Deciding what is important

Effective decision involves two important aspects—the purpose for which it is intended, and the environmental situation in which it is taken. Even the best and correct decision may become ineffective if these aspects are ignored; because in decision-making there are so many inside and outside chains of unavoidable reactions. If certain principles are followed for decision-making, such multidimensional reactions can mostly be overcome.

Decisional matters or problems may be divided into groups consisting of programmed and non-programmed problems. Programmed problems, being of routine nature, repetitive and well-founded, are easily definable and, as such, require simple and easy solution. Decision arrived in such programmed problems has, thus, a continuing effect. But in non-programmed problems, there is no continuing effect because they are non-repetitive, non-routine, and novel.

Every event in such problems requires individual attention and analysis and its decision is to be arrived at according to its special features and circumstances. The organisational structure, having an important bearing on decision-making, should be readily understood.

If the organisational structure is rigid and highly centralised, decision-making authority will remain confined to the top management level. This may result in delayed and confused decision and create suspicion among the employees. On the contrary, if the organisational structure provides scope for adequate delegation and decentralisation of authority, decision-making will be flexible and the decision-making authority will be close to the operating centres.

In such a situation, decision-making will be prompt and expected to be more effective and acceptable. Proper analysis of the objectives and policies is needed for decision-making. The clear definition of objectives and policies is the basis that guides the direction of decision-making. Without this basis, decision-making will be aimless and unproductive.

For decision-making, analytical study of all possible alternatives of a problem with their merits and demerits is essential. This is necessary to make out a correct selection of decision from among the alternatives. Effective decision-making demands a machinery for proper communication of information to all responsibility centres in the organisation.

Unless this structure is built up, ignorance of decision or ill-informed decision will result in misunderstanding and loose co-ordination.

Effective decision-making requires sufficient time. It is a matter of common experience that it is usually helpful to think over various ideas and possibilities of a problem for the purpose of identifying and evaluating it properly.

But in no case a decision can be delayed for an indefinite period, rather it should be completed well in advance of the scheduled dates.

Decision is intended to be carried out for the realisation of the objectives of the organisation. A decision in any particular area may react adversely in other areas of the organisation. As all business activities are inter-related and require co-ordination, it is necessary that a study and analysis of the impact of any decision should precede its application.

The decision-maker should not only be an observer while others will perform as per his decision. He should also participate in completing the work for which decision was taken by him. For example, it is natural to fixate on the analogous situation that best supports the action you would like to take, ignoring other cases that might provide a broader picture of possible strategies and their outcomes. Case-based decision making provides a structured framework for synthesizing information from multiple analogous experiences and examples.

These methods require decision makers to collect a sample of analogous cases, determine the results achieved in those cases, and assess how similar each case is to the decision at hand. The best decision, then, is the one that maximizes the similarity-weighted average of results in the analogous cases.

Sometimes the analogy is close to home: Movie producers can compare a project with similar projects from the past; serial acquirers can do the same. Decision makers on less familiar terrain must look to other industries for comparisons, and those comparisons will take more ingenuity.

Consumer product industries facing digital disruption might look to the unbundling of music and books as an analogy. A company shifting from a product-based to a service-based business model might look at IT companies that have made this shift. These are oversimplified for the sake of clarity.

The company has or can get all the information it needs to be reasonably certain how a given location will perform. First, it knows the variables that matter for success: local demographics, traffic patterns, real estate availability and prices, and locations of competitive outlets. Second, it has or can obtain rich data sources on those variables. And third, it has well-calibrated restaurant revenue and cost models.

Together that information constitutes a causal model. Conventional capital-budgeting tools such as discounted cash flow and expected rate of return. They still have a reliable way to model costs and revenues; they have relevant data about demographics, foot traffic, and so forth.

In other words, they have a causal model. However, they can predict a range of possible outcomes by using quantitative multiple scenario tools. Some preliminary market research in different regions of the country will most likely give them a range of outcomes, and perhaps even the probability of each. Managers could then use standard decision-analysis techniques to make its final determination.

Such pilots provide useful information about the potential total market demand without incurring the risk of a full-scale rollout. This approach is still market research, but usually a more expensive form. Real options analysis, which quantifies the benefits and costs of the pilot in light of market uncertainty, would be the appropriate decision-making tool in this case.

Quantitative multiple scenario tools such as Monte Carlo simulations, decision analysis, and real options valuation. These tools combine statistical methods with the conventional capital-budgeting models favored in Situation 1. Managers can simulate possible outcomes using known probabilities and discounted cash flow models and then use decision analysis tools to calculate expected values, ranges, and so on.

Executives still understand the model that will drive store profitability. The cost and revenue drivers may well be the same, market to market. However, the company has much less information about outcomes, and predicting them using market research and statistical analysis would be difficult. It can build scenarios on the revenue side that cover a wide range of customer acceptance and competitor response profiles.

On the supply side, scenarios might focus on uncertainties in the emerging market supply chain and regulatory structure that could cause wide variation in supplier costs and reliability.

These scenarios will be representative, not comprehensive, but they will help executives assess the upsides and downsides of various approaches and determine how much they are willing to invest in the market. Executives should supplement the scenarios with case-based decision analysis of analogous business situations. They might look at outcomes from their own or other fast-food entries in developing markets or consider outcomes from a consumer goods entry in this particular market.

Some are easy, such as what to have for dinner cheeseburger thank you , and others, more serious, like, for instance, choosing a career. While you may not be able to guarantee the outcome of a decision before you make it, at least you can know you put a lot of careful thought into it. Step 1. You might tend to rush your decisions without thinking them through, or you avoid making a decision at all because the stress has put you off your game.

Go for a walk on the beach. Hit up a yoga class or hang out with friends. Step 2. Give yourself some time if possible. Give yourself the chance to sit on a problem for a while so that you can process your options and feel confident about the course of action you choose.

Step 3. Weigh the pros and cons. Deciding what is most important to you is the first step in effective time management. You need to understand your priorities and what matters to you most. What is that thing that makes you want to get out of bed every day and work your hardest?

The answer to this question is going to be different for each one of us, and it is the start to setting up our time management routine. Is it a successful and happy career? Is it spending more time with my kids?