Sunday, November 29, 2009

How to Make Better Decisions

Decision making is an essential part of business in all organizations. In traditional companies this power is typically held by few managers at the top of the organizational ladder. Lean companies however strive to empower their employees to make decisions at all levels through access to data, knowledge of evaluation methods, and defined standard processes. Nevertheless, decisions are necessary in all organizations and the following these guidelines can be beneficial.

  1. Timing. Neither making snap decisions nor always having to “sleep on it” is the best approach to the time factor involved in making decisions. Make your decisions based upon the circumstance and the time available. Within the realm of practicality, give yourself enough time to take the following decision-making steps.

  2. Define the problem. Be careful not to confuse symptoms of the problem with the real problem.

  3. Identify the options. Try to get at least four alternatives. Since you may be too close to the situation, seek others’ input.

  4. Gather the facts. In order to evaluate your options, you must gather the facts about the ramifications of choosing each option. List both the pros and cons of each option.

  5. Evaluate the options. Usually this will include a comparison of costs, time required to implement and the expected end result of each option.

  6. Choose and put into effect. Key, and often neglected, aspects of implementing decisions are to communicate the decision to the affected parties, outline why the decision was made, why the particular option was picked, what actions are required on their part and what beneficial results are expected.

There are several common pitfalls in decision making that should be avoided if you want to be effective.

  1. Deciding alone. There are many benefits to consulting with others on a decision: gaining different perspectives, more resources to draw upon and more commitment to the decision by those consulted.

  2. Every decision a major decision? Not every decision requires a lengthy decision-making process. Don’t get bogged down with minor problems. If they’re minor, make a reasonable decision and move on.

  3. The last time I was wrong was when I thought I made a mistake.” No one is always right. If you’ve made a bad decision, admit it and get started on fixing it. Remember – it’s impossible to force a bad decision into being a good one.

  4. “Boy! I sure wish I hadn’t.” Just the opposite of pitfall #3. Because no one can be right all the time, don’t waste your energy regretting bad decisions. Get on to current issues.

  5. Failing to use past precedent. Maybe the same problem has come up before and been effectively solved. Perhaps, if it has come up enough, there is a company policy that covers it.

Not every decision will be right but if you avoid these pitfalls and follow these six guidelines you will find you have many more right decisions than wrong decisions. Remember, the only thing worse than a wrong decision is no decision.


  1. Great points on decision making. This is also a great area to integrate 6sigma die hards. I like your approach and it is very much like DMAIC with a twist. You could easily integrate the DMAIC process with the rules above.

  2. Ankit you are right. This is DMAIC or PDCA type of process. I might even characterize it as a CEDA process. CEDA - Collect data, Evaluate, Decide, Act then repeat.