That the current era of economic uncertainty may have been ushered in through a series of poor government and corporate decisions is implied through the rear view mirror. Could some of the events that shaped todays crises have been avoided through better decision making processes? Thomas Davenport (2009, p. 117) presents examples of “decision making disorder” evident in both the public and private sectors and offers a framework to guide managers in making better decisions in the future.
His premise lies in the ineffectiveness of the individual decision-making process resulting in dire consequences for the organization. Davenport provides a framework to guide managers in adopting a more analytical and systematic approach, resulting in greater effectiveness. He posits that the use of data, especially analytics embedded in automated systems can be powerful tools when balanced with informed human judgment. Davenport presents no new information entailing the decision making process.
He does, however, raise the question of why the majority of organizations continue to rely on intuition and ignore proven tools and methods without regard for the evidence pointing to their effectiveness. The author warns that without proper prioritization and systematic review of the decision making process, success remains a gamble. Article Highlights According to Davenport (2009), allowing individual managers to make decisions without a systematic analysis has severe consequences that result in languishing profit margins.
In spite of the resources available, most organizations fail to implement the recommendations that would help managers employ better decision making processes. The author notes that while these processes do not guarantee better outcomes, they certainly increase the potential (p. 118). Davenport (2009) outlines a four-step process to improve managerial decisions, the components of which are identification, inventory, intervention and institutionalization. He suggests mangers begin by prioritizing the top decisions required to achieve a goal.
He states: “without some prioritization all decisions are treated as equal, which probably means that the important ones won’t be analyzed with sufficient care” (p. 118). He goes on to stress the importance of identifying key decisions in in order to examine all variables through an inventory process to determine effectiveness and lay the groundwork for organizational communication. Subsequent to identification and taking inventory, considering all parameters of the decision, the appropriate intervention should rise to the surface.
The final step is the institutionalization of the decision making process, for which Davenport (2009, p. 119) recommends hiring “decision experts” in guiding managers through the process. Davenport (2009, p. 119-122) cites two examples of organizations who improved the decision making process: Educational Testing Service (ETS) and The Stanley Works. Meeting with great success, ETS has expanded the new processes to evaluate and prioritize all product changes as well as apply the methodology to handle new prospects.
A center of excellence was developed at The Stanley Works that created an analytical tool for sales data and new potential sales opportunities. According to the author, due to automated decision processes created by the center of excellence, the company realized a 6% growth in gross margin. Although highly in favor of analytical tools, Davenport (2009) warns of reliance solely on automation, and cautions managers to use their expert human insight to monitor how well analytical tools are working. The decision making process should always be a human endeavor with analytics only a part of the overall toolbox.
Significance of the article Davenport (2009) raises a universal concern encompassing the impact of poorly thought out organizational as well as individual decisions. The decisions of today are the realities of tomorrow, and in spite of the myriad of excellent resources available, “few organizations have reengineered their decisions” (p. 117). The author presents an excellent argument for the necessity of a systematic decision making process as well as the use of analytical tools to provide reliable information in order to make sound decisions. Corporate CEO’s exist that agree with the concepts and actively ngage in systematic decision-making processes.
Donna Thompson, CEO of Access Community Health Network in the Chicago area is one example. She shares her ritual of going through the same decision-making process before taking any action, and offers “good decision making isn’t as much about having all the right answers as is using a process to ask all the right questions” (Reed-Woodard, M. A. 2006p. 164). Gully, Stainer and Stainer (2006), in their study on moral decisions within organizations, have also found a systematic process to yield the best decisions.
The authors describe an organized “balance sheet” designed to prevent disordered thinking as a model of cooperative business behavior. Their findings include the need for systematic decision-making and state “the moral decision making maze needs ordered steps of asking questions and providing answers that can readily be applied to solving problems and dilemmas in business” (p. 194). Davenport’s (2009) article continues with accolades for analytical tools within automated systems as long as managers thoroughly understand the models.
Jim Ciampaglio CEO of NeoSpire exuberantly claims the success of an analytical sales tool used to manage leads and store sales information and states this tool “helped us change who we are as a sales organization” (McKay, L. 2010). Executive decisions lay the foundation for business strategy: poorly thought out decisions lead to less than optimal results and systematic decision making takes the emotionality out and puts the issue in an objective framework, leading to better outcomes. Organizations integrating this type of framework reduce the risk of moving ahead with a faulty plan.
Davenport (2009) states while managers are buying and most likely reading resource material providing the basis for better decision making, few actually adopt the recommendations (p. 118). Conjecture rather than interviews with key decision makers is offered to support this particular viewpoint with the implication that this may be due to the failure to connect bad outcomes to faulty decision making Conclusion Davenport (2009) does an excellent job of tying the process of decision-making to an organization’s ultimate failure or success.
His thought provoking discussion as to what exactly transpires during the individual decision making process and why organizations need to gain some control over this process makes intuitive sense. The success of the author’s suggested framework for making decisions is well supported by the organizations cited in his work, with confirmations easily found in other studies such as Gully et al (2006). Further research is recommended examining the decision making processes generally employed by organizations before conclusions that support Davenport’s (2009) negative assumptions can be drawn.
The author does not support his claim that only a few companies employ a systematic process and is biased in his perception of the” poor calls made in both the public and private sectors” in recent years. Overall, Making Better Decisions provides food for thought and raises the question that if Davenport’s (2009) assumptions are in fact correct, why is it that corporations continue to allow managers to use more intuition than systematic processes to arrive at decisions that impact the organization’s bottom line?
Courtney from Study Moose
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