How to Make Better Decisions
Every day, Businesses make many decisions, some of these decisions are:
- strategic, such as acquiring a company or eliminating an underperforming line of business,
- some are tactical, such as conducting a marketing campaign,
- Finally there are operational decisions- the choices companies make everyday in their processes.
Examples of operational decisions include: how many loyalty points to award a customer, which vendor to purchase materials and services from, how much credit to extend a customer, and many others. Millions of these decisions happen every day.
As compared to the strategic or tactical decisions, the value of these ‘operational decisions’ have huge impacts on business performance. Even small changes to the decisions can have a noticeable impact on performance. This is known as decision yield….
How Companies Manage Decisions Today
While it is obvious that decisions and choices are critical, few businesses manage their decisions as separate entities or first class citizens. Companies use KPI’s to measure the impact of their decisions. They have not created an inventory of decisions and do not know the business rules and data that drive these decisions.
In terms of technology: because decisions are not separated from the stream of requirements, they are buried in the artifacts: use cases, stories and processes. The rules and data are spread across the requirements and code bases.
Poor Decision Management = Increased Risk?
There are many risks to poor decision management:
- First there is operational compliance: employees and systems often do not know what management expects. They do not comply with their leaders’ directives.
- Next there is compliance risk: including fines and legal costs, many decisions affect tax, finance and environmental reporting. Making a wrong choice leads to non-compliances —breaking laws and regulations.
So it is difficult for these businesses to change the outcomes of the decisions if they are not separated from models and technical requirements.
Generally there are these risks associated with poor decision management.
- Agility: decisions that are not managed are difficult to change
- Accuracy: there is inaccurate and imprecise targeting of process and practices
- Adaptation: is poor, the factors that decide are not understood and are hidden
How to Improve
First, companies should treat their decisions as a first class citizen in their operations. By first class, we suggest companies treat their important decisions as assets that should be managed. To do this, companies can implement Business Decision Management. (BDM) is a new discipline that identifies, catalogues and models decisions, particularly the operational decisions we have been talking about. BDM also quantifies their impact on performance and creates metrics and key indicators for the decisions.
Next, companies can model their decisions with Decision Model and Notation (DMN). The purpose of DMN is to provide an understandable notation that describes business decisions. This includes the rules and data that drive the decision.
What is Signavio’s role
The Signavio Decision Manager which will be released on April 15, 2015, supports the DMN standard and creates a comprehensive environment for collaborating on the discovery, management and improvement of your decisions. With the Decision Manager, decisions can be reused across other decisions and they can even be connected with the processes they drive. Decision Manager empowers the people in your organization that must manage even the most complex decision.
Extracting the decision from the clutches of uncertain management and technology will reap many benefits including improved performance, reduced cost and legal fees, and overall risk.
If you want to discover new ways to improve performance and reduce risk in your organization please register for our free 30 day trial at www.signavio.com/try.