Decision Making

It's not easy to make good decisions about strategy. The material in this section provides a few ideas as to how to improve the decision making.

Making good strategy decisions pays off. A sequence of good decisions usually leads to good results, as indicated by the elated figure at the top of the decision tree below. Making bad strategy decisions is likely to make one feel like the critter at the bottom of the tree.

People generally use one of two basic approaches to make a decision: pattern matching and analysis. Pattern matching is more intuitive and analysis is, of course, more analytical.

When we use pattern matching, we compare the current situation to similar past situations for which good decisions are known. Comparisons are made until a match is found. The decision choice from the prior situation is then applied to the current situation. Pattern matching is very common. We all use it for everyday decisions. It is the approach used for quick-response situations, such as fire fighting, police action, or combat.

The analytical approach is more structured. It involves the following steps:

The frame focuses attention on what the decision is about. Notice that your direction of thought with "Where shall we go on vacation?" differs from you direction of thought if the framing question is "What shall we do on vacation?"

Each question leads you in a different direction, and you want a question that focuses your attention in the right direction.

See our Frames page for more information

The six-step process listed above is something you have done many times. But have you paid much attention to how well you have carried out those steps?

Bad decisions using the analytical approach will result when the six steps are not done well. Watch out for potential errors like those listed in the table below.

Setting the right frame for the decision is the most important requirement for success, and a bad frame is the biggest cause of bad decisions.

For longer-term, strategic decisions, careful use of an analytical approach, combined with a small amount of carefully selected pattern matching, will produce the best results.

Errors to Avoid in Making a Decision

Step in Making a Decision Sources of Error
1. Set the frame. Wrong frame (biggest cause of bad decisions), including bad assumptions, bad success measures, and bad framing question.
2. Define desired result. Wrong frame. Fuzzy goals. Conflicting goals. Incorrect goal definition.
3. Identify possible choices. Too few, too narrow, too similar, too weak, too much business as usual.
Key people missing.
4. Evaluate choices. Many decision traps.
Superficial evaluation.
Biased evaluation.
Bad assumptions.
Key people not involved.
5. Select best choice. Bad selection criteria.
Bad selection process.
Status quo thinking dominates.
Key people missing.
6. Set plan to implement best choice. Step omitted --no plan.
Key people missing.
Incomplete or superficial plan.
Plan not communicated to others.

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