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Strategic Decision Making: Why and How?

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Even the small decisions we make on a daily basis can hugely impact the course of our lives. This especially applies in the world of business, where one simple decision might mean the difference between failure and success.

There are many different frameworks you might adopt to make more effective decisions. Read on to learn about the strategic decision-making process and see if it works for you.

What is strategic decision-making?

Strategic decision-making is defined by two key elements. The first is building a broad view of a problem, analyzing it from a range of perspectives. When people make poor decisions, it is often due to basing that decision on limited information. Strategic decision-making attempts to avoid this by ensuring a problem is viewed from all possible angles.

The second key element is understanding the short and long-term implications of each potential avenue. After gathering this comprehensive information and examining the available options, a strategic decision-maker will then build a step-by-step plan for implementing their decision.

How mission and vision play a role

A business has a mission and a vision to define what and how it intends to achieve. If these statements are clear and practical, they can be excellent guides during the strategic decision-making process. Leaders can use them to evaluate how well each potential decision would serve the mission and vision of the business.

Why not develop personal mission and vision statements? For example, if your goal is to cultivate an excellent work-life balance that allows you to travel and spend time with family, a mission statement could make the decision easier if you are offered a demanding job that requires a lot of overtime.

Long and short-term goals

The mission and vision might provide overarching objectives, but implementation will be easier if they’re further broken down into long and short-term goals. Leaders should have firm ideas of where they want the company to be in one month, six months, a year, and five years.

Again, you might want to apply this logic to your own life, both professional and personal. For example, if your objective is to be a successful online influencer in your industry within one year, how many followers do you need to have accumulated in six months? What content do you need to prepare in the next month to start the process?

Tools for strategic decision-making

Since strategic decision-making requires a methodical approach to problem-solving, it makes sense that many tools have been developed to systematize the process. Here are four you might consider using the next time you engage in a decision-making process.

Logic Tree

A logic tree is ideal for visual thinkers. It allows you to capture the myriad considerations that will influence your final decision in a clear, easy-to-understand diagram.

The trunk of the tree is your problem, and each consideration becomes a branch. These main branches might also break off into multiple smaller branches. You might find that the brainstorming session required to generate your logic tree reveals some important factors you had not previously realized.


OODA stands for Observe, Orient, Decide, Act. If it sounds very no-nonsense and direct, that might be due to it being created by a military strategist.

The observation stage of the loop requires gathering information. In a business, this might be data relating to company performance and the industry context. Orienting involves making sense of the information and analyzing it in relation to the problem. Once the decision is made, then it’s time to take action!

Decision Matrix

Once you have a range of possible options, a decision matrix uses specific criteria to evaluate their usefulness. You decide these criteria, and each criterion is weighted differently according to its relative importance.

When choosing between different career paths, for example, criteria might include high pay, the opportunity to work remotely, the potential for promotion, and variety of workload. A decision matrix allows potential decisions to be measured and compared in a logical, numerical way.

Ladder of Inference

Often, we arrive at decisions without exactly knowing how and why. The Ladder of Inference is designed to reveal the assumptions and beliefs that lie beneath decision-making processes. By exposing them, we are then able to examine them and ensure that we are not jumping to unmerited conclusions.

The Ladder of Inference can be used to analyze your reasoning and ensure that your decision-making is rooted in reality.

Step-by-step strategic decision-making

The strategic decision-making process requires you to work through five stages:

1. Define the problem. It is crucially important to determine whether this is the real root of the problem, or simply a symptom of another issue. Assess the urgency of the concern and determine your end goal. What do you want to achieve through the decision you eventually make? What would a positive solution look like?

2. Gather information. Look for data that explains the origin of the problem. Talk to stakeholders at different levels to build a comprehensive understanding of the situation. Ask yourself, “What knowledge am I missing?” and look for innovative ways to obtain that information.

3. Develop options. Once you have a clear image of the issue, you can start to map out potential paths that could be taken in response. Some options can probably be immediately discounted. Others might combine to form a stronger solution.

4. Evaluate options. Use strategic tools to determine which options are most useful. Look at the pros and cons, and assess the practicality of each option. Consider the possible impact of decisions from multiple angles to uncover any unintended outcomes.

5. Choose and take action. Once you have chosen the best solution, it’s time to implement your decision. Do this strategically by breaking it down into smaller steps.

This approach can be used to make strategic business decisions, but it also transfers well into other areas of life. We can make better decisions by ensuring that they are based on data and well thought-through, aligning with our broader objectives.

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