How to Make Better Decisions

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Imagine that your company has been expanding rapidly over the past 12 months. Sales are up 50 percent, but costs and overheads have also increased, so your operating profit has fallen. Decisions need to be made – and fast! But first you're going to need to consider your options...

We make decisions every single day. Some are simple, others are more complex.

Some of your decisions will be so routine that you make them without giving them much thought. But difficult or challenging decisions demand more consideration. These are the sort of decisions that involve:

Uncertainty – Many of the facts may be unknown.
Complexity – There can be many, interrelated factors to consider.
High-risk consequences – The impact of the decision may be significant.
Alternatives – There may be various alternatives, each with its own set of uncertainties and consequences.
Interpersonal issues – You need to predict how different people will react.
When you're making a decision that involves complex issues like these, you also need to engage your problem-solving, as well as decision-making skills. It pays to use an effective, robust process in these circumstances, to improve the quality of your decisions and to achieve consistently good results.

This article outlines one such process for combining problem-solving and decision-making strategies when making complex decisions in challenging situations.

A Systematic Approach for Making Decisions

In real-life business situations, decisions can often fail because the best alternatives are not clear at the outset, or key factors are not considered as part of the process. To stop this happening, you need to bring problem-solving and decision-making strategies together to clarify your understanding.

A logical and ordered process can help you to do this by making sure that you address all of the critical elements needed for a successful outcome.

Working through this process systematically will reduce the likelihood of overlooking important factors. Our seven-step approach takes this into account:

Create a constructive environment.
Investigate the situation in detail.
Generate good alternatives.
Explore your options.
Select the best solution.
Evaluate your plan.
Communicate your decision, and take action.
Let's look at each of these steps in detail.

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