Poor critical decisions is the reason that thousands of companies fail each year. According to research from The Ohio State University, up to 50% of companies that have failed have done so because of not making informed decision making. The economic, social and competitive implications of this crisis are profound for individuals, families, communities and stakeholders. Direct and indirect job losses impact between 5 and 7 million employees annually.
When making an important decision, it’s useful to have in-depth knowledge and research to help you make an informed choice. Learning how to make a decision can help you have confidence that you’re choosing the right option.
Uninformed vs. informed decision-making
Uniformed decision-making is a process that relies largely on human factors to make a decision. Many executives instinctively use informed decision making in business for both simple and critical decisions. Studies suggest that failure is four times more likely when executives do not use informed decision making for critical nature of the decision.
Why is making informed decisions important?
This problem of not making informed decisions spans and influences the entire business community. Uninformed decision-making is appropriate for decisions that do not pose significant risks, downsides or consequences, where intuition and experience are key predictors of success.
Here are several reasons it’s important to make informed decisions:
- Increases confidence
- Generate realistic expectations
- Getting more options
- Allows control
What is informed decision making?
When facing a decision with significant complexity, risk, cost or consequences, executives need to take a very different approach. They need to apply informed decision-making, which integrates the intuitive aspects of uninformed decision-making with information and logic. This provides the decision-maker with a significantly better chance of a successful outcome.
All information is not equal or important in decision-making. Gathering and analyzing the right information about your customers’ needs is critical to neutralizing competitive threats and avoiding missed opportunities.
Steps to make informed decision
Informed decision-making comes from integrating these four steps:
Collecting appropriate and accurate information
- Filter, prioritize, analyze and synthesize data or information to support or refute a decision.
- Extract and categorize best-practice insights and wisdom in an easily accessible knowledge repository.
- Communicate critical information and knowledge to the appropriate staff.
Creating a customized informed decision making support team
- Provide easy access to specialists who can provide expert advice and counsel in fields such as legal, financial, regulatory, marketing, sales and operations.
- Foster a culture that promotes collaborative and systematic approaches to decision-making.
Creating a warning system
Identify and monitor significant technology, industry and competitive challenges and opportunities.
Make a decision
Take time to analyze your list of the pros and cons for each option, then make your informed decision. When making your decision, it’s important to consider all research and questions related to each option. It’s helpful to have a colleague or friend present when making your decision so that you can receive their feedback and support.
Review the outcome of your decision
Allow some time to pass before reviewing the result of your decision. Look at the impact that the decision had on you and the positive and negative outcomes of the decision. Reviewing can help you make more informed decisions in the future.
