Thursday, January 26, 2017

The Five Phases of Decision-Making - Part 1

Image courtesy of pls47
Have you adopted a decision-making process that works well for you?

If you have, I'd love to hear about it. If not, read on.

As a leader, your next best action is based on making a decision as to what that action will be. How do you arrive at that decision?

I've been reading Peter Drucker's The Practice of Management; in it, Drucker devotes a chapter to decision making. His thoughts on the topic are interesting, and he states that managers typically - and erroneously - focus on finding the right answer during the decision-making process rather than finding the right question. Beyond that, he notes that the most difficult - yet critical - part of the process is to put into action whatever was decided. That sounds like a no-brainer, but I've seen people spend hours or days or week trying to make a decision only for that outcome to go nowhere.

He outlines five steps that comprise the decision-making process:
  1. Define the problem
  2. Analyze the problem
  3. Develop alternate solutions
  4. Decide upon the best solution
  5. Convert the decision into effective action
I like that he actually makes action a formal step in the process.

Let's take a look at each of the steps.

1. Define the problem
Step one in this phase is to find the real problem and define it. Find the right question. Obviously, if you don't know the problem, you can't come up with a solution. But it often happens that people focus on the symptoms, not the true problem. This is a critical phase in the process. Spend time making sure that you clearly define the problem. Drucker advises to avoid symptomatic diagnosis and focus on finding the critical factor, i.e., the element in the situation that has to be changed before anything else can be changed, moved, acted upon. This reminds me of doing a root cause analysis to get to the heart of the matter.

The next step in this phase is to determine the condition for the solution of the problem. Think about the objectives of the solution. And consider what rules or policies will limit a solution. Why is this important? Sometimes these currently acceptable practices and policies will have to be change in order to put the solution into effect.

2. Analyze the problem
During this phase, you'll classify the problem and uncover facts about it. Classifying problems includes identifying who needs to make the decision, who needs to be consulted when making it, and who needs to be informed about it. (Sounds a bit like RACI to me.) Classification also includes the time commitment for the decision and how long to wait before its reversed, the impact on other departments or areas, how many other decisions feed into it, and the uniqueness of the decision. Classifying the problem ensures that the decision maker is stepping back, looking at the big picture, and understanding the impact on the larger organization.

Only once the problem has been defined and classified can you gather the facts about it. At that time, you need to consider what information you need to make a decision: what's relevant and valid to the decision at hand? and what other information do you need? Drucker notes that it isn't necessary to have all the facts, but it is necessary to know what information is lacking in order to judge how much of a risk the decision involves, as well as the degree of precision and rigidity that the proposed course of action can afford.

3. Develop alternative solutions
This one is a no-brainer. You should always develop alternative solutions for your problems. Drucker notes that alternative solutions are the only way to train our imagination; otherwise, he's afraid we won't land on a creative solution, rather come up with familiar and comfortable solutions.

Interestingly enough, he proposes that one alternative solution should always be to take no action at all. Rightly so, it is a valid alternative, and he spends a bit of time on this in the book. Unfortunately, one of the consequences of no action is the perpetuation of "this is the way we've always done things." So think this option through clearly and consider all implications; again, it is a valid and viable solution at times.

I'll wrap up Part 1 there and continue with the last two steps in my next post. You won't want to miss those last two steps; I'll outline details behind Step 4, where Drucker outlines criteria for making effective decisions, and Step 5, where I'll reiterate the importance of taking action. Some great advice wraps up Part 2 next week! Check back for it.

For there are few things as useless - if not as dangerous - as the right answer to the wrong question. -Peter Drucker


  1. "If I had an hour to solve a problem I'd spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.” ~ Albert Einstein

    1. Thanks, James. Love that quote. I think Drucker might be a bit more diligent in his approach, though.