Smart Things to Know About Decision Making

1

An Introduction to the Decision-Making Process

WHEN DO YOU MOVE FROM PROBLEM-SOLVING TO DECISION-MAKING?

Learning Objectives

At the end of this chapter you will be able to:

Distinguish problem-solving from decision-making.

Use good questioning technique to find the real cause of problems.

Use a cause-and-effect diagram to structure critical thinking.

Define and use a decision-making process.

The importance of decision-making in management is generally recognized. But a good deal of the discussion tends to centre on problem-solving, that is, on giving answers. And that is the wrong focus. Indeed, the most common source of mistakes in management decisions is the emphasis on finding the right answer, rather than the right question.

Peter Drucker, management writer, educator and consultant

At this stage we need to be clear on the difference between problem-solving and decision-making. Just as decision-making must be followed by action, it is frequently preceded by problem-solving or finding causes. It is not a good idea to start the decision-making process to solve a problem if you are unaware of what is causing the problem.

This book is about decision-making, so I will limit this part on problem-solving to some simple, but effective, techniques that help with the logical search for the cause of a problem.

A sales manager was falling short of his target for the year’s sales. He knew there was a relationship between the numbers of sales calls, or visits to customers his salespeople made, and the number of deals they signed up. He decided, therefore, to put in an activity monitoring system to check how many calls his people were making. After a month, armed with the statistics that the new system gave him, he set the members of the salesforce an objective to raise the number of calls they made. They did this and a small, though not proportionate, increase of sales came through. A few months later the number of calls had returned to normal, and the sales had settled back—still below target. Talking to a colleague he bemoaned the laziness of his people and attributed his failure to it. The colleague replied that over time she had come to understand that there is a limit, it might as well be physical, to the amount of time that salespeople spent in front of customers and prospects, and that any effort to increase that always failed. It seemed—in their business at least—that salespeople, with the best will in the world, could not spend more than 25% of their time on visits. The rest of the time was needed for preparation, keeping up to date with product, and so