Strategic Decision Making

“A decision is an irrevocable allocation of resources”

prof. emiritus dr. Jac Geurts

In case uncertainties are high, it is often wiser to think big (in terms of ambition and long term objectives), but make small actionable steps avoiding wasting time, money, creativity of your best people and management attention.

But, once in a while the small steps are taken and now a big decision has to be made often involving a lot of people, money and time.

Basically, there are two sources of uncertainties in complex decision making.

  • Uncertainties related to lack of knowledge (related to technology or market development)
  • Uncertainties related to the interaction between players (for example: if we enter the market with this new service, how will the customers, but also our competitors and business partners respond?)
For the knowledge related uncertainties, a methodology called Strategic Decision Analysis is used.
  • Decisions and decision options are identified
  • Decision criteria are chosen
  • Decisions relations are identified (one can not make a decision in one area, without implicitly deciding in an other area)
  • Uncertainties and decisions are translated into scenarios with a certaint probability and outcome
  • And finally risk return plots are generated for different strategies (sets of decisions)
 For interaction related uncertainties a methodology called Preference Tree Analysis is used
  • The different key players are identified
  • Possible moves are identified for each of the players (both pro-active as re-active moves)
  • The preferences of all the moves from all players are assessed and put in a preferred order
  • A software tool is used to analyse most relevant scenarios

Preference Trees Analysis