The Business Case: Why organisations should invest in the optimisation of their decision making

My three core principle in optimised decision-making can be naturally used in building up the business case for organisations to invest in improving the way they make decisions. Here is an example of such business case (minimum viable version of it):

1. The problem statement will be derived once you apply 1st principle of optimised decision-making — Feedback Loop. The retrospective analysis will give you a list of points to improve. This will formulate the ‘problem’ to solve and invest in.

2. Feasibility analysis and Solution Scope are facilitated by 2nd principle — Practical Framework. Applying Data-driven Pyramid will help to formulate exact use-cases to gain efficiency by either automation or through process optimisation. So, you get feasibility, target user groups and clear scope of the solution for the business case.

3. Recurrence and Scale are given by the 3d principle — Continuity. The flow of decisions generated by your management suite and the quantification possibilities of its scale are your direct justification points for the decision-making optimisation project.

Now, the only missing bit to formulate a tangible business case is the ROI assessment. Here we may reuse some already available estimations of management ‘population’ in organisations. As per several studies, management constitutes about 10–17% of staff in an average organisation.

This means that roughly every 6th FTE is a manager of some sort and tasked to make operational decisions. See, for example, HBR: Excess Management Is Costing the U.S. $3 Trillion Per Year.

Thus, if you increase productivity of 17% of your productive workforce by say 5% — you get roughly 1% increase in your total productivity on a recurring basis. And, having in mind that managerial decisions will have a wider impact, this 1% most probably will give multiplied savings and efficiency gains at the organisational scale.

So, what was this all about: there is a good business case for decision-making optimisation. And once you start treating managers and decision-making processes in a more structured way — this optimisation business case becomes very feasible. This feasibility, in its turn, defines a more pronounced need to review how business decisions are usually made in your organisation.

In conclusion, I want to add that it can be obvious, that there will be two major types of decisions :

• those which are ‘easy’, something that can be solved quickly, possibly with less stakes, or less impact, or which are highly revertable.

• and those which are ‘complex’, where stakes are higher, maybe with higher impact, more costly to revert and fix etc.

For the majority of management, it is common sense to devote more time to complex decisions. And practice shows that, in this case, there is a high tendency to involve some professional analytics (internal or external to the organisation).

What I wanted to show in this set of articles is that even in ‘easy’ decisions it is still good to have a framework behind the process of deciding. Not only because the decisions can be then explained if needed, but also because they can be ‘reused’ and built upon to strengthen the ‘decision-making’ skill of the management and thus elevate overall organisational decision-making culture.