An Organized Decision: Key Elements of a Decision  - (2024)

An Organized Decision: Key Elements of a Decision

There are many types of decisions, but they all share a few common features. Here, the four key elements to consider before making a decision.

The Greek philosopher Heracl*tus wrote: “No one bathes twice in the same river”. Though it is true that we never face the same decision twice, some elements are repeated in all situations in which we have to choose a course of action.

Much of our success as decision makers depends on our ability to define the four basic elements that make up any decision situation: objectives, alternatives, uncontrollable variables, and parameters.

1) The objectives

Objectives are the reasons why we decide and are defined by the future state we hope to reach. Precisely, we make the decision to bridge the gap between the desired future world and the world that will occur if we do not act. The objective is the answer to the question: why are we deciding?

Every well-stated goal is made up of three factors:

An attribute or metric: What is it that we want to modify with the decision? For example, company profits.

An operator: What is the level we want to achieve for that attribute or metric? In our case, what do we want to happen with the profits? For example, getting them to surpass the threshold of 10 million dollars per year.

A completion time: When do we expect the goal to be achieved? In our example, how soon do we expect the decision to allow us to surpass $10 million in profit?

2) The alternatives

The alternatives are the possible paths we can follow to reach our objective. In any decision, there are at least two alternatives. If there were not, there would be nothing to decide.

For example, if we perceive the only way to lower prices is to use lower quality material in the manufacturing of our products, there is no decision to make.

But, if we also believe we could improve the efficiency of our production system to reach the same objective, we would have two alternatives and, therefore, a decision situation.

Each of the alternatives must be viable, lead to the desired objective and be exclusive with respect to the others.

These conditions are not trivial. Companies often spend a lot of time and effort developing unfeasible ideas and advancing projects that are not aligned with the desired goal. Sometimes, the lack of a correct approach to the alternatives forces us to make hasty decisions in situations where it was not necessary to make any decision.

Many companies engage in fierce internal discussions between two products to decide which one to launch. In many cases, a more careful analysis would have indicated that both could coexist in the market

3) Uncontrollable variables

Uncontrollable variables include all those elements that affect the outcome of the decision but are beyond the control of the decision maker. The dollar’s exchange rate, for example, affects the profits of an export-import company, but there is nothing the firm can do to modify that variable.

It is important to consider two issues regarding uncontrollable variables.

Uncontrollable, for whom? Some variables are uncontrollable for some decision makers, while controllable for others. The price of the dollar is beyond the control of an export-import company, but it can be modified by the Central Bank through foreign exchange trading operations.

Unknown vs. Uncontrollable. There are data we do not know but are capable of researching to understand their behavior. A manager may not know the final price at which a product of his company is sold in a certain area, but this does not mean it is an uncontrollable variable. He can always ask the right person what that figure is and incorporate the data into his decisions.

As decision makers, we must choose the uncontrollable variables that we will consider in our analysis. These should be broad enough to cover those with the greatest impact on results, but not so broad that we are paralyzed by an overdose of information. Therefore, uncontrollable variables with less impact on the results should be omitted from the analysis.

4) The Parameters

Parameters are data that arise from the past and that the decision maker knows. For example, at the time of planning, each manager knows the budget assigned to them by the company.

Although we may doubt the reliability of the value of the data, this is an issue that is not related to the uncertainty present in the variables, but rather depends directly on the reliability of the informant or the measurement system that we are using to obtain it.

Parameters can sometimes act as constraints that affect the courses of action being evaluated. An area’s budget will surely be a restriction for the number of projects that can be carried out, the scope of the initiatives, the products to be launched, etc.

In short, decisions are of many types and on many topics. But they all share some common traits. Discussing these four elements with our team will allow us to make a more accurate diagnosis of the situation and move towards making smarter decisions.

Florencia Lasa
Director at Tandem.
fl@tandemsd.com

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An Organized Decision: Key Elements of a Decision  - (2024)

FAQs

An Organized Decision: Key Elements of a Decision  -? ›

The four decision-making styles, analytical, directive, conceptual, and behavioral, are strategies leaders and individuals employ to make choices. Different styles work better in different situations or environments, and understanding decision-making leads to productive, cooperative, and engaged work environments.

