The June edition of the McKinsey Quarterly has an interesting article on how to improve the speed and quality of decision-making. Access to vast amounts of data, advanced analytics and powerful algorithms allow for establishing sound decision proposals. At the same time growing complexities within organisations and in the market place hampers clean delegation and clear accountabilities. McKinsey has experienced that the simple steps of categorising decisions and tailoring the decision approaches to a few distinct decision categories, improves decision-making in a significant manner.

Four decision categories

McKinsey define four major decision categories

  • Big-bet decisions (infrequent high-risk decisions with potential to shape the future of the company)
  • Cross-cutting decisions (frequent and low-risk interconnected decisions made as part of a collaborative process)
  • Delegated decisions (frequent low-risk decisions handled by one team)
  • Adhoc decisions (infrequent low-stake decisions)

Our experience is mostly related to the “Big-bet decisions” and how to handle the inherent uncertainties and complexities in these decision problems. We support the suggested steps of appointing a sponsor, breaking things down and connecting the dots, as well as utilising a standard approach with the necessary adjustments to make it good enough for the specific situation. In our view, involving the right people at the right time and to the right extent for each decision situation is essential.

Series of decisions

Another interesting point is the importance of recognising how a series of smaller decisions may represent a big bet when taken as a whole. In this respect it may be somewhat difficult to classify a decision as one of the distinct categories above. Many of the Big-bet decisions we have been involved in can also be classified as “Cross-cutting decisions”, as they comprise a series of decisions over time and require collaborative efforts with clear definition of roles and responsibilities.

A proper decision analysis framework is required to handle series of decisions and uncertainties. Read our white papers on decision analysis methodology and decision processes to get more insight into the benefits of applying consistent analysis approaches, as well as fit for purpose decision processes with clear decision accountability.

The McKinsey Quarterly article can be found here: Untangling your organization’s decision making

 

 

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