Problem solving and decision-making are important skills for business

and life. Problem-solving often involves decision-making, and decision-

making is especially important for management and leadership. There
are processes and techniques to improve decision-making and the
quality of decisions. Decision-making is more natural to certain
personalities, so these people should focus more on improving the
quality of their decisions. People that are less natural decision-makers
are often able to make quality assessments, but then need to be more
decisive in acting upon the assessments made. Problem-solving and
decision-making are closely linked, and each requires creativity in
identifying and developing options, for which the brainstorming
technique is particularly useful. See also the free SWOT analysis
template and examples, and PEST analysis template, which help
decision-making and problem-solving. SWOT analysis helps assess the
strength of a company, a business proposition or idea; PEST analysis
helps to assess the potential and suitability of a market. Good decision-
making requires a mixture of skills: creative development and
identification of options, clarity of judgement, firmness of decision, and
effective implementation. For group problem-solving and decision-
making, or when a consensus is required, workshops help, within which
you can incorporate these tools and process as appropriate. Here are
some useful methods for effective decision-making and problem-
solving: First a simple step-by-step process for effective decision-
making and problem-solving.

decision-making process
1. Define and clarify the issue - does it warrant action? If so, now? Is
the matter urgent, important or both. See the Pareto Principle.
2. Gather all the facts and understand their causes.
3. Think about or brainstorm possible options and solutions. (See
brainstorming process)
4. Consider and compare the pros and cons of each option - consult
if necessary - it probably will be.
5. Select the best option - avoid vagueness or 'foot in both camps'
compromise.
6. Explain your decision to those involved and affected, and follow
up to ensure proper and effective implementation.
Introduction to Decision Making Techniques
All of us have to make decisions every day. Some decisions are relatively straightforward
and simple: Is this report ready to send to my boss now? Others are quite complex:
Which of these candidates should I select for the job?

Simple decisions usually need a simple decision-making process. But difficult decisions
typically involve issues like these:

• Uncertainty - Many facts may not be known.

• Complexity - You have to consider many interrelated factors.
• High-risk consequences - The impact of the decision may be significant.
• Alternatives - Each has its own set of uncertainties and consequences.
• Interpersonal issues - It can be difficult to predict how other people will react.

With these difficulties in mind, the best way to make a complex decision is to use an
effective process. Clear processes usually lead to consistent, high-quality results, and they
can improve the quality of almost everything we do. In this article, we outline a process
that will help improve the quality of your decisions.

A Systematic Approach to Decision Making

A logical and systematic decision-making process helps you address the critical elements
that result in a good decision. By taking an organized approach, you're less likely to miss
important factors, and you can build on the approach to make your decisions better and
better.

There are six steps to making an effective decision:

1. Create a constructive environment.

2. Generate good alternatives.
3. Explore these alternatives.
4. Choose the best alternative.
5. Check your decision.
6. Communicate your decision, and take action.

Here are the steps in detail:

Step 1: Create a constructive environment

To create a constructive environment for successful decision making, make sure you do
the following:

• Establish the objective - Define what you want to achieve.

 • Agree on the process - Know how the final decision will be made, including
whether it will be an individual or a team-based decision. The Vroom-Yetton-
Jago Model (member only) is a great tool for determining the most appropriate
way of making the decision.

• Involve the right people - Stakeholder Analysis is important in making an

effective decision, and you'll want to ensure that you've consulted stakeholders
appropriately even if you're making an individual decision. Where a group
process is appropriate, the decision-making group - typically a team of five to
seven people - should have a good representation of stakeholders.

• Allow opinions to be heard - Encourage participants to contribute to the

discussions, debates, and analysis without any fear of rejection from the group.
This is one of the best ways to avoid groupthink (member only). The Stepladder
Technique is a useful method for gradually introducing more and more people to
the group discussion, and making sure everyone is heard. Also, recognize that the
objective is to make the best decision under the circumstances: it's not a game in
which people are competing to have their own preferred alternatives adopted.

• Make sure you're asking the right question - Ask yourself whether this is really
the true issue. The 5 Whys technique is a classic tool that helps you identify the
real underlying problem that you face.

• Use creativity tools from the start - The basis of creativity is thinking from a
different perspective. Do this when you first set out the problem, and then
continue it while generating alternatives. Our article Generating New Ideas will
help you create new connections in your mind, break old thought patterns, and
consider new perspectives.

Step 2: Generate Good Alternatives

This step is still critical to making an effective decision. The more good options you
consider, the more comprehensive your final decision will be.

When you generate alternatives, you force yourself to dig deeper, and look at the problem
from different angles. If you use the mindset ‘there must be other solutions out there,'
you're more likely to make the best decision possible. If you don't have reasonable
alternatives, then there's really not much of a decision to make!

Here's a summary of some of the key tools and techniques to help you and your team
develop good alternatives.

• Generating Ideas

• Brainstorming is probably the most popular method of generating ideas.

 • Another approach, Reverse Brainstorming, works similarly. However, it
starts by asking people to brainstorm how to achieve the opposite outcome
from the one wanted, and then reversing these actions.

• The Charette Procedure is a systematic process for gathering and

developing ideas from very many stakeholders.

• Use the Crawford Slip Writing Technique (member only) to generate ideas
from a large number of people. This is an extremely effective way to make
sure that everyone's ideas are heard and given equal weight, irrespective of
the person's position or power within the organization.

