Wednesday, December 28, 2011

Six Step Decision-Making Process

Here is a decision-making process based on the works from March and Simon

Six step decision-making process based on March/Simon
The description for this process is as follows:

Step 1. Recognize Need for a Decision
The need for a decision can be sparked by an event such as environment changes. The events can be internal or external. Whether it is proactive or reactive, it is imperative that managers immediately recognize this need and respond in a timely and appropriate manner.
Step 2. Generate Alternatives
The managers must develop feasible alternative courses of action. If good alternatives are missed, the resulting decision is poor. It is hard to develop creative alternatives, so managers need to look for new ideas.
Step 3. Evaluate Alternatives
What are the advantages and disadvantages of each alternative? Managers specify criteria, then evaluate. Successful managers use four criteria to evaluate the pros and cons of alternative courses of action:
  • Practicality
  • Economic feasibility
  • Ethicalness
  • Legality

Often a manager must consider these four criteria simultaneously. Some of the worst managerial decisions can be traced to poor assessment of the alternatives.
Step 4. Choose Among Alternatives
Managers rank the various alternatives and make a decision. Managers must be sure all the information available is brought to bear on the problem or issue at hand
Step 5. Implement Chosen Alternative
Managers must now carry out the alternative. Often a decision is made and not implemented.
Step 6. Learn From Feedback
Managers should consider what went right and wrong with the decision and learn for the future.
Without feedback, managers do not learn from experience and will repeat the same mistake over.

As you can see, all the steps describe activities. The first step, identifying when a decision is needed, is interesting and more a requirement than a real process step. The decision or the objectives are never defined. The generation of alternatives, the evaluation is described and the choosing process based on a ranking. The execution of the decision is another key point, as well as learning from feedback. From the number of steps, only three deal with making the decision, while the first one is identifying the need and the last two with the execution and learning from the decision.

The process is more complete than other described processes, is good on the feedback loop and implementation, but has a very fuzzy frontend and limited decision definition steps.

Here is a link to the book from March and Simon, which describes this six step process in more detail:

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