There is a tendency in financial management to opt for an extreme valuation of strategic capital planning, overlooking other aspects that are equally important for a company’s success - chief among them, rapid decision making.
A skilled manager is capable of making sound choices, with a view to increasing their company's productivity, safety and profits. In specific situations, leaders need to know when to seal a contract, and when to invest more in the business.
In this context, data collection assumes a crucial role. The grouping of certain data yields strategic information, which can be used to make the right decisions and guide your team in the right direction.
What is decision making?
Decision making is the process of selecting and choosing an option, and excluding other possible alternatives. Within a company, the decision making process relates to the evaluation and selection of a strategic path to be taken, within a sector, market or process. Decision making within a company impacts the results which it can expect to achieve.
Given its impact, decision making should be based on a data and information collection process which helps companies identify which options are most appropriate, and which align with their strategy and objectives.
The corporate decision making process falls to a group of professionals whose aim is to improve the functioning of the company. It is a continuous and dynamic activity which permeates all other activities within the organization.
As a continuous activity, the decision making process plays a vital role in the functioning of a business. After all, it represents the combination of scientific knowledge, technical skills and professional experience of everyone involved.
Processes which do not assess the company's objectives, available options and data related to the issue at hand have no reliable basis, and are more likely to lead to mistakes. With the right information, your company can make an assertive and efficient decision.
Here are the five main steps of a rapid decision process:
- Identify the main question or problem to be resolved;
- Assess the current situation, making a list of alternatives and options;
- Collect and organize data and information on the subject;
- Note the company's goals;
- Choose the best option and monitor it.
Plenty of tools can assist these steps, one of which is a decision tree maker, whose design lets users evaluate every possible decision, explore its results following a set of conditionals, visualise and classify data according to the conditions of your project, and commit to a solution.
1 – Identify the problem to be resolved
Within a company, decision making usually revolves around a problem, need or strategic issue related to the company's objectives. Identifying the central issue is the first step towards making the best choice.
Look at what caused the problem or need in the first place - finding the cause of an issue is key to making the right decision to resolve it.
2 – Assess the current situation, and make a list of alternatives and options
Having identified the problem and its causes, look at what is going on within the sector today, related to demand.
Decision making involves assessing where the problem is, and which specific process is impacting the whole. Without looking at the big picture, it can be especially difficult to ascertain what could be improved, and which decision may lead to this improvement.
By observing the current context and understanding the causes of the problem, possible solutions and choices will naturally appear.
Making a choice means defining which path to take. So it is important to make a written list of every possible solution.
3 – Collect and organize data and information on the subject
Without data, we don’t know what works and what doesn’t, which processes need fixing, where the real problem lies, and other variables.
Without this data, you may as well be working in the dark. Data and information are like flashlights lighting your way, reducing the likelihood of making the wrong decision.
As access to technology grows, finding tools that offer fundamental decision making data has never been easier.
A good manager should use tools that, in addition to collecting information, allow them to analyze the situation as precisely as possible. Tools that process information and generate accurate graphs and reports will optimize a manager's decision making.
4 – Note the company’s goals
Another important element in corporate decision making is the company’s strategic planning and objectives. These can help you determine which path will help you to achieve your goals.
To make the best possible decision, managers should be fully aware of:
- their company goals;
- the profile of their customer;
- their products;
- the competition.
By drawing up a solid strategic plan that takes into account all the points mentioned above, you’ll increase your chances of making a correct decision, since the objectives, the market and your decision will be in alignment.
Decisions are not always made by a single person. In some cases, a group is responsible for deciding which path to take. Knowing how to lead a decision making process is vital, so that emotions or egos don’t hinder your progress.
Allow everyone present to offer their opinions and make sure that, when the decision is made, everyone is in agreement. Even when decisions are made as a team, establishing leadership to organize its execution is important.
5 – Choose the best option and monitor it
The time has come to make your decision. Having gathered and understood all the necessary information, you have what it takes to make your choice. Once you have, follow the results closely, monitor key indicators and evaluate the impact of your decision.
It is always possible to optimize the results obtained and adapt as long as they are on your radar thanks to data and indicators.
Not even the best planning in the world can entirely rule out unpleasant surprises. Maintaining emotional control during situations of conflict is a key trait for any leader.
The most effective decisions should generate improved performances that lead toward your long-term goals, guided by the business’ core values.
Re-evaluate your spending and assess the likely consequences of your actions constantly. If you follow these decision-making tips, you’ll be able to make smarter, more efficient decisions on a number of matters.
Making decisions is important, but if your ideas don’t result in real action, then they are of little use. Therefore, it is very important to engage your team so that they perform their tasks as best they can - one more reason to understand the five steps for rapid decision making, and how to put them into practice.
