Some Important Aspects Of The
Business Decision Making Process

The business decision making process has some unique characteristics that need to be considered. It's not always simply a rational process where you define the objective, gather information, create a list of alternatives, make a choice and implement and evaluate the decision.

The size of the business, the mission and values, the availability of such things as expertise, finance and technology, the economic climate, the competition and the number of people affected may be very important factors.

Let's have a look at some ideas that should be considered in any business decision making process.

 

Who's making the decision?

And who should be making it? Does the decision-maker have experience in this area? Or is there somebody better qualified? For example, is the CEO or a top executive making this decision himself or is s/he enlisting the help of others? The Vroom Jago model is useful in this situation to clarify who should make the decision and take the responsibility.

The situation is obviously different in smaller companies. If a company comprises one or two people, the question arises if they should be making the decision alone or, for example, should they include those clients who will be profoundly affected in this particular business decision making process. Even if it's only for the stages of gathering information and/or creating viable options.

Sometimes it's obvious. If one of two directors is an expert in a particular field it makes sense that he makes decisions in that area and the other goes along with it. Sometimes it's not so obvious, and it's worthwhile asking the question.

 

Is this a strategic decision?

Or is it a tactical or operational one? Strategic decisions have to do with the identity of the company, the vision, the direction it is moving in. They organize the company to move into the future over the long-term. Tactical decisions are medium-term decisions about implementing the strategy. Think mission statement. Operational decisions are about the day-to-day functioning of the company.

This is important for several reasons. If all the decisions are tactical and operational, and there is no strategy, the company will not do well. (I work long hours, and even help the staff out, but we don't seem to be going anywhere.) If they are all strategic with little or no tactics or operational decisions, the company probably won't even get started! (There's loads of opportunities out there and we have lots of ideas but we cant seem to get it together.)

Just because it's an operational decision doesn't mean it can't have an impact into the future. If you are making lots and lots of operational decisions it may mean you haven't established the processes and procedures in the company. The idea behind having procedures is that you and your employees know what to do in certain situations. There is no need to be making decisions every time. And having clear processes and procedures can have a major effect on a company moving into the future.

Operational decisions may need to be made on the spot. Strategic decisions should take more time!

 

How many people will be affected?

If there's going to be a big change for people, as part of your business decision making process you need to work out how to 'get them on board', how they will make the transition in a way that they agree to.

You could also consider the decision from different people's perspectives as well. Edward De Bono's Six Thinking Hats is one method of doing this.

Excellence comes from having many choices. Wisdom comes from having multiple perspectives.

- Robert Dilts

 

Is the decision aligned with your values and principles?

The decision should obviously be aligned with the vision and mission of the company. And while American corporations have many of the legal rights of an individual, and people may hide behind the idea that "the company decided…", YOU are responsible for the business decision making processes in your company.

Make sure you're happy to live with the decision!

The UK Institute of Business Ethics suggest three simple questions to verify the result of your business decision making process is ethical. Paraphrased, they are:

  • Is it okay for others to know what I have decided?
  • Have I considered potential harmful effects and taken steps to avoid them?
  • Will my decision be considered fair by all affected parties?

The last question is a bit tricky, because it may be difficult to determine 'all those affected'. However, if you can answer yes to all of of the above, you're on the right track.

 

And remember…

You're a human.

You make mistakes.

And you have emotions.

Emotions affect your thinking.

 

Better business decision making process?

You can help yourself by continuing to improve your decision making skills, and in particular by having some decision making models that you're comfortable with and that are effective for you.

One of the better teachers is experience, the more you practice your business decision making process, the better…

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