The 3-stage process for making strategic decisions

 

Marcel Planellas

Managers find it difficult to make strategic decisions and develop this management skill. Their day-to day work involves dealing with management issues that normally concern routine company activities requiring quick decisions. This can be classed as operational management, the everyday running of the business.

Managing strategic decisions is different. This activity relates to the future of the company and the setting of medium- and long-terms goals for the organisation. These decisions affect the entire company and normally involve a firm commitment to resources.

The challenge for managers is that they have to make these decisions with a limited amount of information and with few past experiences to draw upon. Strategic decisions involve a high level of uncertainty and can rarely be reversed.

In this type of strategic decision-making, they have no prior experience and often managers feel insecure and tend to seek outside help.

Strategic decisions involve a high level of uncertainty and can rarely be reversed

 

People have a vested interest in spreading the idea that strategic decisions are very complex and are best left to external consultants. But the truth is, in reality, no one knows the business better than the people within the organisation who will have to implement a strategy.

There is nothing wrong with enlisting the assistance of external experts; managers are increasingly using consultants to deal with management issues that do not involve operations. The problem arises when you abuse this crutch, because it merely delays the development of this strategic skill. 

Managers must accept ultimate responsibility for the strategies of their organisation and this task cannot be delegated to a subcontractor. They should choose the models that best suit their organisation and simply make their strategic decisions, learning from the process, in line with the organisation.

People have a vested interest in spreading the idea that strategic decisions are very complex and are best left to external consultants

 

“Where am I?” ”What should I do?” “How should I do it?” These questions form the basis of good strategic decisions. Businesspeople and managers must ask themselves these questions to be able to take responsibility and manage strategic decisions as an absolute priority.

To answer these questions, we propose the ‘circle of strategic decisions’ model, which is a three-stage process that involves analysing, decision-making and implementation.

The circle of strategic decisions is based on the premise that the strategic management or planning process should take into account the organisation’s purpose.

The mission, vision and values of an organisation lie at the heart of its strategies. They are the organisation’s raison d’être. They explain how it wants to do things and where it wants to go. It is stable and does not change with each decision. It is what remains, in other words, the foundation stones of the organisation itself.

The strategic management or planning process should take into account the organisation’s purpose

The 3-stage process for making strategic decisions

Once the mission, vision and values are embedded into each strategy, the following three-stage process can help guide executives to make better strategic decisions:

1. Analysis

An analysis is an attempt to understand where the organisation is, including the strategic position of the organisation in relation to its environment and its internal capabilities. 

Analysis aims to provide a better understanding of the internal and external environment. It requires a certain distance and perspective. It must be rigorous and supported by data, while also identifying opportunities and anticipating trends.

2. Decision

A strategy is a decision: without a decision there is no strategy. The purpose of this part of strategic management is to choose a strategy. It requires generating options, comparing them and deciding. 

The art of management lies in choosing a unique mixture of options that includes choosing a course to follow, and in so doing, setting a course for the future.

With strategic decision-making, the most sophisticated solution can often be the simplest one

3. Implementation

Decisions have to be implemented. Implementation is the last part of a strategy and is the part you can see and feel. It means ‘doing’ or ‘taking action’. The question is how to move from making a decision and turning it into reality. This has to do with people and resources, being able to effect change and make things happen.

A continuous learning cycle

People and organisations can learn. This circle can be seen as a learning wheel, a continuous process in which the organisation can learn and get better at strategic decision-making. It represents learning by doing and by deciding, correcting mistakes and providing new solutions. It involves learning in a double loop.

I have never seen anyone become a good strategist without practice. As in sport, this is a discipline that requires training and practice. You can learn to manage strategies through practice (by practicing management) in making decisions, putting them into practice and analysing the results. 

However, with strategic decision-making, the most sophisticated solution can often be the simplest one. Getting to the essence of a strategy does not have to be complicated. You simply have to know the way, the process to follow and have the necessary tools and models to accomplish your goals.

This article is based on knowledge insights by Marcel Planellas & Anna Muni published in the book Strategic Decisions: the 30 most useful models.

