Executive Summary
Let`s be honest from the start: decision-making is a complex process. This set of articles will not give you a magic bullet to crack it all at once. However, this article can give you a decent ground to get thinking and reflecting on how decisions are made in your organisation. It will help to reveal the most promising trajectories once you would set yourself on a decision-making improvement journey.
Systematic approach to decision-making is getting a huge boost in organisations as we are facing growing and all-consuming digitalisation requirements from all sides of the value chain. Clarity and transparency in the decision-making culture of the organisation are the prerequisites for a smooth automation. Or, to approach it differently: the ability to automate more and thus get higher ROIs is directly dependent on the existing organisational decision-making framework.
In this article, I want to show the core principles of decision-making and how this organisational culture or framework is formed and can be employed as a new weapon to fight for greater overall business efficiency. We will also look at key practical aspects of how to join digital and decision-making to propel your organisation to the next level of agility focusing on management effectiveness.
We all are aware of process optimisation frameworks (Lean and 6 Sigma, Agile in some way). But it is commonly overlooked that decision-making is, in the end, also a process that can be (and should be!) optimised. Automation and digitalisation will give greater ROIs, once not only the processes are looked at in some mechanistic way, but once the management decision-making is perceived as specialised and governed activity. Or, in other words, once such management activity is holistically approached as an organisational culture of decision-making.
Digital is slowly but surely invading previously exclusive management domain of deciding where more and more types of problems could be given to algorithms to be solved automatically with automatic decisions. The output of a manager (in essence — decisions) can be optimised in the same way as you may think about increasing the productivity of any other employee. And even more to that, management decision-making optimisation can lead to much greater gains for the organisation than workers’ productivity, because the decisions taken by managers may have a much greater impact and scale than the ‘decisions’ of an optimised employee.
Let`s see how this all can be done, and we start by addressing three key principles of optimised decision-making.
Key principles of optimised decision making
Optimised decision-making is based on 3 key principles:
1. Feedback loop and retrospective analysis are necessary to enable optimisation in decision-making. These are the key drivers of optimisation and are also always surprisingly overlooked pieces of the puzzle.
2. Practical framework to follow and assess progress on the way. I call it Data-driven Pyramid of decision-making. This is a set of guiding criteria to assist you to see where your organisation (or department, or team, or you as a decision maker) is on the way to optimum data-driven decisions and what to do to get even better in it.
3. Continuity of business decision-making (or principle of continuity). What in essence is the acceptance of a simple practical fact: decision-making in business is a flow of decisions. Decision-making should be viewed as a process, continuous ‘production’ process of management and not as an ad-hoc single act of deciding. This principle in particular leads us to managerial productivity and reinforces the business case for investing in decision-making optimisation projects in the organisation.
Let`s go through each of the principles in more detail and for reading and reference convenience I`m covering each principle through a dedicated link:
1. Feedback loop and full-cycle approach in decision-making
2. Data-driven Pyramid of Decision Making
3. Continuity in decision-making and managerial productivity
