essential decision making steps
Classify visible phenomena by severity using decision attributes.
|Know the risk taken applying a risk based approach.||Generate decision options considering data, risk and expected results.||Opt for the best option considering previous experience and risk policy.|
|Preserve the organization’s corporate memory and demonstrate knowledge during decision making.|
Whether we are deciding for a new customer or trying to select the candidate for a job, we make plenty of decisions where we sometimes have a gut feeling about the answer. Should we question that instinct or go with it?
Decision makers are often told to go with the first answer that pops into their head, but the evidence suggests they might want to be careful about which options they should trust. When instant answers just appear to pop into our minds, the Nobel prize-winning behavioral economist Daniel Kahneman refers to this as “System 1” or fast thinking. This contrasts with the slower, more considered “System 2” thinking, where we actively consider risks taken before coming to a conclusion.
Business management face daily uncertainties and issues when making decisions. These decisions are growing more important at the same time that they are increasing in complexity. Countless executives want to make them better—but how?
By classifying the decision alternatives, either in nominal decisions or decision categories will reduce the ‘gut feeling’ decisions that may expose the organization to uncertainty.
Decision options should be subject to a risk assessment and careful analysis. A thorough definition and documentation will allow to draw the boundaries of a decision framework and limit the risks taken.