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Decision-Making: How do we take decisions?

Knowledge, News
By Nicolas Oury On January 27, 2016
Decision-Making: How do we take decisions?

Decision-making: 3 approaches

On a daily basis, everyone has to take decision: What do I take for breakfast? What time do I need to leave to be on time to my meeting? What is my main task today at work? Should I contact this person?

There are different manners by which we are taking decisions. The main ones are described here:

decision making approaches

Tradition

“We ALWAYS did it this way. Why not doing the same way again?”

Obviously, sometimes it works. Sometimes not…

Gut feeling

“I am not able to clearly explain why, I know, I have the feeling, I have the impression we have to do it this way”

Intangible, irrational way of deciding but it does not mean that the decision will be wrong. It is just not justified by evidences.

Information-based decision-making

“Let’s gather some facts, analyze information, identify some evidences and let’s decide for the most rational choice”

Evidence-based, information-based decision making.

Let’s focus on this one: information-based decision-making.

Information-based decision-making

8 steps to edit an action plan

decision making

Identify the decision to be made

It seems obvious but the first step is actually to decide what we have to decide on. I need to take actions to acquire new customers. I need to take actions to reduce my recurring costs.

Identify required information

You now need to identify the information you need to take your decision. Once done, identify where you can get this information.

Collect raw facts & figures

Collect the data you need. Combine all sources to get a transversal view of the facts your want to analyze.

Discover information

Measure your information with KPIs. Use dashboards and self-service dashboarding solutions to easily navigate in your data, slice and dice across silos.

Gather findings

This is a key step: navigating in your data you finally discover (or get the confirmation) a specific pattern in your business data: 90% of my best customers are more than 40 years old and are coming from this specific region. Top 15% of my customers are representing 85% of my total gross margin.

You have been able here to define a correlation between the event you are analyzing and some concrete facts.

Develop & Evaluate alternatives

Leverage your findings to define potential scenarios on which action plans could be taken to impact this portion of your business.

Rate each scenario based on inherent risks, incurred costs, chances of success and potential impacts.

Submit recommendation

Elaborate a recommendation based on the rating performed previously.

Edit action plan

Define the steps and actions going forward on this subject.