Strategic Decision-Making Process

When you are looking to mesh your long-term goals, short-term goals, and mission statement, then you are working through the strategic decision-making process. These procedures let  you provide focus and constancy to your organization. The process is lengthy, but the payoff is worth the time.

Strategic decision-making procedures help people at all levels of your organization better understand the target. This lets stakeholders, employees, and customers know what your business stands for and represents. Strategic decision-making procedures usually involve measurable standards of quality and quantity.

Define Your Mission

Begin your strategic decision-making process by creating a mission to show the world why your business exists. The purpose statement should define the long-term goal of your business.

Maybe your business exists so you can make as much money as possible. Or, maybe your business exists because you want to change the way the world orders sandwiches. Your company might exist because you need something to keep you busy in retirement. Whatever the goal is, state it clearly, then live by it.

You can craft your mission in a stylized way, or you can state it succinctly. You can print it on your business card or keep it in the back of your mind. The mission is your goal and should help better understand how you plan to conduct daily business. You can share the target with your employees, or you use it to motivate yourself if you are a sole proprietor.

Develop Long-Term Goals

After you have a mission, the next step is to develop long-term goals. The mission statement is what you want to achieve, and the long-term goals will help you get there. Your goals should be realistic, measurable targets that will guide your daily activities. When you write your long-term goals, don’t forget to include any values that you added to your mission.

A long-term goal for your sole proprietorship could be your future plans to hire an employee. Another goal for a money-making venture is to make enough money to retire comfortably. Your sandwich-making goal might include eliminating the need for single-use plastics in the next year.

Focus on Short-Term Goals

You cannot forget to include short-term goals in your strategic decision-making process. These are the little daily goals you have regarding cash flow, customer contacts, and marketing decisions. Even though they are short-term goals, you should build them with your long-term goals in mind.

For example, if you plan to stop using single-use plastics within one year and you run out of plastic straws, don’t reorder them. Find something to replace them that isn’t made of plastic. Your short-term goals can speed up your long-term goals.

Strategic Decision-Making Steps

There is nothing easy about strategic decision-making. People learn how to do it through expensive college courses. Creating a mission or vision statement and developing both short-term and long-term goals takes more time than most people think.

Strategic decision-making is planning for the future. Since it is impossible to predict the future, you will need to blend your experience, instinct, and wisdom. You also need to understand problems and solutions and the elements that affect them.

Understand the Problem

Before you begin formulating decisions, missions, and goals, you need to understand the problems that your business will face. These are issues that your goals can help solve. You might need to attend to some problems immediately, while you might be able to wait on others.

Your problems might be minor, or they might be symptomatic of significant issues that will repeatedly plague your business. As you peruse these problems, your goal is to create an objective that you can accomplish. The aim should be closely related to the issues your business faces regularly.

Learn About the Problem

Once you understand the problem, your next task is to collect information about it. When you are working through strategic decision-making, you should start by analyzing one problem. Although, you might find that one problem opens up into several. The information you collect about the issue should include who, what, when, where, and why.

You are looking for reasons why the problem happens and who is involved when it occurs. Look for what the challenge entails, along with where and when it happens most frequently. You can find the answers by talking to people who are affected by the problem and by digging into your data files.

You can use data to understand what is happening. You can also use the data to find out where and when the problem keeps occurring. You can use anecdotal information to understand why. As you dig into records and listen to stories, go beyond the obvious to find the real issue.

Problems often happen when we neglect our biases, ask poor-quality questions,  and fail to dig deeply into data.

Formulate Solutions

Once you better understand the problem and the facts surrounding it, you are ready to create solutions. When you are formulating solutions, accept everything.

Don’t worry if the solutions need more information or if stakeholders will challenge them. Brainstorm without silencing anyone, do not edit your thoughts. Get them out and evaluate them after you’ve built a substantial list.

Once you have compiled your list, then you work through the options. Evaluate the feasibility and decide which ideas you like the best.

As you build your solutions, look at the potential outcomes of each one. Use if-then statements to help you decide how to predict what could go wrong or right. Work together to determine what the worst possible outcome could be, then figure out how to avoid it.

Eventually, you will be able to weed out the ideas that won’t work in your organization. The same goes for the ideas that could potentially work. Those are the ideas you should further investigate.

Make a Choice

Eventually, you have to make a decision. One of the options will become the best. This is where strategic decision making becomes tricky. To decide, you should look at the facts you have uncovered about all of the choices. Then, trust your intuition and use some empathy.

While intuition and empathy are far from strategic, you are deciding the future. No one can predict the future accurately. So, you have to use some emotional reasoning. Because of the inaccuracies that come with making choices with the future, you must trust that your choice might be far from perfect. And that’s okay.

If you are working with a group, you might have difficulty coming to a consensus. Many groups choose to meet in the middle by selecting a decision that offers the best promise of success.

Put the Decision to Work

When you make your choice, the next step is to plan how you are going to activate the decision. Along with putting it to work, you need to foresee how to measure the progress of the decision. Create a starting point so you can compare any data you have collected to the status of your organization at the point before implementation.

