The Art of Decision Making: A Guide to Making Better Choices

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As a business owner, you take numerous minor and major decisions every day. While it is fine to take minor decisions intuitively, most major decisions require considerable contemplation to arrive at.

Taking the right decisions—both small and big—is crucial to the company’s long-term success. Decision-making is an art that can be cultivated with practice.

Types of Business Decisions

Business decisions can be typically divided into three categories, as given below.

Long-Term Strategic Decisions 

These are long-term, complex decisions that are taken while keeping a company’s mission and vision in mind. Strategic decision-making involves aligning the organization’s short-term goals with long-term objectives to bring the company’s mission to fruition. 

Strategic decision-making starts with a clear idea of the organization’s mission and vision. The principles and goals of the business are integrated with the short-term and long-term decisions.

To make better strategic choices, the vision and mission of the company should be communicated to the employees and other stakeholders. Senior managers make strategic decisions.

Medium-Term Tactical Decisions

Tactical decisions are medium-term decisions that generally cover a period of one month to one year. These decisions are generally related to inventory management, logistics, production planning, generating additional funding, etc.

Tactical decisions are taken within the constraints of strategic decisions. These are semi-structured and take place with greater frequency than strategic decisions.

Tactical decisions are often related to the implementation of strategic decisions and are taken by mid-level managers, with the help of cloud services specialists, to ensure a great customer experience and growth.

Routine Operational Decisions

Operational decisions, also called structured decisions, have to be taken frequently on a day-to-day basis. They have a lesser impact on the organization’s long-term success than strategic or tactical decisions.

Calculating employee bonuses and replying to a sales inquiry are examples of operational decisions. Junior managers make these routine decisions.

The 5-Step Decision-Making Process

Making the right choices for your business requires you to systematize the decision-making process. Here is a lowdown on an effective process that will help you make informed and educated decisions in your business.

Identify the Problem

The first step in effective decision-making is to identify the problem to be solved. As a business owner, you first need to identify what the problem is so that you can implement the right steps to solve it.

Clearly define the problem to streamline the decision-making process. Setting measurable and timely goals is a great beginning to problem-solving.

Elements of effective problem identification:

  • It is objective, clear, and specific
  • It can occur at the group or individual level in the organization 
  • It is well-informed 
  • It is timely
  • It is based on appropriate assessment

Collect the Necessary Information

After identifying the problem, it is time to collect all the necessary information required to solve the problem.

You can do an internal assessment to gather such information, and you can also seek relevant information from credible external sources, including market research, industry studies, and business journals. If needed, one can also pay for evaluation from consultants. 

How to gather relevant information?

  • Create a data collection plan to structure and implement the process
  • Identify sources that can provide high-quality information 
  • Use existing information or collect new information 

Especially in the context of the fast-paced world of business today, quick decisions are crucial. However, with so much data available, it can be hard to discern what is relevant to a company’s bottom line. This is where business intelligence comes into play, helping to collect more precise information for informed decision-making. 

Identify the Alternatives

Once you collect all the relevant information needed, you can start figuring out the alternative courses of action available.

Often, there is more than one way to achieve a certain goal. Use idea-generation techniques to come up with a list of all possible solutions to your problem. You can come up with as many options as you want. The list will be narrowed down, and the best option will be selected in the subsequent steps.

A few idea-generation techniques you can use:


Brainstorming is an idea-generation method that involves encouraging a group of participants to come up with ideas relevant to the topic at hand.

The goal is to generate as many ideas as possible without judgment to any participant. The ideas are collated and categorized after the session.

Mind Mapping

A mind map is a diagram to visually represent ideas and concepts. It helps in structuring information, generating new ideas, comprehending, and analyzing data.

It is an artistic and analytical activity that helps you explore your creativity and come up with innovative ideas. If you prefer a more structured and hierarchical way of visualizing information, you can create a concept map, which is quite similar to a mind map.

Reverse Thinking

Reverse thinking is an approach that is different from traditional approaches that aim at coming up with solutions. Instead of looking at options for solving a problem, the participants figure out ways to worsen the problem. By doing this, the team can come up with different perspectives and ideas.


