Effective Decision-Making: How to Make the Right Decisions When You're in a Situation of Uncertainty and Pressure." Most people know that highly effective decision-making is the lifeblood of management.
Everyone knows that we live in a world of fast change and speed. This speed and rapid change have provided many benefits for all of us because it has made it easier and faster to accomplish various tasks, much quicker than our ancestors who lived centuries before us. However, despite this, we know very well that every advantage comes with a disadvantage.
If we observe closely, we will see that the nature of our world requires us to make decisions as quickly as possible to respond to these rapid changes. And because we don't have the power to slow down the speed of this business trend, many questions have been raised: How can we manage speed and change and make the best decisions in this technological era? With these many questions, this book was conceived. In this book, you will find good methods and techniques to help you make the right decisions according to the time you have. You all have probably heard of a brainstorming method, undoubtedly. And this method is the oldest and most widely used decision-making method. The foundation of this technique is very influential, but it seems that it has not produced the expected results in actual practice. It has not produced the expected results because many conditions have not been met correctly. Next, I will introduce the first method, which is an effective decision-making method. Before reading to this book, I would like to suggest that you have a pen and paper nearby to take notes on the key concepts. Because this book is full of detailed information, ideas, and methods that you will not be able to remember everything just by listening. Method 1: Brainstorming.
If we look at the implementation of this method by many institutions, we will find that they have used this technique to make decisions through group work. This is one of the main reasons why it doesn't work well. In fact, it might be better if you tell all group members to practice this brainstorming method individually first, and then present only all of their good ideas for group discussion. That would be better. Why do it this way? The answer is because the social structure has hindered our creativity. Many people don't know that for creative ideas to flow like water, you must first turn off your brain's censoring function. By letting your feelings or ideas float along with the flow of creativity that you can think of, and allowing your ideas, both good and bad, to emerge without limitation.
The problem with brainstorming in a group is that individual group members will not have enough freedom to express ideas that are not good, that don't seem smart, or that are not amazing. In fact, some people prefer to hide their amazing ideas, not daring to express them for fear of criticism and lack of appreciation. Therefore, for the brainstorming process to be effective, the following factors must be included without fail. First factor: Group members should be friends who are not afraid to speak or express ideas, even bad ideas or ideas that sound crazy, without fear of criticism. Second factor: The brainstorming process should take at least 4 to 5 hours for the entire process. Third factor: As for the brainstorming environment, it should be made so that participants feel safe and can share ideas freely and without pressure. These conditions are rarely met, which is why group brainstorming seems to be ineffective.
If you can meet all of the above conditions, that would be amazing. You will get great results from brainstorming and be able to make effective decisions. But if you cannot follow the above conditions, there are other methods that you can use immediately as well. Do you know that setting boundaries in brainstorming by posing the right questions can help the brainstorming process yield good results? Think and think again a hundred times before making a decision, but once you've made a decision, be strong and be a responsible person for that decision. Method 2: Frame of Reference. What is a frame of reference in decision-making? A frame of reference refers to the process of passing through the brain a set of reference data or a set of criteria such as experience, beliefs, ideas, culture, etc., and we always base our decisions on those reference data every time we make a decision. Below, I will briefly explain the different types of reference data that can help you make decisions. Try any type that is most suitable for you.
Creative observation and learning from what you can do about your business or industry will make your decision-making better. The first type of frame of reference that we often see used the most is the type called the OODA loop, which comes from the words Observe, which means to observe; Orient, which means to focus or to direct; Decide, which means to decide; and Act, which means to take action. This technique was designed by Colonel John Boyd to be used as a decision-making strategy for the military to fight back in the air, but it can be applied to decision-making in any business to counter competitors. Now let's look at the observation phase. The observation phase requires you to understand your environment, such as your body, mind, or business environment. Observe everything that is present in that environment to make sure it is where it should be without any changes. For example, if you are in a board meeting, you can observe every member of the board to see if there are any new members joining you.
What do the faces of all members tell you about their feelings? Is the atmosphere of the meeting tense or not? When you talk about business, you might consider the situation of the global market, the national market, or the regional market. Do those markets tend to benefit you, or do they tend to benefit your competitors? In general, what you have to do in this observation phase is to take everything around you as input. Remember that this method was first developed for fighter pilots in combat. When fighter pilots reach this stage, they will try to understand their environment so they can accurately target the enemy. After the observation phase, you enter the next phase, the focus or orientation phase. This phase is very much related to your own personality.
