Strategy-making is an immensely complex process involving the most sophisticated, subtle, and at times subconscious of human cognitive and social processes – Henry Mintzberg
This quote from Henry Mintzberg is a beautiful depiction of the intrinsic nature of strategic decision making.
At it’s very core, strategic decision making is flawed because it is based on human judgement which can never be perfect.
We can draw heuristics from the nature of strategic decisions, the process of strategic decision making, the use of strategic intelligence or knowledge and future focused strategic intelligence tools such as scenario planning and business war-gaming. These key principles or rules can be articulated as the “25 Laws of Strategic Decision Making” and are described as follows –
- Strategic decisions are the output of the strategic decision making process which utilizes strategic intelligence or knowledge as the input
- Strategy is forward looking and should not be based only on historical or past data or insights
- The effectiveness of strategic decisions can be improved by enhancing the quality of the strategic intelligence or knowledge that is used as the input
- Strategy does not take place in an internal vacuum and the decision making process needs to be outward looking
- The assessment of the strategic knowledge generation process is a means to reach the desirable end goal of strategic outputs
- Strategy is too important to be left to the strategic planning department alone
- Constantly strive to improve the process of acquisition, analysis and dissemination of strategic intelligence to key internal stakeholders
- Strategic decision making should involve multiple internal functions and stakeholders
- The right people within the organization should be given the right strategic knowledge at the right time to achieve effective strategic decisions
- Strategic decision making should generate strategic options that mitigate risk and uncertainty and also articulate growth opportunities
- Learn to navigate the politics behind strategic decisions, especially when multiple stakeholders across geographies and functional areas are involved
- Frequently reconsider and revise strategic assumptions and inputs at regular intervals
- Pay more attention to the external factors impacting strategy, since they are outside your control
- Integrate future oriented strategic analysis tools like business war gaming and scenario planning
- Detailed competitive analysis derived from War Gaming is a perquisite for generating assumptions on likely competitor moves
- Both upsides and downsides of a chosen strategy need to be clearly articulated
- Incorporate both quantitative and qualitative data and insights in the strategic decision making process
- Always validate the source of the data and insights that form the basis of the strategic decision to eliminate biased misinformation
- Discern all possible interdependent variables that affect a strategic decision
- Always ascribe probabilities to the likelihood of strategic outcomes
- Develop a skeptical mindset and question everything
- Remember that cognitive biases affect decision making
- Deliberately jolt your belief system by exposing your mind to information sources that go against it
- Keep an open mind that deliberates contrarian interpretations
- Use algorithms based on Big Data, Artificial Intelligence and Predictive Analytics to automate strategic outputs and eliminate human bias
Conclusion
Strategic decision making is a complex, human endeavour that is affected by a myriad of internal and external variables. It uses strategic intelligence or knowledge as the input to produce outcomes in the form of strategic decisions. There are several laws or principles around the nature, process and practice of strategic decision making. By incorporating these laws, the outputs of strategic decision making can be enhanced and lead to effective strategic decisions.