Whether you’re thinking of changing jobs or starting your own business, every decision in life requires critical thinking, time, and effort. Having the ability to make effective decisions is important because no one will intervene for you.
The purpose of strategic decision-making is to align short-term and long-term goals. So, if you’re looking to launch a new product, your strategy includes setting goals, assessing customer needs, and assessing your competition. At the same time, other variables such as frustration and uncertainty must also be taken into account.
Harappa Education’s decision-making process guides you through the five-step process of strategic decision-making to set clear goals, simplify your strategy, and evaluate your options. Have the right set of tools to handle both personal and professional decisions. Let’s look at the types of decision-making and the strategic decision-making process.
Types of Strategic Decisions
Several types of strategic decisions must be made while evaluating your business needs. It can be a high-impact decision, such as defining your target market and advertising strategy, or a low-impact decision, such as ordering your next lunch.
There are three types of strategic decisions:
These decisions have a significant impact on your business plan.
These decisions involve internal and external stakeholders such as team members and customers.
This includes everyday decisions like choosing a restaurant for a team dinner. It doesn’t affect your business strategy.
Strategic decision-making process
Professor Max H. Bazerman and Professor Don A. Moore conducted extensive research on decision making in their 2012 book, Judgment in Management Decision Making. Here are five common steps in Harappa’s decision-making process, based on their research:
Defining the problem makes it clear what you want to achieve and what your intentions are. You can identify the question you want to answer. For example, a business goal might be to expand, create a new team, or simplify a payroll system.
Breaking down different factors such as cost, time, and resources will help you systematically evaluate your options. This is the determining factor in how to choose the right solution for your needs. Metrics are not always easy and there may be several factors to consider. Focus on choosing criteria that are relevant to your goals. For example, if you are looking to enter a new market for your product, you will consider factors such as target audience, growth opportunities, and marketability.
Weight the standard
Once the criteria are established, they can be ranked in order of importance. For example, if you are considering opening a new retail store, criteria include location, budget, and accessibility. Ranking each element based on importance will help you make the right decisions. This requires a degree of discretion combined with technical know-how. Evaluating a criterion may require input from multiple stakeholders.
The second and final step in the process is to rank the options according to criteria. Narrowing down the locations to A and B in the aforementioned example, you can assign a number to each option based on accessibility criteria and see which of the two is more appropriate. This simplifies the evaluation process. Focusing on the overall benefits of a decision can lead to a more sensible solution.
Make the final decision
Finally, it’s time to make a decision. After carefully considering each step in the strategic decision-making process, choose the option that meets your criteria. There is no one ideal solution and you may have to sacrifice a few things along the way. But the most important thing is to arrive at a solution that meets your needs. Use your judgment and intuition to make decisions.
Your decision may depend on your specific business needs and long-term goals. Each strategic decision-making process is unique and there is no one-size-fits-all approach. Harappa Education’s decision-making process guides you on best practices to adopt in your decision-making process. It also introduces key concepts on how to navigate problems in strategic decision-making. Learn about each framework through real-life examples from expert faculty.