The big question at this point is, based on the information you have observed, what will you do? Your success in this orientation phase is largely determined by your experience, the richness of your knowledge, and how accurate or effective that knowledge is. This is why people in decision-making positions must continue to learn a lot and consistently. After the observation phase and the orientation phase, you will reach the final phase, the decision phase. You have to compare all the options you have and create an image in your mind of the possible outcomes, and then act on your decision. Another type of decision-making model is called RPD, which stands for Recognition-Primed Decision Model. This is a decision-making model based on pre-recognition. This decision-making model was developed by Gary Klein in 1989. It is a common strategy that you may have practiced without realizing it. This RPD decision-making model is related to thinking about the problem and expanding to find only one solution based on past skills and experience.
The RPD model is useful only when you have encountered the same or similar problems before, and it differs slightly from the traditional problem-solving model of brainstorming as many solutions as possible for a single problem and then choosing the best one. The third type of frame of reference is called GROW. GROW stands for Goals, Reality, Options or Obstacles, and Will, which means intention. The goal is the most important in this model. What kind of goal are you looking for? You need to set your final goal clearly. You can also use the SMART method to set this goal. I would like to digress a little to share about the SMART goal-setting method. S M A R T S comes from the word specific, which means specific. M means measurable, which means it can be measured. A comes from the word achievable or attainable, which means it can be achieved. R realistic, which means to be realistic. Finally, T is time-bound, which means setting a specific time to achieve it.
To set a goal, ask yourself what your real current situation is. If your goal was set before you made your current decision, how far have you gone in reaching that goal? Analyze your current situation, then continue to think about options and obstacles. Here, you need to understand the possible options and other obstacles. Choose the option that you have a high chance of overcoming the various obstacles easily. The last phase is will. In general, in this last phase, you should ask yourself the question: What will you do, considering all the factors you have? This GROW decision-making model looks more like a coaching system than a decision-making strategy, and it is not very effective when the decision needs to be made quickly. The fourth and final type of frame of reference is the PDSA cycle. This model is mostly used in healthcare systems. It is an effective and well-structured strategy. But it takes time and cannot be used as a standalone system. The letter P here stands for the word Plan, which means plan, which is the most important stage in this model. During the planning phase, you need to study the factors that may affect your final goal. These factors will tell you about the best strategy to get the results you want. Next is the letter D, which comes from the full word "do," meaning to take action. In this stage, you take action based on the information you have gathered from planning. Study your results and see how successful you are. Does your strategy work or not? Can you get the results you want, or do you need to adjust or change your strategy? The answers to these questions can determine how you will act.
You have three options in the implementation phase. Option one: Continue to follow the plan. Option two: Adjust the plan. Option three: Abandon the plan. Remember that a real decision is measured by the fact that you have taken some new action. If you don't have any action, it means you haven't made a decision yet. Third decision-making method: SWOT analysis. This is a method of analyzing strengths, weaknesses, opportunities, and external threats. Business owners should know how to use this SWOT analysis to make better business decisions. You have to be careful when making decisions in business. Sometimes, decisions in business will cause you to lose market share. If that happens, it can cost you many years of labor and a lot of money. to regain market share that was once controlled by your competitors. Unfortunately, a large number of businesses do not easily regain market share. You can avoid wasting time, pain, and regret that may happen to you and your institution if you spend a little time analyzing some important issues before making a decision. Every business decision must consider both external and internal factors. A thorough consideration of these two points is the key to success. Let's look at a real example to demonstrate this type of analysis. If you are the owner of a clothing business that on average sells $100,000 annually and you want to double that number next year, then you can use this SWOT analysis method, which has the following characteristics: Strengths: These are internal factors that will help you reach your goals faster. For example, for your clothing supply chain, you can win the competition and maintain a prominent position in the market, or your products are of high quality, durable, and reasonably priced, etc.
Weaknesses are internal factors that cause your goals to fail. Being able to identify those factors clearly can give you new insights on how to overcome them. For example, one of your most capable employees just quit their job because they have a health problem. Two, you owe a lot of debt, and so on. Opportunities: These are external factors that can help you reach your goals. For example, someone is willing to invest in your clothing supply chain. Two, the government just announced last month that next year, all small and medium-sized enterprises will be exempt from tax. Threats: These are external factors that can stop you from reaching your goals. For example, one of your biggest competitors is considering expanding their clothing business to your area as well. Two, shipping costs are incredibly high, making it difficult for you to distribute products to customers who order online. The SWOT analysis method works well when you follow it meticulously.
So, take your time and analyze each factor carefully. It should also be noted that this SWOT analysis method was created by Albert Humphrey in the 1960s. The SWOT analysis method basically considers only some internal and external factors. But the PEST analysis method, P-E-S-T, helps us to think about many external factors that you cannot control. that can make your business unstable if you don't consider and find ways to avoid them. So, what are those external factors? Fourth decision-making method: PEST analysis, which is an analysis focused on political, economic, social, and technological factors. In English, it is political, economic, social, and technological analysis. If you perform a PEST analysis correctly, you will be able to position your business to achieve success. Let's explore it in more depth. Political factors: The following are all political factors that can help or stop you from achieving your business goals. For example, government regulations, political stability, labor laws, or environmental laws, etc.
