Decision Excellence: What Does it Take?

Performance is directly attributable to the quality of decisions taken by the people involved. This is true in sports, war, government, economics, personal life - I can't think of a domain where it does not apply. 

So one would expect to see businesses  institutions, agencies, governments and individuals striving systematically for decision excellence. But this seems to be true in only in a minority of cases. 

This presents a paradox and a wealth of opportunities. The paradox is that the problem has been with us for centuries, so why wasn't it nailed long ago? The opportunities arise because when one is starting from a low baseline, substantial improvements can be achieved relatively easily. 

What does it take to achieve Decision Excellence? That is the question this blog addresses.

I'm not going to address the character aspects: the commitment, passion, focus, and steadfastness of purpose; let's take these as given. My concern is HOW, given the heart and the head are suitably configured, one achieves Decision Excellence. What are the components, and how do they fit together? 

I see four interacting components. Any one of these on its own can help move you forward, but when all four are brought into play, their powers multiply. Conversely, leaving any one of them out is like standing on a chair with a missing leg.

The good news is that it is now feasible to bring all four into play in a rapid, balanced and cost-effective way, to achieve outstanding results.

The four parts are the red ovals in the figure below.  They constitute business goals: solving the right problem, understanding the data, working with not against the physics, and managing predictability.

The discipline that delivers each is shown in blue.  Let's go through them one by one.

1. Solve the Right Problem

This is about ensuring we have the most appropriate conceptual framework for thinking about the decision, so we can be sure we have all of the pieces of the puzzle on the table, and that we understand how they fit together.  The way to achieve this is with Systems Thinking, a graphical discipline for building shared understanding and constructing coherent narratives.

2.    Understand the Data

We need to make appropriate use of the available data so we can understand what is happening and how things are changing. This is where Data Science is so powerful. It may even provide clues as to why the changes we see are occurring.  It needs to be recognized, however, that data can only tell us about the past, and what we are trying to manage is the future. We need to understand the past, but that's not all we need.

3.    Work With, Not Against, the Physics

If a business tries to build revenue by increasing its sales force, but fails to invest appropriately in growing delivery capacity as well, that would be working against the physics of the situation and would hinder performance. There is a well-developed quantitative discipline for this, called Strategy Dynamics. Applying it quickly yields important and tangible insights about how to improve future performance.

4.    Manage Predictability

Predictability is the probability of different outcomes, given all the known risks and uncertainties. The great majority of decisions are taken with only superficial estimates of predictability: risks and uncertainties may be captured in a "risk register", but they are almost never incorporated into financial models in a disciplined way. Applied Information Economics is the appropriate discipline here. 

  

I will expand on each of these in my next posts, but to repeat the good news:  it is now feasible to bring  all of these powerful disciplines into play in a rapid, balanced and cost-effective way, to achieve outstanding results.

How does your corporation/department/institution rate for Decision Excellence? 

Take this 5-minute survey to kick-start your thinking.

For more information, contact:   Dr George A Simpson at  gsimpso4@gmail.com