The Big Picture of Business
Decision Making Models


The vast majority of business decision making models used in organizations nowadays are of the rational type. These models typically involve a listing of possible alternatives, with a comparison of the pros and cons of each. Then a rational, logical and sensible approach to picking the best option.

Some of the more complex business decision making models also compare and contrast the risks associated with each alternative. The aim is to at least minimise any risk or damage.

These models are often represented visually and you can read details and explanations of many of these tools and techniques as well as their pros and cons.

Is it a pro... or a con?

There is a lot of emphasis on accountability, or in some cases being able to shift the responsibility! The rational models are useful for this because it's possible to work in percentage possibilities and assign numerical values to alternatives and consequences.

The overall idea, of course, is to be able to predict the future and work out ahead of time the steps that need to be taken. When you consider the amount of chaos in the universe, this can obviously get very tricky at times! It's a major source of stress and anxiety because the business decision making models are designed to set the goal and the steps to get there.

The goal OR the steps

But if you think about it, you can't even do this for getting to work in the morning. If there is unexpected roadworks, you have to use a different route to get there. But you may not know about that ahead of time. So if you want to actually get to your workplace, you have to change the 'how'.

If you keep the 'how' in place, for example, 2 miles down this road, second left, third right, first left and then first right, if one of these exits is blocked and you still follow the instructions exactly, then you're going to end up someplace else other than your workplace!

So you get to choose the 'how' or the 'what', but not usually both. But both things are exactly what many of the business decision making models are trying to establish. It's no wonder they have to build in more and more contingency plans.

"Stay committed to your decisions, but stay flexible in your approach."

- Tom Robbins

Theory vs practical

And besides, many of the business decision making models were designed in labs using decision making theory. They were not designed around how humans actually make decisions.

When Gary Klein began to study people who made effective decisions, he noticed something very interesting. Based on the situation and the information available, they set an outcome. Based on their experience, intuition and skill level, they chose a particular action plan, a 'how to get this done' scenario.

They mentally rehearsed it and if they found no flaws, if they thought it would work, they went ahead. If there were potential problems, they altered the action plan, ran another mental simulation, and if this worked, they went with it.

If at any stage they considered their action plan would not work, they jettisoned it completely and started again. At no stage in this recognition primed decision making process are there any comparisons of alternatives or contrasting of consequences. It's just not what they did.

Using your intuition

Much research has suggested that we use this kind of process in up to 95% of our decision making, including in business situations. Most people are not actually aware of how they make their own decisions. Even when they think they are using formal business decision making models, they are often running this kind of process in order to run the business models. But using intuition is frowned upon!



"Wherever you see a successful business, someone once made a courageous decision."

- Peter Drucker

When using your business decision making models, with all the worksheets filled out, and all the numbers as evidence to go ahead, this hardly qualifies as a courageous decision.

When everyone and their mothers are telling you one thing, and you know that the other option is right for you and will allow you to have your own life, and you go with it, now that's a courageous decision...!

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