Economic factors: This factor includes taxes, inflation, and the general state of the economy. Social factors: An example of social factors that can affect your business or organization is: customer loyalty, demographics, culture, and media, etc. Technological factors: This is the last factor that you need to analyze. It includes general technological factors that affect your business, such as artificial intelligence and new innovations. The reason is that PEST analysis is especially important for large organizations because it can help you identify risk factors that affect your business. Therefore, it can help you position your business and make effective decisions. If you have a role in making important decisions in your organization or institution, please spend a reasonable amount of time alone or with your team. And to take that opportunity to analyze the situation of your institution based on all the factors mentioned above. Do you know that this PEST analysis, P-E-S-T, has been further expanded in various aspects to make the analysis even more in-depth? by adding two other major factors. First, the addition of legal and environmental factors. Second, the addition of ethical factors, etc. Five: Strategic Tools for Competition and Profit Analysis.
Regularly analyzing the situation is the best way to maintain flexibility with the ever-changing new trends in your industry. In business, your decisions will mostly be influenced by market conditions. or the industry you are in. For example, Apple and Samsung are major competitors in the mobile technology landscape. The Samsung Galaxy Note phone was produced to respond to the decline in iPhone sales in recent years. As a result of the competition, both companies are very cautious when making decisions related to production. Otherwise, one of the two companies is very likely to lose market share to the other. But not all industries are competitive. That's why you have to master your industry. Do you understand your industry? How much is the competition and the profit? Having the right answer to that question will help you make the right decision. There are some other tools that can help you in this process. The level of competition from your competitors. The more competition in any industry, the less profit it will generate. And if there is less competition, it will lead to a higher chance of making a profit. Indicators of competition that you should consider include innovation, industry prices, and the size of your total production in the market.
The threat of new competitors entering the market. Will new competitors have it easy to enter the market of your industry? And how can they enter? If you can find the answer, you must take immediate action to strengthen yourself from the weaknesses you have. with your intelligence to the fullest. Otherwise, you will surely start losing market share. In general, if an industry has few or no barriers to entry for new competitors, the market for that industry is very likely to become saturated. And your business will not be able to develop and grow bigger either. The threat of competitors who can replace your market presence. You will have high demand if it is not easy for any business to replace your business. Can your products or services be replaced? Why should customers buy from you and not from your competitors? You need to think about these points and be prepared to solve them as quickly as possible. The bargaining power of buyers. This is similar to the previous factors. If buyers have many choices, they will have influence over you, and it will also affect your price. Every business person knows that this is not a good thing for their business.
The bargaining power of suppliers is the same. Suppliers also influence your price when there are not many suppliers. The level of expertise of the supplier and the complexity of changing suppliers both affect and influence the price negotiation from the supplier. Sixth decision-making method: Finding the root cause of your problem. Finding the root cause of your problem is the key to effective problem-solving. There is a type of complementary technique that you can use to do this. That method is called the fishbone analysis. The basic idea behind this technique is to break down the root cause of your problem into different categories. to easily focus and make it easy to decide on the right solution. For example, if you are facing a marketing problem, you can break it down into different groups as follows, which is known as the 7Ps for marketing analysis. which include Product, Price, Place, Promotion, People, Process, and Physical Evidence. And the next step is to use your intelligence to focus on finding problems in each group. Do this until you are done and know for sure what your problem is and what is the best solution.
Try to define your problem correctly using the techniques described in the summary above before you try to solve the problem, so you can avoid solving only the symptoms and not the real root cause of the problem. Conclusion When there is a problem to solve, start by making sure you are comfortable enough to think clearly. After that, you can break down the problem to find its real root cause. Next, you need to study your internal and external environment to determine the direction of the best action plan you can take. Your brain will not be able to help you in the decision-making process forever. And if you don't know how the brain works, you won't be able to use it to help you make better decisions. For example, when we try to solve a problem, we mostly filter out any ideas that come to our minds and choose only the good ones to reflect on. This action has severely limited the brain. What you should do is let your ideas flow freely.
Write them all down during the brainstorming process, then choose the best ones later after you have finished thinking. Doing this will help you have more of a flow of good ideas. Next time, if you face any decision, think about what you have learned and learned today. For example, you can use the OODA cycle method to try to find a better decision. Do you remember? The steps in making a decision using this method. In this method, the first step is to observe your environment, orient yourself, and focus on the problem clearly. Then, decide what action to take, and finally, implement it and maintain strength and responsibility for that decision without hesitation.