The Elements of Effective Decision Making
PETER F. DRUCKER
"Decision making is not an intellectual exercise. It mobilizes the vision, energies, and resources of the organization for effective action. At the end, it is an exercise in courage and responsibility"
Good decision makers don’t make many decisions. They make decisions that make a difference. And they know when a decision is necessary. Then they don’t procrastinate. Good decision makers know that the most important, and most difficult, part of decision making is not making the decision. That’s often quite easy. The most difficult and most important part is to make sure that the decision is about the right problem. Few things can do as much damage as right decisions to wrong problems.
Good decision makers don’t make many decisions. They make decisions that make a difference.
Good decision makers know how to define the problem. They ask, “What does the decision have to do to be appropriate to the problem?” Good decision makers don’t even think about what is acceptable to whom and what compromises have to be made until they have thought through what the right decision is. But good decision makers know that, in all likelihood, they will have to make compromises in the end. And they know the difference between the right compromise and the wrong compromise.
Good decision makers know that they haven’t finished making a decision until they build its implementation and effectiveness into it. Until then it’s not a decision—it’s only a good idea. They also know that a decision is a commitment to action. And almost always it’s action to be taken by other people. Hence, as most good decision makers have learned the hard way, the actions required must fit the capacities, the understanding, the knowledge, the values, and the language of the people who will have to do the action.
Above all, good decision makers know that decision making has its own process and its own clearly defined elements and steps. Every decision is risky: it is a commitment of present resources to an uncertain and unknown future. Ignore a single element in the process and the decision will tumble down like a badly built wall in an earthquake. But if the process is faithfully observed and if the necessary steps are taken, the risk will be minimized and the decision will have a good chance of turning out to be successful.
Let’s get into the elements of decision making.
The Elements of Decision Making
You minimize risk by following seven elements of effective decision making, which are
Determine whether a Decision is Necessary
Unnecessary decisions not only waste time and resources, but they also threaten to make all decisions ineffectual. When decision makers fail to distinguish between necessary and unnecessary decisions, their organization can quickly become snowed under and turn cynical about all decisions. Even the most necessary and most important ones will soon be seen as mere busyness.
And few things so damage an organization’s ability to make changes or to take effective action as a lot of unnecessary decisions. They lead to the organization’s sitting on its hands no matter what the decision. Therefore, it is important that you be able to distinguish between necessary and unnecessary decisions. Surgeons provide perhaps the best example of effective decision making, as they have had to make risk-taking decisions on a daily basis for thousands of years now. Since there is no such thing as risk-free surgery, unnecessary operations must be avoided. The rules surgeons use to make their determinations are very old; they go back to the Father of Medicine, the Greek Hippocrates, 2,400 years ago.
The Rules Used by Surgeons to Make Decisions
Open Rule One
Hover to readRule One
In a condition that is likely to cure itself or to stabilize itself without risk or danger or great pain to the patient, you put it on watch and check regularly. But you don’t cut. To do surgery in such a condition is an unnecessary decision.
Open Rule Two
Hover to readRule Two
If the condition is degenerative or life threatening and there is some-thing you can do, you do it—fast and radically. It is a necessary decision, despite the risk.
Open Rule Three
Hover to readRule Three
The condition that falls between Rule One and Rule Two is no doubt the largest single category: the condition that is not degenerative and not life threatening but still not self-correcting and quite serious. This is where the surgeon has to weigh opportunity against risk. It’s also where he or she has to make a decision. And it is this decision that distinguishes the first-rate surgeon from the also-ran.
These old rules leave out one important case where a decision has to be made: the recurring crisis. If a crisis happens—say a cash crunch, or an inventory buildup, or an accident in a particular location or activity—the first time it happens, one fixes it. But if it happens again, then one finds out the cause and fixes it so that the crisis never happens again.
Quite often, the solution to the crisis is so simple that everybody afterward says, “Why didn’t we think of this ourselves?”
All of us, for instance, take for granted that our address is printed on our bank checks. But actually addresses were not printed there until well after World War II. Before the war, only a minority of Americans had bank checking accounts; and after the war, suddenly everybody had one.
And then every bank had an enormous number of accounts of people with the same or very similar names. And, pronto, these accounts got mixed up. Banks spent loads of money; they hired large numbers of people at enormous expense to compare the account number on a check with the account number on a monthly statement. And still, names and accounts and checks got more and more tangled up, to the understandable annoyance of depositors.
And then someone had the simple but bright idea to have addresses on the checks. And all that’s needed is to compare the address on the check with the ad-dress on the monthly statement. And the problem disappeared almost overnight.
Adapted from “Management: Tasks,Responsibilities,Practices”, P.295-307
