the various stakeholders have come to terms with your chosen alternative, it’s time to put the solution into action. Create an implementation plan so that your team is on the same page for the next steps. Then put your plan into action and monitor progress to determine whether this decision was a good one.
Step 7: Review your decision and its impact
This step allows you to monitor and evaluate your decision. You refer to the success matrices identified in step 1. This is how you determine if this solution meets your criteria for success.
You may take the following questions in reviewing your decision.
- Did it solve the problem your team identified in step 1?
- Did this decision impact your team in a positive or negative way?
- Which stakeholders benefited from this decision? Which stakeholders were impacted negatively?
This decision making process is very much applicable in the Analysis of Business Problems (ABP) course in LBS and in real business life situation in general.