Five Pillars in Building Decision-Making Capability

Digital business is becoming complex and uncertain, decision making is more often a complex scenario, especially for the large, strategic decision making. Decision-making today needs to take a systematic approach, leverage both gut and information, logic and intuition, interdisciplinary knowledge and group contribution. Here are five pillars to build decision-making as a solid business capability and improve business competency.

Information: Information and decision-making are intimately connected and interdependent. Many information-savvy organizations have invested in tools and created analytic teams to make informed real-time decisions. Information allows you to build an actionable insight on making effective decisions as well as how to take actions to move from one level to the other. Information as input to the decision-making does not absolutely determine the decision but allows the decision-maker to exercise their judgment.  It applies to the context and environment in which decisions are made. In high-effective organizations, information is refined to knowledge, insight, and wisdom, enabling making the right decisions at the right time.
Resource: Making the decision in a timely manner requires resource awareness. Effective resource allocation and utilization is an important factor for a timely decision making.  The resources include the available information, effective decision-making framework or tools, the heterogeneous team with cognitive difference, or internal decision 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 information/knowledge management capabilities, etc. Resource limitations are significant and decision makers who are not cognoscente of what they can or cannot do will always make a bad decision.
Process: With increasing complexity and overwhelming information overloading, many decisions are difficult and time-consuming, and decision making is more science than art. A sound process to frame decision is critical. You need a sound process to frame the decision, spec out your options, weigh them appropriately with the right people, and actually make a decision. The full life cycle of corporate information management is to ensure that decisions have been made by the right people at the right time via the right processes to solve the right problems. In traditional organizational setting, decision making often lies in informal and closed group power centers within the organization. The lack of clarity usually surrounds the context of the decision to be taken. To fine tune decision-making processes, it is important to identify the bottleneck in decision-making scenario and choking point. If the decision-making scenario is well designed and executed, you have the highest probability of getting the best outcome in the state of knowledge accessible at the time of decision.
Tools: We live in the era of digital convenience. There are many great tools around for either helping to make effective decisions or collecting useful information. A collaborative tool is better for strategic decisions. Most strategic decisions involve many people with different objectives, an effective collaboration platform will enhance communication and improve group decision making effectiveness. Analytics is the great tools for improving decision maturity as well. With an effective process and efficient tools, if you mine, cleanse and improve the data to produce information, then combine that information and visualize it in different ways, then you gain organizational knowledge and from that knowledge, you can make excellent tactical decisions.
People: People are the ultimate decision makers, not tools or information. For decision-making to be effective, the decision-maker must have enough knowledge to make their decisions rich in information and significantly different from the available data. It is important to understand the psychology of decision-maker. The psychology to make a decision is embedded with the "choice" process (which includes identification, contemplation, evaluation, and selection of a universe of alternatives) within the thoughts block. Often making decisions is all about making the right choice to fit different circumstances. That's why "the most relevant aspect" of thoughts is choices...because that's ultimately what drives actions. And how effective the decision is depends on how capable the decision maker can climb the knowledge pyramid from data to information to insight and wisdom.

One significant effect of digitization is increased velocity, complexity, unpredictability, and a need for a faster response to changes in businesses based on effective and efficient decision making. Decisions are necessary as a result of limited resources in time, knowledge, capital, and people. The distinction between the decision quality and the outcome is important. The big “HOW” of decision making becomes more transparent, logical and scientific, and it is based on the decision-making capability of the organization. Follow us at: @Pearl_Zhu