Three factors of effective decision analysis
1 Comments Published by John Dillard on Sunday, October 08, 2006 at 10:20 AM.
Decisions come in a wide variety of sizes and shapes, any of which can mean success or failure for an organization. At one end of the spectrum are transactional, high-volume decisions like choosing among many suppliers of a particular commodity; at the other end are extremely infrequent, high-stakes decisions made by executives in the strategic planning process.
When we look at decisions and how to get them right, there are three factors to consider regardless of the size and type of decision.
1) Strategy. Ok, we will admit that this is a grossly overused and misused word. Here's the point: if you don't know why you are making a decision it's pretty hard to get it right. When analyzing a decision, learn first why the decision is being made and how it is intended to advance the strategy of your organization. No decision is small enough for strategy to become irrelevant.
2) Decision method. Once you know why you're making a decision, you need to know how to do it. Having a deep understanding of the nature of the decision is critical here. Is it a high frequency decision or is it an annual decision? Is it inherently a high human interaction decision or could it be automated? Is it a subjective or objective decision? Once you know the character of the decision, you can choose a method. There are many choices, from group consensus to executive directive, to more sophisticated and predictive approaches like real options, ANP, AHP, conjoint analysis, and the like.
3) Decision technology. We don't advocate particular technology approaches to decisionmaking, but technology can be your best friend in the decisionmaking process. Once you know how you're going to make the decision (see #2), you can then identify who makes it, what information they need to make it, and when they need that information. Application of technology can be as simple as using a solid prioritization tool, or as sophisticated as using data mining, ERP systems, and identity management to increase the precision and depth appropriately with what's required for the decision.
Obviously, there are many other factors to consider, but covering these three bases when you're determining whether you're making a decision effectively will get you a long way toward success.
When we look at decisions and how to get them right, there are three factors to consider regardless of the size and type of decision.
1) Strategy. Ok, we will admit that this is a grossly overused and misused word. Here's the point: if you don't know why you are making a decision it's pretty hard to get it right. When analyzing a decision, learn first why the decision is being made and how it is intended to advance the strategy of your organization. No decision is small enough for strategy to become irrelevant.
2) Decision method. Once you know why you're making a decision, you need to know how to do it. Having a deep understanding of the nature of the decision is critical here. Is it a high frequency decision or is it an annual decision? Is it inherently a high human interaction decision or could it be automated? Is it a subjective or objective decision? Once you know the character of the decision, you can choose a method. There are many choices, from group consensus to executive directive, to more sophisticated and predictive approaches like real options, ANP, AHP, conjoint analysis, and the like.
3) Decision technology. We don't advocate particular technology approaches to decisionmaking, but technology can be your best friend in the decisionmaking process. Once you know how you're going to make the decision (see #2), you can then identify who makes it, what information they need to make it, and when they need that information. Application of technology can be as simple as using a solid prioritization tool, or as sophisticated as using data mining, ERP systems, and identity management to increase the precision and depth appropriately with what's required for the decision.
Obviously, there are many other factors to consider, but covering these three bases when you're determining whether you're making a decision effectively will get you a long way toward success.
