In business, decision-making is often considered to be the most difficult and challenging process leading to the choice of an action or a belief among a series of possible choices. In fact, it can be both rational and irrational. In business, it is not uncommon for there to be a series of competing perspectives and viewpoints as well as competing expectations.
Right Decision Making Process
Each individual in a decision-making process has the ability to evaluate information. Some people are rational while others are less rational. Likewise, some people have a linear, single-minded perspective while other people are more multi-minded and perceptive. Regardless of one’s perspective, the key to successful decision-making involves taking steps that increase one’s chances of getting a decision right while decreasing the chances of getting a wrong decision. This is where the theory of change management comes in.
Change management involves the deliberate, planned, and effective use of information and knowledge from diverse sources to improve and alter specific decisions and procedures in the decision-making process. According to the theory of change management, “the more choices a manager can take, the better his chances of getting the most desirable results.” A key element in the theory of change management is the ability to recognize and measure the results of decisions.
Each decision involves at least two steps; the first step is initiating the decision and the second step is carrying out the decision-making process. In a complex decision-making process, the initiation of steps is made from a variety of sources and the effectiveness of those steps relies on the effectiveness of the prior ones. The parallel assumption in this principle is that each step is an effective decision making process. Each individual involved in a process has an interest in completing the tasks and in contributing to the collective interest. The objective of this article is to provide practical guidance on the formulation and implementation of effective decision-making processes and the attendant analysis. A central emphasis will be on identifying the sources of uncertainty and exploring the relationships among those sources.
The key elements for a successful decision-making process are: informed decision, options available, alternative outcomes, and a choice to proceed. In order to provide a framework for describing these elements in an understandable way, five steps for a successful decision-making process have been proposed. The first step is to understand the decision and know its various aspects. The options available and the range of possible outcomes are important aspects of understanding the decision. Alternatives to the final outcome and the time scale to reach the final outcome are other aspects that need to be considered in determining the likely impact of the decision.
After assessing the decision making process, the next step is to assess the options and their potential impact on the achievement of the target or goal. In the first place, it is crucial to ensure that all relevant information is available. This includes the range of options, the time scales, the consequences of each option and other relevant information that will support the decision-maker’s decision. The decision-maker must also be aware of the current circumstances and their likely effects in reaching the decision. This includes the costs involved and the implications of changing course and the trade-offs that need to be made in reaching the decision.
The third step in determining the right decision is to gather information on the alternatives. Gathering information helps in deriving the right information needed for the application of the decision-making process. Gathering information on the alternatives enables one to decide upon the appropriate alternative. A decision can be made right even when one gathers information on all possible outcomes but this is not a certainty because there are always options left open.
The fourth step is to analyze the underlying logic of the decision-making process. Arguably, many of our problems with decisions arise from the inability to make decisions intuitively. Intuitive decisions are those that are fast and take the shortest time to execute. However, an often overlooked aspect of the decision-making process is the ability to arrive at a decision after considering all available information. This ability is called reasoning and the ability to reason is an integral part of making sound and practical decisions.