Strategic Decision Making

A decision is an irrevocable allocation of resources

prof. emiritus dr. Jac Geurts

Strategic Decision Making is a very practical approach for addressing specific stratgeic issues. It is very strong on mobilizing and leveraging the know-how of people involved in the process. It ends with an underpinned advice (based the combined knowledge  of the people involved).

If the focus is on technology and organisation, Strategic Decision Analysis is preferred.
  • Decisions area, decision options and decision criteria are identified
  • Interdependencies between decisions are made explicit  (example: a product architecture may have a great impact in production and supply chain and on market price, demand flexibility and  the value proposition to the customers)
  • Identified uncertainties may be translated into a set of decision scenarios each with different probable outcomes, so comparison becomes possible
Example: Technology decisions
If the focus is on (external) stakeholder interaction,  Preference Tree Analysis (based on Game Theory) is used
  • Key players are identified
  • Possible moves are identified for each of the players
  • The preferences of all the moves from all players are determined
  • Software is availabe to analyse scenarios (otherwise this is getting pretty complicated)
  • It is adviced to test the stakeholder strategy in a face-to-face business game. People put in a game are far more driven and creative in identifying new ways to undermine or strengthen the proposed stakeholder strategy. It’s fun, but it is also an experience people will not likely forget. So, when in the busines, things pop-up that are related, people tend to “Remember the future”. This is how Shell was very succesfull with coping with the 1973 oil -crises, because before the crises the managers had gone through a business game, addressing exactly this challenge. “They had been there”
Example: Mergers & Acquisitions, (multi-player)-negotiations

Preference Trees Analysis