Sunday, January 8, 2017

The Effectiveness and Efficiency of Decision Making

What seems to differentiate good decision-makers out from others is their ability to frame issues, problems, and decision options and turn them into the best possible outcomes.

Making a decision is one of the significant tasks for business leadership. However, the high ratio of strategic decisions has been made poorly and cause the catastrophic effect. There is fuzziness in the decisions because there is fuzziness in conflicting criteria. An effective decision can be defined as an action you take that is logically consistent with the alternative you perceive, the information you get and the preference you have. But how to make effective and efficient decisions in the face of today’s complexity and uncertainty.

Align people, process, and technology in decision-making scenario seamlessly: All decisions are difficult and time-consuming as goals and alternatives are continuously being rehashed, debated and tweaked but no one wants to actually make a decision. Therefore, an effective decision-making scenario takes the well-alignment of people, process, and technology, implementing a decision-making software tool does make decision making more systematic; after the initial learning curve, the group decision-making sessions are short, productive and well documented. The process organized through the software helps organize the goals, the criteria and provides a sensitivity analysis tool. As a result, the debate in the decision-making sessions cut out the bickering about the input and more about expected outcome to meet the goals of the group. The group members believe they are making better decisions and they will often go back to review the decisions, update the outcome and comment on what worked and what needs to be worked on. Many are using the decision tool as a "corporate knowledge base" to help make a decision in the future.

The good decision making shall consider both effectiveness and efficiency: Science, technology, and economics focus on efficiency, but not effectiveness. The difference between efficiency and effectiveness is important to an understanding of transformative leadership. Even with the best systems and processes, there are no guarantees that you will make good decisions. Indeed, the fact that something requires a decision will mean that there will be a bunch of associated risks to manage. A decision is a plan to change something in your current situation. A"decision" has lots of connotations of finality. What seems to mark those good problems solvers out from others is their ability to frame issues, problems, and decision options and turn them into potential opportunities, tangible outcomes, and inspirational change and transformation. Efficiency is a measure of how well resources are used to achieve ends; it is value-free. Effectiveness is efficiency weighted by the values of the ends achieved; it is value-full.

Brainstorm possible options and alternative solutions: There is too often a tendency to take a one-size-fits-all approach to decision making, which includes a linear and static decision which commits to a singular path. Decision-making today needs to take a systematic approach, but via nonlinear, collective thinking, the mix of analytics and intuition, and group contribution. Consider and compare the advantages and disadvantages of all options. Select the best option - avoid vagueness or indecisiveness. The thing, however, that the human brain cannot do, is to do a comparative assessment of many decision criteria - both quantitative and subjective, concurrently across many options, initiatives or programs etc, but the advanced decision intelligence tools can help. When leveraging the tool weighing tradeoffs, it's important that the team has determined the relative importance of each factor. Teams, specially with the heterogeneous group setting, work because they bring different perspectives and knowledge to the table. They help to balance out the biases that from which the poor decisions are made. A decision is arguably a choice between two or more options. The greater majority of these options are circumstantially provided. One alternative may have a lot more strengths than another, but all those strengths together may not be nearly as important as the one or two strengths that another alternative has. So effective decision making needs to well blend both information and intuition; think fast and slow accordingly.

Any decision made needs to be applicable in a timely manner: Decisions are necessary as a result of limited resources in time, knowledge, capital, and people. There is no such thing as a perfect decision, but it is always crucial to make the timely decision in order to take the best action you could. People with different personalities approach decision making in different ways. And some have difficulty making any decision at all, which is in and of itself a passive decision “not to decide.” Making the decision in a timely manner requires resource awareness. Resource limitations are significant and decision makers who are not cognoscente of what they can or cannot do will always make a bad decision. Effective resource allocation and utilization is an important factor for a timely decision making. Sometimes internal factors which may influence the decision process include, such as the goals of the decision maker, decision situation, decision context, relevant knowledge, as well as the organizational capabilities and resources. On the other hand, external factors can influence strategic decision-making as well, including technology factors, political and legal conditions, and competition and consumer demands.

“Fast Decision, Slow Decision”: Fast decisions are made of necessity. But a condition of benefiting from considered decisions is having a good decision -making the process to use the time effectively.  There’s research into leadership that basically says, "If speed matters, you need someone with experience - they will make better decisions. If speed doesn't matter, you need someone with "smarts" as then they will have the time to make better decisions than you would get from the evidence alone. Some say, cognitively the shorter time for decision making helps make the decision (right or wrong) more concrete.

Either decision fast or decision slow; the individual decision or group decision, it takes right information, organized processes, efficient decision analytics tools, timely feedback, and follow the fine-tuned decision principles & practices in order to make decision scenario more productive and effective.


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