Leading Made Simple

7.5 Steps to Profitable Decision-Making

If the title sounds confusing bear with me here, it will get clearer…

How important is an effective decision-making process? For you personally? For your company? As a leader?

Consider the different environments and the impact a decision will make. It could mean as much as life or death, profit or bankruptcy, and success or defeat. Not every decision has dramatic outcomes, however, every decision has some consequences for some of the stakeholders.

As leaders, we do not necessarily make all decisions. Jan Carlzon, former CEO of SAS, a major Scandinavian airline, has turned a nearly bankrupt airline into a highly profitable company being voted the best business airline in the early 90’s. One of the decisions were to implement what became known in the industry as “Business Class”. This revolutionized the industry at that time!

Jan Carlzon joined SAS in 1980 and became its CEO in 1981. In my opinion, creating a “Business Class” market segment was a critical decision for the short-term and competitors around the world quickly copied the approach. The real strategic decision has been an internal people development philosophy dubbed “Putting People First”. This decision resulted in an organization-wide training & development program which produced a dramatic structural shift throughout the company. The aim was multi-pronged:

Equip all employees on all levels of the organization with the necessary knowledge and understanding of decision making to serve the (internal AND external) customers the best way possible.

Move decision making to the closest point of customer interaction every day and everywhere.

Develop and institute a culture where those employees closest to the customer are supported by the rest of the organization aiming to maximize customer satisfaction. (inverted hierarchical pyramid).

Obviously, Mr. Carlzon was taking considerable risk with the cultural and organizational changes he instigated. History proved him right after all.

I am not sure which decision-making process he and his team utilized at the time. However, I am certain that is was a process after all. Since 2006 I promote with my clients a decision-making process which was ultimately documented by UMASS Dartmouth as the “7 Steps to effective decision making”.

decision-making process
Decision-Making Process

Below is a copy of the UMASS document, however, I added an additional step for good measure.

I call it step 5.9 and it is edited into the document below:

7 Steps of effective decision making

Step 1: Identify the decision

You realize that you need to make a decision. Try to clearly define the nature of the decision you must make. This first step is very important.

Step 2: Gather relevant information

Collect some pertinent information before you make your decision: what information is needed, the best sources of information, and how to get it. This step involves both internal and external “work.” Some information is internal: you’ll seek it through a process of self-assessment. Other information is external: you’ll find it online, in books, from other people, and from other sources.

Step 3: Identify the alternatives

As you collect information, you will probably identify several possible paths of action, or alternatives. You can also use your imagination and additional information to construct new alternatives. In this step, you will list all possible and desirable alternatives.

Step 4: Weigh the evidence

Draw on your information and emotions to imagine what it would be like if you carried out each of the alternatives to the end. Evaluate whether the need identified in Step 1 would be met or resolved through the use of each alternative. As you go through this difficult internal process, you’ll begin to favor certain alternatives: those that seem to have a higher potential for reaching your goal. Finally, place the alternatives in a priority order, based upon your own value system.

Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready to select the alternative that seems to be best one for you. You may even choose a combination of alternatives. Your choice in Step 5 may very likely be the same or similar to the alternative you placed at the top of your list at the end of Step 4.

Step 5.9: Review your decision & predict potential consequences for all stakeholders

In this step, consider the possible outcomes of the decision and evaluate whether it will fulfill the identified requirements from Step 1. Consider the various impacts the decision may have on the different stakeholders and make any necessary course corrections.

Step 6: Take action

You’re now ready to take some positive action by beginning to implement the alternative you chose in Step 5.

Step 7: Review your decision & its consequences

In this final step, consider the results of your decision and evaluate whether it has resolved the need you identified in Step 1. If the decision has not met the identified need, you may want to repeat certain steps of the process to make a new decision. For example, you might want to gather more detailed or somewhat different information or explore additional alternatives.

Decision-making is a challenging task for everyone! As leaders, we must be diligent in the way we go about the task and help those on our respective teams to develop the skills and experience the process. Getting as many people as possible into effective decision-making habits is especially important in a distributed or partly remote work environment. Doing so in an effective and efficient manner has become a key element of sustained organizational success.

Lead well, stay safe, and help your team to succeed! If you would like to explore additional ideas about effective leadership or business strategy let’s talk!

Manfred Gollent

Manfred Gollent is a certified business coach and the founder of QLI International LLC. He works with a variety of clients from Fortune 500 executives to small business entrepreneurs on leadership and strategy development since 2006. Prior to founding QLI International, Manfred has been a turn-around executive in a Fortune 500 company with global operations. During his 30+ years in the corporate world, he led the rebuilding of underperforming subsidiaries in the United States, Europe, and Asia by developing their leadership team and organization, restructuring their market portfolio, operations and efficiency to improve results toward meeting investor’s expectations. Aside from his international corporate career, Manfred has served on company boards in the UK, Belgium, Norway, France, Spain, Italy, Germany, Singapore, Philippines, Hong Kong, Taiwan, Australia, and the United States.