Three Business Decision Making Methods
There are a plethora of theories and decision making methods for business. We've put together a list of three of the most effective decision making methods for business.
The Kepner-Tregoe Matrix
The Kepner-Tregoe decision making matrix is all about making the "best possible" decision not the "perfect" decision. There is a big difference between the "best possible" and the "perfect" business decision. Making the "best possible" decision will always have an element of risk involved and decision makers need to accept that and mitigate any risk involved.
The Kepner-Tregoe process helps decision makers set goals, explore alternatives and asses decision risk. It also involves creating contingency plans.
The Kepner-Tregoe Matrix comprises four basic steps:
1. Situation Assessment – Identify issues and problems
2. Problem Analysis – Describe the issues you are trying to solve and what is causing them.
3. Decision Analysis – Identify and assess alternative outcomes by conducting a risk analysis of final decisions
4. Potential Problem Analysis – Evaluate the risk of a final decision, create contingency plans and take all possible preventive actions necessary to minimize that risk.
Learn more about the Kepner-Tregoe Matrix.
The Vroom-Yetton-Jago Decision Model
Making good business decisions is one of the main roles of business leaders. Part of doing this is determining the most effective way of making a decisions
Business leaders can.t make authoritative decisions if group consensus is required, nor do they want to involve other parties for every single little decision. This means leaders need to be flexible and adapt their decision making methods based on the issue at hand. But authoritative and consensus-based decision have their benefits for different situations.
Here are the three major decision making styles:
Autocratic – The leader makes the decision and then informs others.
Consultative – The leader consults with a group to gather information then make the decision.
Collaborative – The leader works with a team of people to reach a consensus on a decision.
Learn more about the Vroom-Yetton-Jago Decision Model.
Consensus Oriented Decision Making
These days, business decisions often require involving various parties and assessing complex requirements. This is where consensus oriented decision making comes in. More and more business leaders are using group decision making to support the decision making process, and reduce the risk involved in making a business decision.
Making group business decisions can be a complicated task, but there are also many benefits of group decision making . Hartnett’s Consensus Oriented Decision Making model (also know as the CODM model) is a seven step process that facilitates group based decision making on a consensus basis.
These are the seven steps for Consensus Oriented Decision Making:
1. Frame the problem.
2. Have an open discussion.
3. Identify underlying problems.
4. Collaborative proposal development.
5. Choose a direction.
6. Develop a preferred solution.
Learn more about consensus oriented decision making.