Wednesday 9 May 2018

A Framework for Improving Decisions

Smart organizations can improve decision making in four steps:

1.  Identification
2.  Inventory
3.  Intervention
4.  Institutionalization



The four steps to improving decision making.

1.  Identification

Managers should begin by listing the decisions that must be made and deciding which are most important.

For example,

  • "the top 10 decisions required to execute our strategy: or 
  • "the top 10 decisions that have to go well if we are to meet our financial goals."


Some decisions will be rare and highly strategic. 

  • "What acquisitions will allow us to gain the necessary market share?"


Others will be frequent and on the front lines. 

  • "How should we decide how much to pay on claims?"


Without some prioritization, all decisions will be treated as equal - which probably means that the important ones won't be analyzed with sufficient care.



2.  Inventory

In addition to identifying the key decisions in 1 above, you should assess the factors that go into each of them.

  • Who plays what role in the decision?
  • How often does it occur?
  • What information is available to support it?
  • How well is the decision typically made?


Such an examination helps an organization understand which decisions need improvement and what processes might make them more effective, while establishing a common language for discussing decision making.


3.  Intervention

Having narrowed down your list of decisions and examined what's involved in making each, you can design the roles, processes, systems, and behaviours your organization should be using to make them.

The key to effective decision interventions is a broad, inclusive approach that considers all methods of improvement and addresses all aspects of the decision process - including execution of the decision, which is often overlooked.


4.  Institutionalization

Organizations need to give managers the tools and assistance to "decide how to decide" on an ongoing basis.

For example, the managers can be trained to determine whether a particular decision should be made

  • unilaterally by one manager, 
  • unilaterally after consultation with a group, 
  • by a group through a majority vote, or 
  • by group consensus.  
In addition, they can also determine

  • who will be responsible for making the decision, 
  • who will be held accountable for the results and 
  • who needs to be consulted or informed.


Companies that are serious about institutionalizing better decision making can often enlist decision experts to work with executives on improving the process.

For example, the members of a decision analysis group can

  • facilitate framing workshops; 
  • coordinate data gathering for analysis; 
  • build and refine economic and analytical modes; 
  • help project managers and decision makers interpret analysis; 
  • point out when additional information and analysis would improve a decision; 
  • conduct an assessment of decision quality; 
  • and coach decision makers.





Regularly assess and review to improve the quality of your decision making.

An organization that has adopted these four steps should also assess the quality of decisions after the fact.  The assessment should address not only actual business results - which can involve both politics and luck - but also the decision-making process and whatever information the manager relied on. 

The organization should regularly performs "look-backs" on major decisions, and assesses not only outcomes but also how the decision might have employed a better process or addressed uncertainty better.



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