We go through a decision-making process day in and day out. From the mundane to the most important decisions, we go through a thought process that can either be simple or complicated. When making personal and professional decisions, knowing the best course of action can be difficult, especially when the stakes are high.
While it is impossible to know for sure whether your decision is the right choice, having a solid strategy in place to approach decision-making can help you achieve consistently better outcomes.
This blog post will explore strategic decision-making and how to make strategic decisions.
What Is Strategic Decision-Making, And Why Is It Important?
Strategic decision-making is attempting to understand the impact of a course of action or inaction on a process, event, or organization. In business, strategic decision-making involves examining how a course of action will affect the bottom line, image, or motivation of employees of a business.
This process is important to help businesses:
- Maximize short-term results and minimize long-term risks.
- Facilitate participation and learning within the organization to improve performance and outcomes.
- Improve efficiency and fast implementation of ideas as the structure of strategic decision-making makes implementation a natural progression.
- Drive growth as it helps the business to make sound and proactive decisions consistently.
- Gain an avenue to assess the different parameters of growth, organizational structures, and processes.
Things to know about strategic decision-making:
Every decision made by an organization must be in line with its goals and future projections. To make better, consistent decisions, it is important that organizations keep the following in mind:
1. VMGO (vision, mission, goals, objectives):
Businesses must keep in mind the goals, objectives, mission, and vision of the organization during the decision-making process. This will ensure that the decisions made are consistent with the organization and not just a replication of a different organization’s processes.
2. SWOT (strengths, weaknesses, opportunities, threats):
Every organization has its strengths and weaknesses. Decision-making must necessarily take cognizance of what makes the most sense in that it allows the business to capitalize on its strengths and tap into opportunities as soon as they arise.
Another important thing to keep in mind is the available research or data. Data must be put into the right contexts for the best outcomes. Data collected must be as relevant and as accurate as possible. Inaccurate data can skew your decision-making and trigger bad outcomes in the long run.
It is impossible to make decisions strategically by considering data. However, while there is a place for human instinct and opinion, make sure that the decision-making process is not tinted with bias. We all have unconscious biases that can affect objective thinking and decision-making. Being aware of them can help you better manage them.
Step-By-Step Process To Decision-Making
1. Identify the need
The first step to strategic decision-making is identifying what needs to be done or achieved, and why it is important to your business. Do you need to adopt a new business strategy because of low sales? If you do, why is it necessary to change the marketing strategy and not the product development strategy? You need to ask all the important questions to help you identify the specific need.
2. Understand and assess the time factor
Once you understand what needs to be done, you must assess the timing. Is it an urgent decision that needs the quick diversion of resources for damage control, or is it a strategic decision intended for a proactive business approach? This will help you consider the fastest process to arrive at a logical solution.
3. Analyze data
Collect data and evidence relevant to the decision you want to make and analyze the data to draw out patterns and gaps you need to fill. Market research is a very important part of the process. If you do not have the resources to conduct your own research, you should get your data from reliable sources that offer such services that relate to your industry.
4. Evaluate your options
This step requires you to come up with options, alternative solutions and approaches to tackling the problem or need at hand. At this stage, it is advisable not to rule out any options as this may lead to you not properly assessing your options.
5. Ask Experts
Understanding complex data and finding correlations for practical outcomes is daunting. It is a task that requires a good grasp of numbers and analysis and the technical knowledge to translate them into practical business solutions.
Seeking expert opinions will help you make better decisions. It is usually advisable for organizations to encourage their executives and employees to get an online MBA. This is a low-cost, flexible way to learn problem-solving and gain the technical skills required for strategic decision-making within the organization.
6. Make a choice and implement it
Once you have an expert opinion on the different possible outcomes based on the data and information you have, and this has been placed side by side with your organization’s goals, objectives, mission and vision, you can then make the choice that’s most likely to succeed. You can also choose the next best alternative considering the context as your plan B.
7. Implement and review
After implementation, you should review the impact of your decision and see if it has achieved the predicted outcomes or at least comes close to doing so. If it doesn’t, then you should review the possible impediments and repeat the strategic decision-making process.
Making good decisions is essential for anyone in a leadership role. This guide provides a step-by-step approach to making sound strategic decisions, based on the principles of rational decision-making.
If you’re looking to improve your ability to make tough choices and take your business or organization to the next level, then this guide is for you. Applying these steps should help you overcome common obstacles and better assess potential outcomes before making any final decisions.