Strategic decision making
shapes your future

Strategic decision making is at the heart of strategic planning. Most managers try to make major decisions on the future of their organizations as rigorously as they can.

Often decision making on strategy is not as rigorous or well informed as it might be. 

How might managers improve their decision-making?

From my experience and these are some of the practices that can improve the quality of strategic decisions.

Key characteristics of strategic decision-making

Purpose driven - Have a clearly understood corporate purpose.

Specific - Use realistic approaches to long-term performance target setting, forecasting and gap analysis.

Ethical - Have an authentic commitment to behaving well as an organization.

Participative - Invite at least the top three layers of management to participate in the strategic planning process. This ensures much relevant knowledge informs decision-making. This is especially so in the SWOT analysis part of the strategic planning process.

Realistic - Strategic decisions may affect careers as one are area is promoted and another educed or abandoned. Be aware that such considerations will influence the process of deciding strategies.

Encouraging - Ensure that at the SWOT workshop there is no premature evaluation of ideas for strategic options. It is vital that top managers hear the range of innovative ideas that are floating round the organization. Organizations that are strong in such decision-making often have systematic processes for managing innovation and entrepreneurship in an ongoing way, and not just at the occasional strategic planning retreat.

Regarding this, you would do well to read Peter Drucker's classic book on Innovation and Entrepreneurship. I believe this may have been the first book to present the management of innovation and entrepreneurship in a purposeful and systematic way.

Evidence based - The SWOT analysis yields the raw material for strategic decisions. It is easy for this to become a swapping of experience in the form of war stories. You must go beyond this. Dig out the facts about what is really going on. It is vital to share the crucial information that is available with all the participants in the strategic decision choice process.

Requisitely informed - The opposite of having too little evidence is having too much! Do not allow analysts to flood the process with detailed analysis with unrealistic forecasts.

Analysis paralysis is a state where the opportunity cost of decision analysis exceeds the benefits of deciding to commit to a course of action. Sometimes the quantity of analysis overwhelms the strategy selection process. This leads to listing just too many strategic issues. The planning team cannot see the few trees that matter in the forest of detailed strategic analysis.

Risk aware - It is also easy to fall in love with the bright ideas that surface during planning workshops. Before taking final decisions, test the proposed strategies against the targets, forecasts, and shortlisted major strategic issues from the SWOT analysis. Additionally assess them against a list of possible risks.

Also, check that any dissenting voices have been give proper consideration. This may give an appreciation of any incentives, obstacles to implementing the decisions, which brings us to the next point.

Execution ready - Coming up with great ideas is one thing! Implementing them is something else! Review available resources. Assess the ability of managers to attend to multiple development projects on top of current operating responsibilities.

A participative strategic planning process not only enhances strategic decision-making, it can improve commitment to execution.

For more on this kind of decision-making, read the work of Stanford University Professor Kathleen M. Eisenhardt.

Start with her MIT Sloan Management Review Strategic article, Strategy as Strategic Decision Making.

Return from Strategic Decision Making to Business Strategy.

Return from Strategic Decision Making to Simply Strategic Planning Home Page.

Some other resources on strategic decision making

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