What are the 4 components of decision-making? ›

4 steps to make the most effective decision possible
  • Define the problem or need: ...
  • Analyze the issue at hand: ...
  • Implement and communicate: ...
  • Learn from the process and the outcome:
Feb 21, 2022

What are the four 4 basic decision-making styles in organizations What are the key features? ›

The four decision-making styles, analytical, directive, conceptual, and behavioral, are strategies leaders and individuals employ to make choices. Different styles work better in different situations or environments, and understanding decision-making leads to productive, cooperative, and engaged work environments.

What are decision elements? ›

There are 4 basic elements in decision theory: acts, events, outcomes, and payoffs.

Which of the following is a key element for decision-making? ›

Three key elements are essential for effective decision making: Clarity of values. Quality of information. Analytical approach.

What are the 4 R's of decision-making? ›

Aligning the Four Rs of Decision-Making: Results, Resources, Restrictions, Risk. Not all decisions require a high level of rigor.

What are the 7 C's of decision-making? ›

They are Communication, Conviction, Common Sense, Composition, Counsel, Circ*mstance, and Choice. Please listen to the opening commentary before we begin our lesson.

What are the 5 P's of decision-making? ›

In order to continuously maintain good moral and ethical standards at all times, we shall now learn the five core principles `of ethical decision-making. These principles, otherwise known as the Five P's of Ethical Power are - Purpose, Pride, Patience, Persistence and Perspective.

What are the four keys to decision making? ›

For those more complicated situations, here are 4 important steps to making tough decisions with confidence.
  • Brainstorming. ...
  • Evaluating. ...
  • Decision-Making With Confidence. ...
  • Dealing With Decisions.
Apr 12, 2022

What are the 4 pillars of strategic decision making? ›

The 4 pillars for strategy are: Vision, Analysis, Target & Plan.
  • A strategy needs to built on the foundation of an overarching vision that it is meant to achieve. ...
  • The analysis pillar of creating a strategy builds on the vision and goals, and assesses existing strategies that have been implemented.
Nov 1, 2017

What are the four key aspects of decision making? ›

Much of our success as decision makers depends on our ability to define the four basic elements that make up any decision situation: objectives, alternatives, uncontrollable variables, and parameters.

What are the four Cs of decision-making? ›

And right now, decision makers across the world can do with all the help they can get given the recently declared pandemic. The four Cs are Core, Complicated, Complex and Chaotic. The person behind this type of thinking is David Snowden and his Cynefin Framework shown below.

What are the 4 factors of decision-making? ›

4 Factors of Decision Making
  • High Risk and Rare – ...
  • High Risk and Collective – ...
  • Low Risk and Frequent – ...
  • Random – ...
  • Let us look at the 4 factors to be taken into consideration during the decision-making process:
  • Call All – ...
  • Make the Decision – ...
  • Commit –
May 25, 2021

What is step 4 in good decision-making? ›

Step 4: Make Your Decision

Now that you have identified your goal, gathered all necessary information, and weighed the consequences, it is time to make a choice and actually execute your final decision.

What are the essential elements of decision-making? ›

The three essential elements of making better decisions
  • Instinct is your gut reaction to a situation or stimulus.
  • Judgment is about applying data and experience to analyze a situation.
  • Perspectives is about seeking external expertise that can expand, influence or change your point of view.
Nov 10, 2017

What are key factors in decision-making? ›

Many factors may influence decision making, including political, safety, financial, environmental, and ethical factors.

What are the four keys to decision-making? ›

For those more complicated situations, here are 4 important steps to making tough decisions with confidence.
  • Brainstorming. ...
  • Evaluating. ...
  • Decision-Making With Confidence. ...
  • Dealing With Decisions.
Apr 12, 2022

What are the three keys to decision-making? ›

This article will delve into three key aspects of effective decision-making based on the podcast conversation and provide actionable advice for each.
  • Balancing Emotion and Logic. When making decisions, we often rely on a combination of logic and emotion. ...
  • Recognizing Cognitive Biases. ...
  • Avoiding Decision by Committee.
Mar 27, 2023

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