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Strategic Decision-Making

Eric Quick

Mastering the Art of Strategic Decision-Making

Effective decision-making is the cornerstone of leadership and organizational success. It's not just about making choices; it's about making the right choices. In this blog post, we'll explore the art of strategic decision-making and how it plays a pivotal role in shaping the direction and outcomes of businesses and leadership.

Understanding Strategic Decision-Making:

Strategic decision-making is the process of identifying and selecting the most advantageous course of action to achieve long-term organizational goals. Unlike routine or operational decisions, strategic decisions have a significant impact on the organization's future.

Key Elements of Strategic Decision-Making:

1. Clarity of Vision: Before making any strategic decisions, it's crucial to have a clear vision of where the organization is headed and what it aims to achieve. When this is missing, it’s very easy to have SOS or “Shiny Object Syndrome” where everything looks like it is good. I’ve found this an ongoing struggle especially in early stage companies where so much can change daily/ weekly or monthly with the strategic direction and traction.

2. Gathering Information: Effective decision-makers gather and analyze relevant information. This includes market research, data, and insights that inform the decision-making process. From an early coaching engagement I had, I was encouraged to gain “Confirming” and “Discerning information” to balance my biased view of the situation and decision at hand. This was critical in my overall process of analyzing the information. As an individual with a heavy analytical muscle, having “enough” information to make a decision can be paralyzing if not kept in shape.

3. Evaluation of Alternatives: Multiple options are often available for any strategic decision. Evaluating these alternatives is a critical step in making the right choice. Getting outside counsel from key advisors or personal board of directors can be critical in having an unbiased source sharing their assessment of the situation/ options available.

4. Risk Assessment: Every decision carries risks. Strategic decision-makers assess and manage these risks to ensure that the chosen course of action aligns with the organization's risk tolerance. Being an eternal optimist like most entrepreneurs, I have found that key stakeholders on the team, on the Board of Directors or outside counsel can be a great sounding board on decisions to ensure you’re not rationalizing a poor decision into a decision you think you can make work. I call this ERS or EOS or the “Entrepreneurial Rationalization Syndrome” or “Entrepreneurial Optimization Syndrome”. You can always see/ rationalize how the decision will be a good one especially in the absence of a perceived next best option.

5. Stakeholder Consideration: It's essential to consider the impact of a decision on various stakeholders, including employees, customers, investors, and the community. Another important aspect that is rarely intentionally considered is the impact on the earth/ environment. This should be right up there with the other key stakeholders as we only have one earth and from the research, we’ve essentially ignored the earth/ environmental stakeholder as part of business decision making processes.

Top 5 Strategies for Effective Strategic Decision-Making:

1. Set Priorities: Start by identifying your organization's top priorities. This will guide your decision-making process and help you focus on what truly matters.

2. Involve Key Stakeholders: Engage key stakeholders in the decision-making process. Their insights and perspectives can provide a well-rounded view of the situation.

3. Data-Driven Decisions: Rely on data and analytics to inform your decisions. Data-driven decisions are more likely to be based on facts rather than assumptions.

4. Scenario Planning: Consider various scenarios and potential outcomes for each decision. This allows you to prepare for different possibilities while exploring the pro/ cons for each one. Maybe there’s a hybrid solution that comes through this activity. .

5. Seek External Expertise: Sometimes, it's beneficial to consult with experts or mentors who can provide valuable insights and an objective perspective. As mentioned above, external options that can provide unbiased perspectives can be hugely beneficial when looking at potential options. I’ve consulted brothers, parents, spouse, executive coaches and friends in my previous decision making processes.

Leading by Example: A Case Study in Strategic Decision-Making

Consider the case of a CEO leading a tech company. Faced with a rapidly changing market, the CEO's strategic decision was to invest in research and development to stay at the forefront of innovation. The decision required a substantial financial commitment and patience to turn the ship, but it was also based on a clear vision, data-driven insights, and a commitment to long-term success.

The outcome? The company maintained its competitive edge, continued to innovate their product offering, and secured its position as a market leader, all thanks to a well-considered strategic decision.

Measuring the Impact:

The success of strategic decision-making can be measured in various ways, including financial performance, market share, customer satisfaction, employee morale and environmental benefits. Organizations that prioritize strategic decision-making tend to see consistent growth and adapt effectively to changing conditions.

