A Framework For
Business Decision Analysis

Effective Executive

Peter Drucker provides a very nice framework for business decision analysis in his book The Effective Executive.

It was originally written in 1966 and his ideas are every bit as relevant today, if not more so. In it, he defines what he means by effective and executive. He says that efficiency is doing things right, and effectiveness is doing the right things.

An executive is a knowledge worker who is hired to make decisions and take actions that have an impact on the performance and outcomes of an organization. He outlines the important characteristics and traits of an effective executive. Although he doesn't mention decision making until later, competency in any of the traits requires effective business decision analysis.

1. Know where your time goes

Time is the scarcest resource, so it's important not to waste it. He points out that many people do things they are not necessary, things that could be better done by others, and things that waste other people's time. Good recording and managing of your time will allow you to do business decision analysis of a completely different calibre.

2. Focus on results

Drucker points out that putting your attention on outward contributions and results allows for more effectiveness then attention downwards on efforts. When people ask themselves 'What can I contribute?' it allows for communications that makes teamwork possible. It also allows for individual self-development which in turn stimulates others to develop themselves.

3. Make strength productive

An effective executive's decision analysis is organized around utilizing people's strengths, rather then the absence of weaknesses. He suggests you feed opportunities and starve problems...!

4. Set priorities

Know what to do and know what not to do. Do one thing at a time, and do it well.

5. Be yourself

Stop trying to be someone else!

6. Decision making

An effective executives business decision analysis includes finding those decisions that are significant and strategic, rather than just solving problems.

The steps in his decision making process include-

  • Is this a generic situation or unique? If it's generic the decision will establish a rule or principle. If it's unique, it is dealt with on its own merits
  • What are the objectives the decision has to reach? What are the boundary conditions?
  • What solution satisfies these conditions, because there will be compromise of some sort. He points out that the things one worries about almost never happen and objections and difficulties nobody had considered suddenly turn out to be almost insurmountable obstacles.
  • Convert the decision into action
  • Check if the actions are producing the expected result

He also considers that getting the facts first is impossible. Opinions count and these are to be encouraged, especially opinions that initially disagree. These allow for alternatives and stimulate imaginations.

More ideas on the business decision making process.

It's a skill...

Drucker believes that this kind of business decision analysis can be learnt. Acquiring the knowledge, skills and habits he outlines will allow for an increase in effectiveness. And self-development of the effective executive, he says, is central to the development of the organization.

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