You need a step-by-step procedure that helps you get the process started. Once you decide exactly how to get started, you should tell the stakeholders what is happening and what they can expect. Someone will have to prepare resources so implementation can occur. Stakeholders might not release all of the funds, as they may want proof of success first.

Organizational leaders often want to see subjective timelines that include objectives. The new deadlines should be rigid so that you can develop measurable data. After your first or second round of data evaluation, your timelines can change as you have a better understanding of the process.

Experts recommend reviewing the decision. Look at what works and what doesn’t work. This way, you can learn from the situation. Often, the best learning happens when evaluating part of the decision that did not work. Investigate what failed and what you can do better next time.

Don’t let problems hold you back. Return to your original planning and see what other ideas can complement what is working. In a well-run organization, you can take strategic risks because stakeholders trust their employees to do what is best. They also trust each other to look for solutions to improve processes.

Challenges with Strategic Decision Making

Stakeholders make decisions with the future in mind. As the future is unknown, choices do not always work out as planned. Your strategic decision-making team can do everything by the book, but the result might not match up with expectations. This and other challenges arise when making any decision about the future.

Being aware of the possible pitfalls can help you better prepare for what might come your way.

Improper Balance of Information

Knowing too much or not knowing enough can be problematic for some decision-making teams. Having too much information can make the process overwhelming. Group members do not know which items are necessary and which are just making noise.

On the flip side, not having enough information can make it nearly impossible to make an informed decision. You need enough information to understand what you are trying to accomplish, but you don’t want too much that you cannot make a choice.

As you are delving through information, check that you have several sources. Having only one source can prove to be heavily biased, which is also a significant problem that decision-making teams must conscientiously avoid.

Trouble Identifying the Conflict

Another critical mistake to avoid is mislabeling the problem. It is vital that you fully understand the problem that you are attempting to solve. In some organizations, issues are interconnected, which makes it challenging to narrow down to one. With quality research and conversations with stakeholders, you should be able to identify the problem.

Strategic decision-making teams should focus on one problem at a time. Selecting too many can weaken the focus of the team and create more issues as time passes.

Overconfidence Rather Than Humility

Some decision-making teams become overconfident in their ability to reach a decision. They may trust their choice too much, but without backing it up with thorough research. Pride often leads to more problems. Groups need to work with realistic and measurable decisions that can be executed by the organization. They need to do this with humility.

Decisions do not always work out as planned. So entering the process of implementation with overconfidence can weaken the organization and create division if problems arise.

Moving Too Quickly

Some stakeholders expect teams to make decisions quickly. As new information arises, groups need time to digest it. When groups are pushed to move too quickly, they can make costly mistakes. Timelines and milestones are often necessary as some decision-making groups can move too slowly. But, slow and steady often benefits in the long run.

Falling Prey to the Halo Effect

When people succumb to the halo effect, they trust first impressions. When making significant decisions, objectivity is essential, and you should not trust the first voice you hear and like. Yes, some strategic decision-making does rely on intuition, but not until the end, after you have evaluated logic and reason. Some organizations only value objectivity.

Do not let your group succumb to preconceived ideas. Follow the steps. Look at the numbers. Find the facts. You are making a strategic decision, not an emotional one.

How to Involve the Strategic Group

As your group begins to work through the strategic decision-making process, you will find that some members participate more than others. To avoid this problem, you must find ways to keep everyone involved. It is also vital that you include different types of thinking to keep the group activity pursuing a workable solution.

Divergent Thinking

To get the group working cohesively, you can use divergent thinking. Group members think about solutions that have worked in the past. Then, they use those solutions to diverge into new ideas. The idea involves using old information to create new ideas. Creative processes often come from this method.

Successful divergent thinking uses elements from ideas that have worked in the past to create combinations for new solutions. Then, as this happens, no one should censor anyone’s suggestions. Instead, group members should encourage each other and complement the thought process to keep fresh ideas flowing.

Often, group members might get stuck in old thought patterns. If this happens, they need to step away for a few moments to clear their minds. Get a drink of water. Take a quick walk. Then, return to the group when ready. Eventually, the divergent ideas will need to be narrowed; this process is called convergent thinking. This is where your group hones the best suggestions.

Divergent thinking is not always easy to do. Some groups need several sessions together before they have the confidence to share openly. In some cases, groups become stale as they share the same ideas with similar patterns. When problems arise, there are a few things that groups can do.

One is to include new group members from different departments. Their experiences can freshen their thoughts. Another technique involves asking questions about the ideas that are changed; this gets people thinking about what they are offering. Some groups like to use traditional brainstorming so that they can open their minds to divergent ideas.

Introduce a New Group Member

For some groups, adding a new member can create tension. But when you do it properly, the group benefits from new ideas. New members do not need to be experts. Often, the best new member is someone who does not know much about the situation. A non-expert brings ideas from other organizations.

Veteran group members often find inspiration in non-experts. The rookie solution is often so different from the veteran ideas that can become stale. Strategic decision-making groups benefit from learning about other industries because their solutions vary so much.

When you add experts to teams, the original team loses confidence in itself. They let the new expert take over and solve the problem. But when an outsider joins the group, even if only temporarily, the group does not feel threatened. Instead, the new non-experts can contribute ideas or can help rework ideas that have been holding back the original group.