• Considering Different Perspectives

• The Reframing Matrix uses 4 Ps (product, planning, potential, and people)

as the basis for gathering different perspectives. You can also ask
outsiders to join the discussion, or ask existing participants to adopt
different functional perspectives (for example, have a marketing person
speak from the viewpoint of a financial manager).

• If you have very few options, or an unsatisfactory alternative, use a

Concept Fan to take a step back from the problem, and approach it from a
wider perspective. This often helps when the people involved in the
decision are too close to the problem.

• Appreciative Inquiry forces you to look at the problem based on what's

‘going right,' rather than what's ‘going wrong.'

• Organizing Ideas

This is especially helpful when you have a large number of ideas. Sometimes
separate ideas can be combined into one comprehensive alternative.

• Use Affinity Diagrams to organize ideas into common themes and

groupings.

Step 3: Explore the Alternatives

When you're satisfied that you have a good selection of realistic alternatives, then you'll
need to evaluate the feasibility, risks, and implications of each choice. Here, we discuss
some of the most popular and effective analytical tools.

• Risk

In decision making, there's usually some degree of uncertainty, which inevitably

leads to risk. By evaluating the risk involved with various options, you can
determine whether the risk is manageable.
 • Risk Analysis helps you look at risks objectively. It uses a structured
approach for assessing threats, and for evaluating the probability of events
occurring - and what they might cost to manage.

• Implications

Another way to look at your options is by considering the potential consequences

of each.

• Six Thinking Hats helps you evaluate the consequences of a decision by

looking at the alternatives from six different perspectives.

• Impact Analysis (member only) is a useful technique for brainstorming the

‘unexpected' consequences that may arise from a decision.

• Validation

Determine if resources are adequate, if the solution matches your objectives, and
if the decision is likely to work in the long term.

• Starbursting helps you think about the questions you should ask to
evaluate an alternative properly.

• To assess pros and cons of each option, use Force Field Analysis, or use
the Plus-Minus-Interesting approach.

• Cost-Benefit Analysis looks at the financial feasibility of an alternative.

• Our Bite-Sized Training session on Project Evaluation and Financial

Forecasting (member only) helps you evaluate each alternative using the
most popular financial evaluation techniques.

Step 4: Choose the Best Alternative

After you have evaluated the alternatives, the next step is to choose between them. The
choice may be obvious. However, if it isn't, these tools will help:

• Grid Analysis, also known as a decision matrix, is a key tool for this type of
evaluation. It's invaluable because it helps you bring disparate factors into your
decision-making process in a reliable and rigorous way.

• Use Paired Comparison Analysis to determine the relative importance of various

factors. This helps you compare unlike factors, and decide which ones should
carry the most weight in your decision.

• Decision Trees are also useful in choosing between options. These help you lay
out the different options open to you, and bring the likelihood of project success
or failure into the decision making process.
For group decisions, there are some excellent evaluation methods available.

When decision criteria are subjective and it's critical that you gain consensus, you can
use techniques like Nominal Group Technique (member only) and Multi-Voting
(member only). These methods help a group agree on priorities, for example, so that
they can assign resources and funds.

The Delphi Technique (member only) uses multiple cycles of anonymous written
discussion and argument, managed by a facilitator. Participants in the process do not
meet, and sometimes they don't even know who else is involved. The facilitator
controls the process, and manages the flow and organization of information. This is
useful where you need to bring the opinions of many different experts into the
decision-making process. It's particularly useful where some of these experts don't get
on!

Step 5: Check Your Decision

With all of the effort and hard work that goes into evaluating alternatives, and deciding
the best way forward, it's easy to forget to ‘sense check' your decisions. This is where you
look at the decision you're about to make dispassionately, to make sure that your process
has been thorough, and to ensure that common errors haven't crept into the decision-
making process. After all, we can all now see the catastrophic consequences that over-
confidence, groupthink, and other decision-making errors have wrought on the world
economy.

The first part of this is an intuitive step, which involves quietly and methodically testing
the assumptions and the decisions you've made against your own experience, and
thoroughly reviewing and exploring any doubts you might have.

A second part involves using a technique like Blindspot Analysis (member only) to
review whether common decision-making problems like over-confidence, escalating
commitment, or groupthink (member only) may have undermined the decision-making
process.

A third part involves using a technique like the Ladder of Inference (member only) to
check through the logical structure of the decision with a view to ensuring that a well-
founded and consistent decision emerges at the end of the decision-making process.
Step 6: Communicate Your Decision, and Move to Action!

Once you've made your decision, it's important to explain it to those affected by it, and
involved in implementing it. Talk about why you chose the alternative you did. The more
information you provide about risks and projected benefits, the more likely people are to
support the decision.
And with respect to implementation of your decision, our articles on Project Management
and Change Management (member only) will help you get this implementation off to a
good start!

Key Points
An organized and systematic decision-making process usually leads to better decisions.
Without a well-defined process, you risk making decisions that are based on insufficient
information and analysis. Many variables affect the final impact of your decision.
However, if you establish strong foundations for decision making, generate good
alternatives, evaluate these alternatives rigorously, and then check your decision-making
process, you will improve the quality of your decisions.
Take our How Good is Your Decision-Making? quiz to find out how we'll you're doing
all of these things now!