The 6 Elements of Effective Decision Making

Successful leaders don’t pull the creativity trigger to make effective decisions. However, they follow a systematic process!

Poor decisions can lead to wasted resources, missed opportunities, and detrimental outcomes. That’s why important decisions can’t be left to chance or superhumans. It is a critical skill to learn as a leader, and a collaborative activity to ingrain in your organization.

Peter Drucker, the legendary management thinker, outlined a six-step systematic process for making high-quality decisions that produce real results.?

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By following these steps, you can enhance your ability to make the right call in complex, and uncertain situations.

Step 1: Classify The The Problem

The first step is properly categorizing the kind of problem or decision you're facing.?

There are four types of occurrences:

1) Exceptional Events: These events are extremely rare and unusual that are unlikely to repeat.

2) Unique Events: They are sporadic and unpredictable in nature. They can be singular or exceptional for your organization, but they are generic in the industry.

Tailored response is needed for every singular circumstance.

3) Generic Recurring Problems: These are frequent issues arising from chronic conditions. They are rooted in the existing systems and processes.

They require you to fix the root causes through improved systems, processes, and rules. Otherwise, you will spend substantial efforts fixing leaks without rooting out the real cause.

4) Early Signs of New Generic Problems: Emerging problems that signal new potential systemic issues.

Each type of problem requires a fundamentally different approach and solution. Misdiagnosing the problem leads to failure. Applying the wrong approach dooms efforts from the start.

By far the most common mistake of the decision maker is to treat a generic situation as if it were a series of unique events—that is, to be pragmatic when lacking the generic understanding and principle. The inevitable result is frustration and futility.

Step 2: Define The Problem

After classifying the problem, you need to clearly define its core elements that constitute the problem as it is.

You can start by asking probing questions such as:

• What is this really about??
• What's most important here??
• What's the key to understanding the situation?

A common trap is an incomplete definition that seems reasonable but overlooks vital factors. That’s why you need to keep testing and refining your definition against the full range of facts to avoid this.

As Peter Drucker put it: Effective decision makers always test for signs that something is atypical or something unusual is happening, always asking: Does the definition explain the observed events, and does it explain all of them?

Don't act until you fully grasp the heart of the matter.?

Step 3: Set The Decision Specifications

Next, start to determine the requirements, objectives, and goals for an optimal decision.

Ask yourself:?

• What are the objectives the decision has to reach??
• What specifications must be met for success??
• What are the minimum goals it has to attain??
• What are the conditions it has to satisfy?

A decision that does not satisfy the boundary conditions is worse than one which wrongly defines the problem.?

This understanding provides a standard for evaluating potential choices. Early in the beginning try to avoid incompatible or unrealistic specifications that create unrealistic hopes rather than sound solutions.

Step 4: Seek The Best Solution, Don’t Compromise

With the boundaries set, seek out the very best solution that perfectly fulfills the specifications. Only after identifying the ideal can you judge smart compromises. Without grasping the optimum, you can't distinguish between right and wrong compromises.

The decision maker gains nothing by starting out with the question, “What is acceptable?” For in the process of answering it, he or she usually gives away the important things and loses any chance to come up with an effective—let alone the right—answer.

Don't start by immediately asking "What can I get approval for?" This surrenders breakthrough possibilities to mediocre, or at best, good thinking. First find the right solution, then refine it.

Step 5: Plan The Implementation?

While defining the problem and setting the specifications are the most important elements in the effective decision making process, this step is the most-time consuming.

To move from good intentions to solutions, you need to convert your decision into action by identifying the execution steps, responsibilities, and requirements before finalizing your choice.?

Here’re important questions before starting the implementation:

• Who needs to know??
• What exactly will they do??
• Do they have the necessary capacities and incentives?
• What kind of people do we have to make this decision effective??
• And what can they do?

As a leader you must make sure that the responsibilities for the actions are clearly assigned, as well as that all people involved are capable of carrying out these actions.

Don't rush and take a decision until you’ve answered these questions clearly. Now you’re set to have the wheels in motion.

Step 6: Setup The Feedback Loop

The final step in the effective decision making process is monitoring against actual results. Information systems and metrics provide insight, but leaders must also go and directly observe what's unfolding.?

Genchi Genbutsu, or go and see for yourself, it’s a common Japanese management practice. It allows you to test assumptions against reality so you can adapt quickly, and avoid complete reliance on reports.

Decision makers need organized information for feedback. They need reports and figures. But unless they build their feedback around direct exposure to reality—unless they discipline themselves to go out and look—they condemn themselves to a sterile dogmatism.

Direct observation exposes nuances and undercurrents that impact success. Rigorous yet flexible follow-up completes the loop, leading to better decisions over time as knowledge compounds.

The Power of a Systematic Process

Making effective strategic decisions is tough. By adhering to Drucker's six-step approach, you can increase your odds of success. It provides a structured methodology to harness your judgment. Over time, sound processes compound into excellence.?

Consistent application of Drucker’s principles will empower you to lead confidently and achieve positive change. With focus, analysis, and real-world feedback, you can become a truly effective decision maker.

References:

• Drucker, P. (1967). The Effective Decision. Harvard Business Review. Retrieved from: https://hbr.org/1967/01/the-effective-decision

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Mohammad Elshahat