Role-playing is an idea-generation technique in which the participants take on the personality of someone different.

Taking up a different identity allows the participant to explore new ideas and options that they might not be confident exploring otherwise. 


A nonlinear idea-generation technique, storyboarding provides a graphical representation of ideas and concepts.

In this technique, each participant gets to ideate separately and also represent it on a storyboard while collaborating with others. The ideas so gathered can be arranged into a linear format or desired order as the session concludes.

Morphological Analysis

This is a technique in which the structural aspects of a problem are identified, and the relationships between them are studied. It is a great way to stimulate creativity and innovation in a strict environment. 

Compare the Alternatives

After making a list of all the probable alternatives, figure out the pros and cons of each option. Compare and contrast the different alternatives: what are the possible rewards of each option, and what could be the potential pitfalls? 

How to evaluate the alternatives?

  • Make a list of the alternatives and describe the possible consequences of each
  • Identify the advantages and disadvantages of each alternative 
  • Weight the importance of each alternative, keeping in view its pros and cons

Select Your Option

Now that your team has a list of alternatives, along with each option’s pros and cons, it is time to evaluate the alternatives. This is part of the decision-making process where you make the choice.

By now, the decision makers already know what options are available and what pros and cons each alternative comes with. 

How to choose an alternative?

  • Make a list of all the feasible alternatives on one page
  • Figure out ways to compare the options
  • Discuss the shortlisted options with the major stakeholders in the company
  • Eliminate the non-viable options 
  • Figure out one major thing your organization wants to optimize
  • Evaluate the remaining alternatives once again 
  • Choose the most suitable alternative 

This 5-step making process lies at the heart of the effectiveness of managerial decisions. Making a mistake here can hurt teams massively. Assess your decision-making skills now to ensure that you are not being careless. Take the free Decision-Making Skill Assessment from Risely to learn more.

Implementing the Decision

Decision implementation is the process of putting the chosen alternative into practical action. It is the effective implementation of the decision that leads to the achievement of the desired results.

Each decision taken by the management, especially the tactical and strategic ones, is constrained by other decisions. No decision can be implemented in isolation without taking into account the other decisions in the integrated business network.

Every decision leads to a set of consequences that may lead to follow-up decisions. In order to ensure the successful implementation and monitoring of decisions, it is crucial to establish a project review process. This process allows for the assessment of the decision’s progress, the identification of any necessary adjustments, and the overall evaluation of the decision’s impact on the organization. By incorporating a project review process, businesses can effectively track and measure the outcomes of their decisions, leading to continuous improvement and informing future decision-making.

Here are some questions you can ask to identify the probable consequences of a particular decision:

  • What kinds of actions are required to implement this decision?
  • How will this alternative impact our business and stakeholders?
  • Does the implementation of this decision require the execution of follow-up decisions?
  • How will this option impact previously made decisions?
  • Which categories of stakeholders need to be informed about this decision?

Addressing the Risks During Decision Implementation

Every business decision carries a certain degree of risk. During the implementation of any decision, it is imperative to identify the probable risks, assess them, and take steps to mitigate them. 

Identify the Risks

First of all, you have to identify all the risks associated with the decision in question. Businesses operating in different kinds of industries face different types of risks. 

Assess the Risks

Assess the risks so identified and determine how likely it is that they will occur.

Which of these risks are acceptable if they occurred? Which risks should be avoided at all costs? Risks must be analyzed using both qualitative and quantitative methods. In some cases, risks can even bring new opportunities. 

Plan the Risk Responses

After analyzing each risk, develop a plan for addressing it. Risk response strategies must be clearly defined and laid out.

These strategies aim to avoid the risks that can be prevented, accept and manage the unavoidable risks, or take steps to reduce the impact of the risk. In some cases, the risk can be transferred to a third party in exchange for financial compensation.


Decision-making is a critical responsibility of any business owner. To ensure that you always choose the best option for your operations, follow a structured model of decision-making.

The decisions made have to be implemented most effectively to ensure that the desired results are achieved. Each business decision carries a few risks and can lead to certain consequences. This needs to be addressed during the decision-implementation process. 

I'm Allison Dunn,

Your Business Executive Coach

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