Conclusion:

Strategic decision-making is both an art and a science. Leaders who master this art create organizations that thrive in dynamic and competitive environments. By setting priorities, gathering information, evaluating alternatives, and considering risks and stakeholders, you can make strategic decisions that propel your organization toward its long-term vision of success.

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Eisenhower Matrix Template

 

Decide which tasks you should do first, which you can delegate, and which are optional by using the Eisenhower Matrix. Prioritize tasks based on urgency or delegate like a pro (or like a President).

About the Eisenhower Matrix Template

We’ve all been there: you sit down to start your day, and you’re so overwhelmed by the tasks you need to complete that you don’t know where to start. Emails pile up, you have errands to run... How do you sort through the chaos? Meet, the Eisenhower matrix, a decision-making framework designed by former American president Dwight D. Eisenhower.

The Eisenhower decision matrix template helps you prioritize tasks based on their urgency and importance. Instead of struggling to figure out in what order you should complete your tasks, decide which ones are urgent, which can be delegated, and which are optional.

How to use the Eisenhower matrix template

Making your own Eisenhower matrix is easy with Miro's template. You can easily visualize tasks in each quadrant of the matrix, adding images, videos, or documents to keep track of everything in one place. For a dynamic overview, you can even integrate Jira cards as action items to keep track of the current status of any task.

Here's a step-by-step guide to using the Eisenhower matrix template effectively:

Step 1: Fill in the "Do First" quadrant

The tasks in the upper left quadrant are the most important. They need to be done today. For example, answer an urgent email from your boss, or make a doctor’s appointment.

Step 2: Fill in the "Schedule" quadrant

Tasks in the upper right quadrant are important, but not pressing. These are things you can schedule for the future and that you need to put in your calendar. Catching up with a friend or meeting with your coworker about a non-urgent topic can fall into this category. The bulk of your tasks should fall into this quadrant.

Step 3: Fill in the "Delegate" quadrant

The lower left quadrant is for tasks that are not as important as the urgent tasks, but should still get done promptly. Make sure to follow up on delegated tasks, to ensure they were executed properly. If someone calls you into a meeting, for example, you could delegate the task by asking a teammate to take the meeting instead.

Step 4: Complete the "Don’t Do" quadrant

The lower right quadrant is for tasks you don’t need to do at all. Think about the tasks that allow you to procrastinate and keep you from getting things done. Things like scrolling through social media might fall into this category.

Step 5: Reassess your matrix and keep it up-to-date

Iterate on your matrix as needed. Your priorities might change during the day or as other tasks come up, so use the template to quickly add, move, or change tasks as your schedule evolves.

Why should you use the Eisenhower Matrix template?

An Eisenhower decision matrix template can be particularly useful for various reasons:

1. Prioritization: It helps sharpen your focus on the most important tasks, thereby increasing productivity by keeping the vital tasks in the foreground.

2. Delegation: The template clearly identifies the tasks that can be delegated, promoting efficient teamwork and time management.

3. Stress Reduction: By categorizing tasks, the matrix reduces the overwhelm of long to-do lists, which eases anxiety and provides a clear path for action.

4. Time Management: It allows you to identify tasks that should not consume valuable time, making it easier to use your work hours more efficiently.

5. Strategic Planning: The matrix supports long-term planning by distinguishing between tasks that require immediate attention and those that contribute to long-term goals.

Eisenhower Matrix Template FAQs

Can the Eisenhower Matrix be used for team projects?

Absolutely. The matrix is not limited to individual task management. It is a powerful tool for teams to align on priorities and ensure that everyone is focused on the right tasks.

Is the matrix suitable for personal and professional use?

Yes, the Eisenhower Matrix is versatile and can be used in both personal and professional contexts to manage any type of task effectively.

How often should the matrix be updated?

It is recommended to review and update the matrix regularly, ideally at the start of each day or week, to reflect the evolving priorities and tasks.

Is there a preferred format for presenting the information within the template?

It's essential to keep your Eisenhower Matrix organized, clear, and easy to read. Miro enables you to add visual assets and color-code stickies for better visibility.

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