What is Strategic Decision Making?
When maintaining a successful business, every decision you make will have a tremendous impact. Even small decisions such as which instant messaging service to use in the workplace can have long lasting implications for a company’s operation. Strategic decision making is a process companies can implement to help them consider all of the influences a business decision will have. The general goal of strategic decision making is to maximize immediate results while minimizing long term risks. Strategic decision making should always be backed by relevant data that informs the decision making process. With an effective strategic decision making process, companies can grow and thrive in their market.
How to Identify the Problem
No two problems are exactly alike, but there are similarities between many of the challenges facing businesses. From the perspective of strategic decision making, there are two categories that issues can fall under. These categories are issues born out of necessity and issues born out of opportunity. Let’s take a closer look at each of the categories.
⦁ Necessity
Issues that threaten the continued success of the business in a major way are issues of necessity. With these sorts of issues, it is necessary for the business to find a solution to the issue or the business could fail. In these situations, companies need a reliable plan for approaching the issue. Strategic decision making can help businesses successfully navigate issues of necessity by identifying a solution backed by data.
Let’s take the example of a hypothetical third-party warehouse that handles the shipping services for an eCommerce brand. If the eCommerce brand continues to be successful, it will continue to require a higher output of shipments from its warehouse. This places extra stress on our hypothetical warehouse, which is now faced with an issue of necessity. The warehouse must either find a way to operate more efficiently or risk being dropped by the eCommerce brand for not being able to keep up. This is a basic example of a decision being necessary for a business’s survival.
⦁ Opportunity
The other kind of challenges that face businesses are ones that offer an opportunity. These sorts of issues likely don’t threaten the business directly, but they do provide the company with a chance to do something great. A company’s ability to take advantage of these opportunities can skyrocket it into success. Strategic decision making can help in these situations by providing them with a framework for how to best take advantage of these situations.
Let’s take the example of a hypothetical startup technology company that has recently found some success. The company is now financially stable and is already being recognized by the public. The success of the startup has led to an overflow in revenue that the company must now decide what to do with. After following its strategic decision making process, the company decides the best way forward is to invest in its staff with a leadership development consultant. By doing so, the company hopes to find continued success and an increase in worker loyalty. In this situation, the company isn’t at risk much at all, but the decision still has a major impact. This is a textbook example of a decision being made after a business is presented with an opportunity.
Stages For Making a Strategic Decision
Every business will need to create a strategic decision making process that is tailored to its own individual needs. However, there are a few steps that every business can benefit from including in that process. Here are a few of the most important steps to any successful strategic decision making process.
⦁ Analysis
An analysis phase is the step of the decision making process where information is gathered about the situation facing the business. During this phase, you should identify the type of issue being dealt with and collect data to quantify the impact it is having on the company. Another important step in this phase of the process is to settle on relevant KPIs or key performance indicators. KPIs are metrics a company can measure after making a decision to understand its effectiveness.
⦁ Decision
The decision phase is arguably the most important step of any strategic decision making process. During this phase of the process, your team should take the time to understand all of the data gathered in the analysis phase. Only after all of the information has been considered can your team make an effective decision. After a plan has been created, discuss any possible pitfalls with your team. If none can be found, then all that’s left is to put it into action.
⦁ Implementation
Implementation is generally one of the last few steps of the decision making process. At this point in the process, all of the planning and deciding are done and all that’s left is to follow through with the plan. Sometimes, the situation changes during the implementation phase and the business is forced to adapt. It might be necessary to return to the analysis phase of the process to ensure your plan is still worthwhile.
