Decision making has been a popular topic of academic research and best-selling business books, due, “As soon as questions of will or decision or reason or choice of action arise, human science is at a loss.”
– Noam Chomsky
Management of an organization makes decisions on a daily basis. Some of these decisions are in response to arising opportunities, business challenges, or new regulatory requirements. What is the best way to respond to the last competitor’s move? Where should we locate the new call center? How can we improve our customers’ experience? How can we meet the new tax reporting requirements at a minimal cost?
Decision making has been a popular topic of academic research and best-selling business books, due, perhaps, to an apparently fascinating fact: seemingly intelligent people are perfectly capable of making blatantly stupid decisions. It’s a complex subject which, I have to admit, I am passionate about.
As an IT executive, manager or professional, you are often expected to contribute your ideas and recommendations to the decision making process. Here’s where it gets interesting, if the experience of my clients and those Techrepublic readers who contacted me, is any indication. There seems to be a lot of difficulty among even the most senior IT staffers in communicating their thoughts clearly. As far as I can tell, the issue lies really in the inability to present a clear and compelling business case, structured in the way it can be understood by the others. At the same time, this is a critical skill that can dramatically advance the career of any IT executive, director, manager, or professional.
Now, we can help with this here, on Techrepublic.com, to the benefit of many readers. This blog commences a series on business cases set to improve the ability of IT communicate with the rest of organization and, notably, with executive management. The first entry is on the rational model of decision making.
Rational decision making model
Malcolm Gladwell noted in one of his brilliant books that “Truly successful decision making relies on a balance between deliberate and instinctive thinking.” While highly developed intuition coupled with the willingness to apply it is somewhat part of the decision maker’s character, the deliberate part relies on the information received from humane and inanimate sources alike. The quality of this information can be greatly improved if it’s structured appropriately.
Figure A illustrates the “deliberate” decision making process. I’ll talk about the sections.
Decisions are made to address one or more objectives. Sometimes they’re conspicuous, and other times, they’re concealed, either deliberately, or through a false belief that their clarity is not important, or because of the decision maker’s inability to properly identify causal relationships between known facts. Sometimes, we fail to treat the root cause but treat symptoms instead.
Before everything else, the objectives need to be clearly understood.
There are usually several ways of meeting the stated objectives, of which status quo is often one. One should strive to explore as many alternatives as possible and isolate three or four for serious consideration.
Which one of the available alternatives is the most appropriate? The set of decision criteria is like a sieve which is typically comprised of the following layers (constraints):
- Corporate Vision, Mission and Values. Is the alternative congruent with them?
- Strategy and ongoing projects. Does this alternative fit our strategy? Does it dovetail with the rest of the project portfolio?
- Costs and Benefits. Every alternative solution comes with its unique set of benefits and costs, both quantitative and qualitative.
- Risks. Often overlooked, the risk profile of each alternative should be considered.
To be most efficient, the recommender needs to be aware of the criteria applied by the decision makers. This necessitates knowledge of the company’s business, awareness of the current economic conditions and other elements of business alignment that I discussed in previous blogs.
4. Preferred Alternative
Once the decision criteria are applied to the set of alternatives, a preferred alternative will emerge. It represents the best course of action available.
How to use this model
Picture yourself responding to a challenge of providing a recommendation on how to deal with a problem or seize an opportunity. The former governor of the Federal Reserve, Alan Greenspan, used to ask his officers, in his usual quiet voice: “Please give me your best thinking on this topic.” They tried their best, as you can imagine.
Now, follow this sequence:
- Restate the objectives to make sure everyone knows you understand them.
- Speak about available alternatives, their pros and cons, benefits and risks.
- Identify the preferred solution. If the attention span of the audience is short, it often makes sense to do so in the beginning of the message.
- Explain why this solution is preferred by discussing the selection criteria.
You should end up with a crisp and compelling message which will showcase your thinking.
There are several considerations that are fundamental to a successful case, as I have learned through my consulting work. Here are the top five.
- Always ensure you understand the objectives. Try to get them directly from the person who sets them.
- Always strive to understand the real driver behind the stated objectives.
- Do an exceptional job in developing a set of viable alternatives. When it comes time to choose the preferred one, it’s too late to develop more of them. Besides, you don’t want additional alternatives foisted on you as you make your recommendation.
- Understand the real decision criteria well, so that your recommendation resonates with the decision makers as reasonable, intelligent choice.
- Always identify the preferred alternative. This is your opportunity to shine.
Ilya Bogorad is the Principal of Bizvortex Consulting Group Inc, a management consulting company located in Toronto, Canada and specializing in IT- business alignment. Ilya can be reached at firstname.lastname@example.org or (905) 278 4753