The art of decision making is indeed should be very simple –it should always lead to a good results. In doing the process, you should gather the evidence, outline the options, provide an assessment of possible outcomes and finally –decide. But in business or business marketing, it is always murkier.
Business decision-making then is a rare game. Here you see rationality of a sort – Nokia already had a high reputation in mobile in the mid-1990s and that was one motivation for its choices. But you also see a whole lot of luck. It could by now be the premier supplier of rubber to the Russian tire industry.
So how do you make critical decisions in business and what kind of decision maker are you?
Haydn Shaughnessy, contributor author of Forbes Magazine, have been studying that problem lately, along with Bryan Kirschner of the Apigee Institute who came up with a brief and simple classification of decision-making based on a company’s relationship to traditional business planning tools like ROI and NPVs.
In this category companies typically have a strong orientation towards the stock markets and the demand for predictable growth. They are typically AGGREGATING companies, drawing in new acquisitions so that the growth story remains strong. That in turn leads them to focus strategic decision-making away from transformation.
This kind of company uses the power and influence of others (analysts, institutional investors) to justify conservative decisions to employees. And its decisions are mostly conservative in nature, outside of it’s M&A program.
- Brand-Centric Core companies.
This category of company takes a very traditional approach to decision making and is very bound by financial KPIs. They have a very strong narrative around core competencies, rather than core business, and have quite static or traditional brand values.
In the hospitality industry and in banking, in particular, they seek customer trust from an overarching narrative based around corporate traditions. Companies in this category believe the brand, rather than any specific decision that they can take now or in future, is the North Star.
- Multi-focal strategists
We called the third category multi-focal. In this category companies grow a second strategic focus away from, but strongly related to, their core business.
Other companies tend not to experiment for long. They have a strong sense of respect for the core business and the people there who are serving up an opportunity to expand and grow in new areas. Although they may experiment, they revert to strict business disciplines quickly.