7 steps for optimizing your decision-making process

Coffee or tea? Drive or walk? Donut or bagel? We make thousands of decisions a day, dozens before we even start work. Many are easy. Some require a little extra thought or research. A few are not only complicated but super important. In these cases, your decision-making process can impact your team, your boss, and perhaps even the future of the business itself. So, where do you begin?

What does a good decision-making process consist of?

The trick to making a good decision is thinking things through piece by piece. You gain several benefits by breaking your decision process down into distinct stages.

1. Firstly, creating separate stages makes each part less intimidating and easier to evaluate.
2. Secondly, doing research allows you to explore alternatives, collect concrete data, and learn more about the topic — all while continuing to make progress on your decision.
3. Lastly, it forces you to document your thinking at each stage. Recording this process means that when the decision is done, you will have data you can review and use for improvement the next time around.

And if things do go wrong and your decision turns out to be a poor one, at least you can present your research back to your team and any stakeholders, explaining where you went wrong and why. Either way, show others you’ve done your due diligence.

How to make better business decisions

At its core, any decision-making process should help you, first, identify your choices and, second, work out the best solution. There are many ways to set up your strategy, but the most commonly accepted number of stages is seven. So without further ado, here’s how to optimize your decision-making process in seven simple steps.

Step 1: Identify the decision

Before you do anything, you need to work out precisely what it is you’re trying to solve.

• Why do you need to make a decision in the first place? What changed either within or outside of the organization?
• Is there a timeline by which a decision needs to be reached?
• Can anyone help you make this decision, and should they be involved early on?
• Who will be affected?

It’s easy to get distracted by the symptoms or goals instead of the root issue. Make sure you have a firm grasp of the decision itself and stay as focused as possible.

Step 2: Gather relevant information

Strategic decision-making should depend on facts and data, not vague predictions. Gather any information that will help you make this decision with more clarity and accuracy. Decide which sources of information are worth pursuing, and then plan how you intend to collect this data.

This should include internal assessments and conversations with your colleagues, but it could also involve external information from books, online articles, market research, surveys, focus groups, etc.

Step 3: Consider your alternatives

Now, you need to set out each possible solution without choosing one. As you were collecting information (back in stage two), you probably started envisioning these possibilities already. Represent each solution fairly, regardless of whether you’re already forming your own preferences.

Don’t worry if you initially feel like there are too many options to choose from. The more options you fully work through, the better your ultimate decision will be.

Step 4: Analyze your evidence

Now the tricky part: weighing your options. Keep the definition you came up with in Step 1 close by, so you can be sure you’re choosing a solution that best suits the original problem or opportunity.

For each possible solution, identify the roadblocks and positive routes that increase the chance of reaching your goal. And finally, rank your different routes according to preference.

You may want to bring in information about your company’s past efforts to see if you can use lessons from previous successes and failures to predict your own probability of success. You can also look at how other businesses have approached this same decision.

Tip: Using a diagramming tool, such as Cacoo, to visually represent your decision-making process can help you organize your thoughts more easily. And you can even use it as a way to collaborate with your team along the way.

Step 5: Choose your path

With a bit of gut instinct and a lot of data, you’re ready to take the plunge and select your path — or combination of paths. Don’t be afraid to run things past a colleague or the broader team if you’re still unsure. Collaborating early on means everyone will feel more engaged and invested in your decision as the project gathers speed.

Tip: Consider selecting a backup option (or two), just in case your first plan falls through.

Step 6. Prepare your action plan

Before you jump in, set expectations for everyone involved. Create a plan of action, which includes getting the support of your employees, your boss, and your stakeholders.  Make a list of any other tasks you must complete to present your findings. This could involve creating a killer project proposal or identifying and reserving the resources you’ll need.

Don’t forget to include the facts and figures you gathered early in the decision-making process, so you can address any concerns that may arise.

Step 7: Measure your success

You’ll need to measure efforts to know if you’ve succeeded. After your plan is in place, take an honest look at your results and see whether your decision fulfilled your initial goal. What worked? What didn’t? Can you take credit for something that turned out well? Or do you need to hold up your hand and admit you made a mistake?

