For better or worse, our decisions and those of the other members of our organization define today’s realities and tomorrow’s outcomes. In a world that is becoming increasingly knowledge based, more and more members of an organization are making impactful decisions every day; thereby extending decision-making’s importance from the executive suites to the desks of the vast majority of professionals.
Decision-making can be categorized based on the time frame in which associated actions will yield observable results. Near-term decisions are often supported by predetermined guidelines to enable more rapid decision-making while long-term decisions, clouded by the ever increasing uncertainty of changing conditions, rely more heavily on broad philosophical principles and decision-maker experience. The four general decision-making categories are:
Near-Term Decisions: decisions supported by policies, procedures, schedules, and regulatory guidelines
Category One: immediate actions taken in response to emergent conditions as directed by procedure. These decisions seek to seize advantage of momentary opportunities or avoid adverse consequences associated with rapidly changing conditions. Decisions of this type should be supported by procedural guidance whenever possible to improve consistency and predictability of response; thereby minimizing the organization’s risk exposure. Examples include: buying or selling of commodities when a target price is reached and actions taken in response to changing operating system conditions.
Category Two: day-to-day choices regarding activities and resource allocations. These decisions have immediate impact on the organization and may have unrecognized or less predictable long-range impacts. Decisions in this category are frequently supported by pre-established performance standards, policies, and schedules. Examples include: daily work scheduling and task assignment and procurement choices between vendors for a one-time purchases.
Long-Term Decisions: decisions made in the absence of procedural guidance and shaped by market trends, regulatory policies, and societal norms
Category Three: intermediate range decisions made in response to more slowly evolving trends where it is believed a particular desired outcome may be achieved in the days, weeks, or months ahead if a particular course of action is pursued today. Decisions in this category may have both near- and long-term impacts on the organization. While not directly supported by policies, procedures, or regulatory guidelines, these decisions often leverage guiding principles or intent to establish a target end state. Examples include: decisions made in response to slowly degrading equipment where failure is likely, vendor selection where contracts will be entered into for annualized periods, equipment leases other than hourly or daily rentals, monthly scheduling, and hiring and termination decisions for first line management positions and below.
Category Four: long-range or strategic decisions define near- and long-term actions seeking to achieve results that will be years in the making. While influenced by the organization’s mission, vision, values and regulatory policies, these decisions are largely shaped by broader market trends. Subsequently, decisions in this category have the highest degree of uncertainty because of their long time horizon and the increasing uncertainty associated with market prediction over time. Examples include: construction of new facilities, major equipment replacements, expansion of product lines, mergers and acquisitions, and hiring and termination decisions for senior managers and executives.
Regardless of their impact time frame and the immediacy in which they are made, all decisions go through a similar process that begins with condition recognition and ends in action. Phases of decision-making include:
Identification Phase: condition evolution, condition recognition, condition reporting
Scope and Significance Identification Phase: condition scoping, condition resolution cost-benefit and risk assessment, action need determination, action response prioritization
Action Plan Development Phase: alternative development (including cost-benefit and risk assessments for each alternative), alternative selection, and communication and action plan development (for the selected alternative)
Action Plan Implementation Phase: communication and action plan implementation, follow-up condition monitoring, decision evaluation, and action plan adjustment
Organizational Capabilities and Cultural Development Phase: decision-making process training, performance expectations established and reinforced, questioning attitude developed and reinforced, decision-making self-assessment and lessons learned communication
The final phase, Organizational Capabilities and Cultural Development, is an enabler of decision-making. This phase occurs on an ongoing basis; creating an organizational mindset that enables both the recognition of decision opportunities and helps the organization learn and grow from its decision-making successes and shortfalls. Strong execution of the Organizational Capabilities and Cultural Development Phase is a hallmark of organizational excellence.
Focus of the Decision-Making Forum
Decision-making is a complex process that when done well enhances both strategic planning and tactical business execution. Materials within this forum explore the four categories of decision-making, underlying concepts, and performance best practices and warning flags. The following articles, podcasts, documents, and resources cover those topics critical to effective decision-making.
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- Evaluating Decision Options, part 1 of 3
- Evaluating Decision Options, part 2 of 3
- Evaluating Decision Options, part 3 of 3
- Best Practice – There Can Be Only One
- Best Practice – Multidiscipline Teams
- Best Practice – Broad Commitment
- Best Practice – Identify the Target
- Best Practice – Ongoing Decision Evaluation
- Best Practice – Follow-up Assessments
- Best Practice – Identify the Decision-Maker
- Best Practice – Observe the Opportunity or Problem First Hand
- Best Practice – Never Let It Go Without Saying
- Best Practice – Establish Decision Execution Performance Measures
- Best Practice – Evaluate the Front Page Headline
- Best Practice – Diverse, Redundant Data Sources
- Best Practice – Document the Decision-Making Process
- Best Practice – Balanced Use of Knowledge and Experience
- Best Practice – Identify the Unintended Consequences
- Best Practice – Identify the Worst that Could Happen
- Best Practice – Informal Advisors
- Best Practice – Dealing with Assumptions
- Best Practice – Identify the Decision Timeframe
- Warning Flag – Logic Fallacies Introduction [SL]
- Warning Flag – The Gamblers Fallacy [SL]
- Warning Flag – Weak Analogies
- Warning Flag – ad hominem: Personal, Not Issue Attacks
- Warning Flag – Distinction Without a Difference
- Warning Flag – The Silent Nod
- Warning Flag – Intellectually Empty Assertions
StrategyDriven Podcast – Special Edition
- Decision-Making Base Model
- Stakeholder Commitment Evaluation
- Opportunity and Problem Statement Development
- Decision Alignment Model
- Great Escapes by Michael and Jerry Useem
- The Effective Executive by Peter F. Drucker
- Decision Points by George W. Bush
- Secrets of Power Problem Solving by Roger Dawson
The StrategyDriven Team
Headquartered in Acworth, Georgia, StrategyDriven provides insightful business performance improvement advice to business leaders in Atlanta, the Southeast, throughout the United States, and around the World. Our world class experts are recognized leaders in their chosen fields.
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