Bookkeeping

The 6 Best Scalable Decision-Making Frameworks

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decision making framework

For an example of the former, consider the global pension fund that found itself in a major cash crunch because of uncoordinated decision making and limited transparency across its various business units. A perfect storm erupted when different business units’ decisions simultaneously increased the demand for cash while reducing its supply. In contrast, a specialty-chemicals company experienced the pain of excess choreography when it opened membership on each of its six governance committees to all senior leaders without clarifying the actual decision makers. All participants felt they had a right (and the need) to express an opinion on everything, even where they had little knowledge or expertise. The purpose of the meetings morphed into information sharing and unstructured debate, which stymied productive action (Exhibit 4). It’s also important to develop tracking and feedback mechanisms to judge the success of decisions and, as needed, to course correct for both the decision and the decision-making process.

The SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis is a strategic planning framework used to evaluate the internal and external factors affecting a decision. It involves identifying the strengths and weaknesses (internal factors) and the opportunities and threats (external factors) related to a decision. Developed by psychologists Daniel Kahneman and Amos Tversky, the Prospect Theory proposes that individuals’ decisions are influenced by how potential outcomes are framed. It demonstrates that people tend to avoid losses more significantly than they seek gains, leading to risk-averse or risk-seeking behaviors. Introduced by Herbert Simon, the Bounded Rationality framework recognizes human limitations in processing information and making decisions.

Personal SWOT Analysis

This framework is particularly beneficial in product development, innovation, and any scenario where user-centric solutions are sought. This framework is particularly beneficial in rapidly changing environments like technology and business, where learning from past decisions and adapting is crucial. Adaptive Decision Making emphasizes flexibility and adaptability in decision-making. decision making framework It involves continuously assessing the outcomes of decisions, learning from experiences, and adjusting strategies accordingly to improve future decisions. Edward de Bono introduced the Six Thinking Hats framework, which employs different metaphorical “hats” to represent various thinking perspectives—logic, emotion, creativity, critical analysis, and others.

decision making framework

RACI has one person accountable for the successful completion of the work and emphasizes task completion over achieving valuable outcomes. The approver doesn’t have to provide input on every detail (unless they want to), but they should be informed enough to make good decisions. The driver should ensure the approver has enough context and information to do so.


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