Another scenario: you could realize your decision was the right one, but the plan was executed poorly. In this case, it’s a good idea to retrace your steps and revisit an earlier stage. Once you’ve answered these questions, you’ll be in a better position to evaluate how you approach problems and improve your decision-making model the next time around.

Common challenges in the decision-making process

We’ve talked about how to optimize business decisions as much as possible. Now, let’s discuss the frustrating (but practical) reality that even the most rational decision-making process can still succumb to human error or unforeseen circumstances. By acknowledging this fact, you can train yourself to overcome hurdles more quickly and effectively. Here are potential challenges to be aware of as you make decisions.

Lack of authority or resources

Good decision-making skills go to waste when your company doesn’t empower the right people. Many organizations put someone in charge of researching a problem, but that person has no authority or resources to pursue a solution. The initial problem is placed on the backburner and continues to escalate unchecked.

What to do: Appoint the right person to the job in the first place. Make sure whoever is tasked with researching the problem is in a position to execute a plan. If you’re the one in charge of a project, try to set firm timelines when your fellow decision-makers must submit their approval.

Facing pushback? Consider prioritizing the most crucial parts of your plan and getting approval for those decisions. The positive results you gain from implementing the initial steps of the plan may help you build more support for the full initiative.

Changing industry trends

All too often, leaders ignore emerging trends believing that they’ll soon die out. In this scenario, it’s tempting to take a wait-and-see approach and drag out the decision-making process so long that you lose the chance to seize great opportunities. You may struggle to get fellow managers on the same page, making it challenging to execute the seven steps we outlined earlier.

What to do: Cultivate good business forecasting practices to get an accurate measure of how trends are developing around you. If you think it’s wise to take advantage of a particular trend, compile quarterly reports that demonstrate why the organization can’t afford to ignore the changing landscape. Try to enlist the support of key stakeholders who can help you persuade top-level decision-makers.

External forces

Some external forces are beyond your control and take effect so rapidly that it’s nearly impossible to contend with them. The COVID-19 pandemic is the perfect example of an unexpected event that transformed, elevated, and in some cases, wiped out industries. You may encounter situations where your decision-making process was well-managed, but an unplanned event derailed your plans.

What to do: Consult the people most affected by these external forces, such as employees and clients. Resist the urge to make a rushed decision among upper leadership, since you’ll need the support and understanding of all stakeholders to pivot efficiently. If sacrifices or major changes have to be made, be transparent with everyone involved, and use their feedback to shape your new action plan.

Confirmation bias and groupthink

Confirmation bias in decision-making is the habit of seeking out information that confirms what you already believe. Groupthink is the tendency to rely on group consensus, rather than thorough evaluation. Both practices are severe barriers to data-driven decision-making, and they can completely undermine your process. How?

If you aren’t open to all possibilities, you’re likely to rule out viable options early in the process. And when everyone involved in the decision-making process agrees simply to avoid ruffling feathers, you risk overlooking major flaws in your action plan.

What to do: During the data-collection phase, make an effort to consult a wide variety of information sources. Go outside your comfort zone, and be prepared to share honest facts with your stakeholders, even if they’re reluctant to hear them. Include stakeholders with different perspectives and levels of influence to get a well-rounded view of the problem.

Final thoughts: helpful tools for decision-making

There’s no denying it: good decision-making is a skill. It can be difficult, not to mention scary — but with a strategic decision-making process in place, you’re much more likely to make logical choices that everyone can understand and learn from.

You can document it in whatever way works for you, whether it’s a good old-fashioned notepad or a collaborative diagramming application. Visuals, such as fishbone diagrams, SWOT analyses, mind maps, and retrospectives, are great tools for organizing your thoughts and assessing different choices.

Consider documenting the research and analysis stages with project management software to track your data and progress. Your options are unlimited. Just be sure you have something to look back on to help you identify mistakes, learn about your strengths, and justify your decisions to others later on.

Through repetition, you’ll begin to refine your decision-making skills and solve problems faster, with greater accuracy and more confidence.

This post was originally published on February 12, 2019, and updated most recently on December 29, 2021.