Which Business Decisions Are the Most Important?
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Next month I’ll be interviewing James Taylor about his new book, Decision Management – A Practical Guide to Using Business Rules and Predictive Analytics. Recently, I received an advance chapter covering the Principles of Decision Management Systems. Part of the chapter is devoted to the types of business decisions that organizations typically make – strategic, tactical, operational and micro decisions. Taylor describes each type clearly, identifying the ones that are good candidates for decision management. A key determinant is whether the decision is repeatable; meaning, it occurs more than once and is more or less defined, such as decisions about shipping, staffing or pricing.
Here’s my quick take on Taylor’s useful clarifications of the types of business decisions from his new book.
The Four Types of Business Decisions
Of course, they all are, but operational decisions have a special kind of importance. It’s like the saying: good ideas are a dime a dozen, but success or failure is in the execution (or some variation on this theme). Taylor says essentially the same thing when explaining that “strategic and tactical decisions (for example, to focus on customer retention or discount more aggressively) will only have an impact if a whole series of operational decisions (how to retain this customer or what discount to offer this distributor) are made in accordance with the higher level decisions." So, good strategies may be a dime a dozen, but success or failure is in the operational execution and decision management systems can with help with the definition and implementation of these highly repeatable, highly consequential operational decisions.
Maureen Fleming, vice president of IDC’s BPM and middleware research, offers a similar perspective but with a slightly different decision naming convention. “Enterprises succeed or fail based on the decisions made by executives. They compete effectively or lose market share based on the operational decisions made by their managers. And they are more or less profitable based on the day-to-day decisions of the various knowledge and line workers who make up most of the workforce.” (To map to Taylor’s decision types, just replace Operational with Tactical and Day-to-Day with Operational.)
Sometimes we’re only as good as our last decision. Perhaps the most important business decision may be deciding which specific decisions to improve. If you believe your strategic decisions are sound and yet you’re still not realizing expected results, you may want to look more closely at your tactical and operational decisions. Are they the right ones to support strategic goals? If so, can you make them fast enough to respond in real time to market opportunities, threats or new regulations? Are you able to easily customize them to make good on customer experience? Can you test the potential impact of your business decisions before going live and are you able to use your organizational data to make them better?
Like a restaurant that is only as
good as the last meal consumed, companies may only be as good as the last
decision experienced by a customer, partner or supplier. Why risk that
If you’d like to learn more about how to put decision management to work for your organization, you can pre-order James Taylor’s book here.