Questioning Ideas

Groups that take all ideas at face-value can run into problems. Asking questions can bring groups to better solutions than if no questions are asked. For example, if you have a yoga studio, but no one is coming, you might think that you are charging too much for classes.

But, have you asked about other exercise options in the community? Have you looked into the ages of children in the area? Your studio might benefit from providing a place for children to go while parents exercise. You might not want to add child care, but it might bring people into your business.

As you question your ideas, you might be challenged. It can be challenging to look at ideas that don’t fit with your preconceived notions. But this is the point. When you question what seems reasonable, you get to solutions that you wouldn’t have considered. The idea is to get away from standard answers into creative solutions.

Look into past situations. Ask why you have always done things the way you are doing them. Then, look at motivation and biases, so you can see how emotions are affecting your ideas. When you get through preferences and feelings, you can start to look at logic and reasoning.

Identifying the Problem

If the basis of strategic decision-making is to solve a problem, the key is to identify the real problem. Organizations are complicated, and many have several issues that you need to address. The main problem has usually been around before anyone takes the time to look into it.

The struggle that businesses have with accurately identifying the problem is that they do not communicate well. Therefore, communication issues become a secondary problem that distracts from the actual one.

Organizations need to move beyond secondary problems, and groups get into the real issue by looking at the barriers blocking it and the goals that achieve success.

Strategic decision-making must look at the real essence of the problem, but you cannot do this without looking at what is standing in the way. Outlining the problem, understanding what success looks like, and recognizing barriers will help. The first time through might not have positive results, so learning to identify the problem can help.

Define the Problem

Strategic groups need to know how to structure the problem by identifying the main problem and any necessary sub-problems. In the first stage, you have to define the problem. The definition can be fluid at this point, especially as group members are added.

If you have an empty yoga studio, but your community is full of people who fit your customer profile, your problem is that you have an empty yoga studio. This problem might seem simple in its structure, but it will evolve as you gain a better understanding of it.

Develop the Problem

Once you understand what the problem is, you must start asking questions. This is the time to look deeply into the situation. You’ve got to begin by looking at the facts surrounding the problems.

Why do you have an empty yoga studio? Have you advertised? Do people in the community know you exist? Are you competing against an established exercise facility? Can people afford your rates? What makes you different from other places in the community? When are your classes offered?

Look at the barriers surrounding your problem. Are the barriers the problem, or is the stated problem the real issues? At this point, you should look at relationships between the problem and the issues that exacerbate it.

Getting people into the studio is the major problem, but if you haven’t advertised or if you are competing against an established business, those are real problems, too. So, your success hinges upon several factors. To solve the problem, you have to also work with the sub-problems: competition and advertising.

Creating Diagrams

There are several ways to visualize your problems beyond writing them. Seeing the problem and the factors that contribute to it can help groups better understand how to solve them.

Chain Diagram

One diagram that helps businesses understand the flow of the problem and the relationships of the subproblem is a chain diagram. This simple technique involves putting each issue into a box, then placing the boxes in an order that shows the relationship between them.

For example, if you have not advertised, then “advertising” should go in a box. If you have an established competition, then that should go in another table. “Empty studio” should also go in a box. Place them in an order that makes sense, showing how they connect.

With a simple chain diagram, you see the sequence of events that needs to occur before you can solve the problem. You can use the chain to decide if your problem is the biggest issue or if the sub-problems should take priority. If your goal is to fill your studio, how do you make it happen?

Flow Chart

When you are ready to look at the problem with more complexity, then it is time to craft a flow chart. There are several ways to craft a flow chart, but most include arrows, branches, loops, and solutions. Begin by creating a simple flow chart with limited elements, then as you become more comfortable looking at it, add elements.

You will see how the sub-problems complicate your perceived problem. Some strategic groups end up using their flow charts as punch lists when they implement the solution. Include plenty of yes-no questions in your flowchart so you can see what happens if you do or do not address subproblems.

Tree Diagrams

All visualization techniques are meant to make the problem more understandable. Tree diagrams have more branches than flow charts. So, if your problem is complicated, this diagram style might help you better recognize all of the elements.

Where a flow chart includes yes-and-no options, tree diagrams can have multiple choices that take stakeholders into different branches. The struggle with a tree diagram is keeping the options contained. You might become overwhelmed if you draw a tree with too many branches because you will lose control of what you need to accomplish.

List the Problem

After visualizing the problem and getting a better understanding of what needs to be solved, your group is ready to set the challenge and priorities. You can do this by creating your list. At this point, you are not solving the problem, you understand what needs to be solved and the real sub-problems or barriers that are preventing you from success.

Often the sub-problems are challenges that will take time to solve, too. In your list, clearly state the problem in a well-crafted statement that includes the subproblems. Then, list the subproblems that need to be solved, too. It might be difficult to fill your yoga studio if you have not addressed the other issues, not advertising and having established an identity.

Once you know what needs to be solved, then it is time to start working on solutions. This is where the real work of the strategic decision-making process gets going.

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