Decision Analytics for Boards and CEOs

Some decision makers like to put off making a final decision for as long as they can and collect enough information to sink a battleship in the process. Like a dog with a bone, they won’t let go of whatever decision they have been wrestling with until they have no choice.

Then there are managers who appear to make snap decisions and never look back. These managers can appear downright reckless to staff of a more cautious disposition. They seem content to rely on minimum information and gut instincts when making even the most important decisions. It is thought that people in the middle who make the best decisions, but neither experience nor research has been able to confirm this. What it does confirm is that there is no magic formula that guarantees success. Through experience, study and an understanding of your Organization and leaders, people and partners you will end up making decisions in the way that is best for you.

Let us talk about how Data Analytics is maturing to Decision Analytics with the principles of good decision making. However Principles are not enough, you have to implement them, practice them, and reflect upon them for Impactful outcomes in your business. It is about moving from  Effective Decision to Very effective Decision to Most Effective Decision.

Let us Talk about the Decision Model: Townsend’s rules of decision Making. This is all about the need for making faster decisions. (Robert Townsend was CEO of Avis Rent-a-Car and wrote the biggest selling management book of the 1970s, Up the Organization.) In the current connected century and digital world, the most efficient capital is the fourth capital most people are not aware of.
  • First Capital is: Currency and money
  • Second capital is: Human Capital
  • Third capital: Intellectual Capital
  • But most important capital in the digital and connected world is fourth capital which is “SPEED” as a capital which has catalyst nature. Townsend suggested that when it came to decision making: decisions should be taken at the lowest level possible in the organisation

There are only two types of decisions:

(1) Those that can be made quickly because they are cheap and easy to correct and

(2) those that should only be taken after due consideration because they are expensive and difficult to correct.

All decisions are made on the basis of incomplete data, or lack of insights.  But in the world of digital you learn how to get the data and perfect insights out of the data or get out of the game. Somehow your data knows what is happening in your business, where are opportunities, where are we making money and where are we losing the money, where we need to make money. It is time to derive decisions out of your Data –> to insight for decisions.

  • Don’t pass decisions up the line that you have the authority to make. It will make you look indecisive. Self doubt is suicidal for leaders.
  • Delegate decisions that are below your pay grade to staff and monitor that they are dealt with.
  • Have confidence to take decisions that are cheap and easy to correct quickly and with minimal information or better still delegate them.
  • Never take into account what has already been spent when making a decision. Such money has gone for good. Past is past, money burnt is burnt. Look at the future cash flows. Never be a gambler chasing their losses in a casino.
  • Never make decision on over optimistic projections…
  • Always use the data and analytics to check several what-if situations. While you can never have complete data when making a decision, you should use the data you  have and apply decision analytics to best out of sample you have.
  • Always carry out a post-decision review and analysis.

In reality between two bad decisions is how one of the richest persons in the world was created.  Bill Gates offered his company for US$50M to Ross Perot in 1979 but Perot rejected the offer. Bill Gates offered MD DOS licensing to all non IBM Computers, and IBM gave full control to Microsoft to load MS DOS to all non IBM PCs…Both Perot and IBM, provided an opportunity to Bill Gates to become THE richest person and for Microsoft to become the giant it is today.

Few questions for you to reflect…

  • How often do you “Pass decisions up the line”?
  • Are you happy to make quick decisions on little data/information when they are cheap and easy to reverse ?


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.