What is strategic decision-making?

Strategic decision-making has an overall goal of adding value to the business through a bold action, and this is not always easy for management as the stakes and expectations are usually high. So, to minimise risk in strategic decision-making companies must evaluate all aspects involved, including possible outcomes and required results.

Decision-making traditionally involves two dimensions: control and performance. Low control-absolute performance decisions are everyday choices, such as selecting options for consumption, like shopping for groceries; the only thing the person can control y which product to choose, but can’t enhance their performance based on any choice. Low control-high performance decisions revolve around the attitude with which a task is faced, therefore actively affecting the outcome; much how like athletes prepare for competitions, they can’t control the tournament ahead, but they can enhance their performance by training. These decisions tend to be intuitive, and sometimes may follow uncounscios cultural biases when choosing.

In the low control-relative performance decision-making field the actions taken are part of an environment in a context of competition, so these decisions involve strategic thinking and anticipation of the rival’s moves. This is an ethically-driven decision, and it is the step prior to strategic decision-making, as it identifies the need for bolder action in order to surpass the competition. 

Strategic decision-making involves positive thinking and the belief and commitment towards influencing the outcome –setting a goal— combined with a strong dose of going above and beyond… that extra effort is usually what sets the difference and drives success. Of course, these decisions don’t just happen overnight or out of whim. Insights and data are key supplies for strategic decision-making, and although they affect the direction of the organisation, therefore higher management makes the final call, every collaborator can play an important role in gathering the necessary information to determine the direction the organisation must navigate towards and the changes needed to get there. 

There are four steps to crafting a strategic decision-making process:

1. Identification, information, outline
The first step in decision-making is identifying the situation. This is usually followed by gathering information, assessing potential solutions, them into action, and evaluating the result. This will lead to designing the initial outline, which will surely mutate as different needs and goals are identified in the process.

2. People
A decision-making strategy must consider the decision-maker and who will be affected. While it is ideal to consider everyone involved, certain issues may deal with confidential information, thus limiting the amount of involvement to a select few. Some decisions may also require highly technical information or external advisory.

3. Time frame
How much time do you have to make this decision? Is the proposed solution a short-term or a long-term one? Careful planning is key to reduce stress-induced reactions.

4. Urgency
Prioritising is also critical is a strategic decision-making environment, with parameters such as timing, reach or intensity of impact or even investment budget as drivers.

Our advisory team at GHD helps your organisation make the right decisions and craft appropriate business plans for your specific needs. We also provide project-management services that can assist you in engaging with your stakeholders and community to gather information better and assess results. Let us assist you should you work on issues that fall under our expertise, such as architecture, energy, transportation and water.

Articles referenced

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