AN APPROACH TO MAKE BETTER DECISIONS

3 Jul

The essence of management is making decisions. Managers are perpetually involved to measure alternatives and make decisions for a wide range of problems. Just like we have different managerial styles, there are different decision-making styles. Decision-making is the heart of strategy deployment. Making decisions involves uncertainty and risk, and decision makers have varying degrees of risk aversion. It must be coherent, relevant and rapidly taken. Decision making also involves qualitative and quantitative analysis and some decision makers prefer one form of analysis over the other. Decision making can be affected not only by rational judgment, but also by non-rational factors such as the personality of the decision maker, peer pressure, the organizational situation, and others.

The most essential raw material when making a decision is your Information. Organizations today have access to almost unlimited amounts of data – sales, demographics, economic trends, competitive data, consumer behavior, efficiency measures, financial calculations, etc. However, many decision makers in organizations feel mazed and bewildered. They have islands of data and still are not capable of making the correct decisions, or understanding where they really are. They fall under the hallucination that mere data is enough. If we have the data and facts, then what more do we need? In today’s connected digital economy, it is very easy to get data yet it is difficult to convert this data into meaningful information for a perfect decision making.

Here are few approaches you can adapt to make better decisions.

  1. Work on the right decision problem. Be careful in stating the problem, and avoid unwarranted assumptions and option-limiting prejudices.
  2. Specify your objectives. Determine what you want to accomplish, and which of your interests, values, concerns, fears, and aspirations are the most relevant.
  3. Create imaginative alternatives. Alternatives represent different courses of action, and your decision can be no better than your best alternative.
  4. Understand the consequences. Determine how well different alternatives satisfy all of your objectives.
  5. Grapple with your tradeoffs. Since objectives frequently conflict with each other, it becomes necessary to choose among less-than-perfect possibilities.
  6. Clarify your uncertainties. Confront uncertainty by judging the likelihood of different outcomes and assessing their possible impacts.
  7. Think hard about your risk tolerance. In order to choose an alternative with an acceptable level of risk, become conscious of how much risk you can tolerate.
  8. Consider linked decisions. Many important decisions are linked over time. The key to making a series of decisions is to isolate and resolve near-term issues while gathering information relevant to issues that will arise later.

To know more on how we have created better decision systems, please talk to Shaughn Knight.

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