Short introduction of 3 types of decision Making levels operational tactical and strategic

By Professor M.S. Rao, Ph.D. The Father of Soft Leadership  

We all make decisions in life.  Some turn out to be right while some turn out to be wrong.  How do leaders make decisions?  Do they make decisions based on their head, heart, gut, or luck?  Do they make decisions after weighing the pros and cons of the available information?  

Decision-making is an art and science.  It involves a series of steps and strategies to arrive at solutions. It is a well admitted fact that some decisions are successful while some are failures.  Is it necessary that all decisions leaders make must be successful?  Leaders also fail at some stages due to wrong decision-making.  If they take precautionary measures and make decisions by following their head, heart, and gut, they can make effective decisions.  It is a well–admitted fact that decision determines destiny.  

Decision-making requires information, analytical reasoning, and problem-solving skills.  Since people are unique, making decisions will also be unique.  Decision-making depends on the nature, experience, and availability of information and environment of the individual, the factors and forces involved at a particular point in time.   

Decision-making is a process where alternative solutions are generated and shortlisted to resolve problems. It has several ingredients such as problem-solving skills, analytical skills, intuition, and gut feeling, and conceptual skills to name a few.   

Categories of decision-making

There are several categories of decision-making processes but fundamentally there are two – rational and intuitive.  In rational decision-making, the pros and cons are weighed and the best one is adopted based on logic, analysis, and rationality.  It is a widely used method of decision-making.  In contrast, in the intuitive decision-making method, the decisions are made based on gut feeling and there is no logic, analysis, or rationality involved.  

Pillars of decision-making

There are four pillars for decision-making – imagination, conceptual thinking, intuition, and innovation.  Einstein rightly remarked that imagination is more important than knowledge.  Imagination helps see the invisible.  Entrepreneurs and leaders have the knack of seeing the invisible as they are imaginative.  Hence, imagination is the first pillar of decision-making.

Conceptual thinking is the second pillar of decision-making.  We must understand the concepts clearly as the entire problem solving revolves around this aspect. Unless there is clarity about the problem or the issue, it is very difficult to arrive at the right decisions. 

The third pillar – intuition and gut feelings help greatly during the decision-making.  Intuition is all about getting inputs from the subconscious mind.  The conscious mind sends lots of important inputs to the subconscious mind regularly and the same is stored and reinforced over some time.  When people don’t get adequate logical and analytical ideas they go by their sheer gut and intuition.  

The fourth pillar of decision-making is innovation where the routine solutions do not work.   Every problem calls for a different solution.  You cannot always follow prescribed solutions.  You must go by the road less traveled while generating solutions. Innovation is a sure shot way to successful decision-making.  Innovation and creativity play a key role in outsmarting the growing competition across various sectors globally.  The senior leaders and CEOs at the top-level lay stress on this particular pillar to stay ahead of time.  Hence, any decision-making depends on these four pillars – imagination, conceptual thinking, intuition, and innovation. 

Process of decision-making

Businesses are bankrupt due to wrong decisions.   Decision-making makes or breaks the lives of leaders.  It can either take the people to the heights of glory or the abyss. Hence, it should not be taken lightly.  When there is no solution in sight the best option is to go by intuition. 

Whenever people make decisions, they should first define the objectives and goals clearly.  Second, they should gather relevant factual information to analyze the pros and cons.  Third, they should develop multiple alternatives by focusing on far-reaching implications and repercussions.  Fourth, they should consider permutations and combinations.  Fifth, they should implement by taking a final call.  This is the most crucial stage of decision-making.  Sixth, it is essential to monitor the fallout of the implementation through proper feedback.  If the decision works in favor, it is fine, otherwise, the decision must be dropped. 

During the decision-making process, the leaders can adopt three approaches such as experience, experimentation, and research and analysis.  The conventional approach is to go by experience. However, keeping the current complexity in view, going by what went right in the past might not work in the present context.  Another method is to go by experimentation which is by trial and error method.  When you look at uneducated people they go by gut and intuition from their subconscious mind.  They make a trial with a specific decision and if it does not work, they learn lessons from the error and adopt another alternative decision. 

Decision-making can happen under three circumstances – certainty, risk, and uncertainty.  When adequate information is available, it falls under certainty.  When the information available is inadequate, it falls under risk.   When there is a dearth of information, it falls under uncertainty.  It is the most complex one as leaders must decide without any access to information through their gut and intuition. 

Peter Drucker quoted, “Whenever you see a successful business, someone once made a courageous decision.” Age is inversely proportional to risk.  The younger the age higher the risk appetite and the older the age lower the risk appetite.  Those who are swashbucklers have a higher risk appetite.  They make decisions based more on the gut than on rationality.  Their decisions depend more on their imagination than on realities.  They usually go by heart rather than by head.  They don’t see any logic, analysis, and rationality.  Young entrepreneurs often fall under this category. 

Decision-making and levels of management:

Conceptual and technical skills: Decision-making differs from each level of management.  The senior leaders are always engrossed in making decisions where the fate of the employees and the organization is involved.  In every organization, the senior-level management is actively involved in decision-making.  At the senior level, the leaders need more conceptual skills than technical skills.  They must be in a position to see the invisible to make decisions.  Whenever they are confronted with problems, they must be in a position to see the prospects and seize the opportunities.  However, the leaders in the middle-level management need an equal proportion of technical and conceptual skills.  At this level, the leaders may not take strategic decisions, unlike the senior level management.  Finally, in low-level management, leaders must have more technical skills and less conceptual skills.  

Strategic, tactical, and operational decisions: Senior level management deals with strategic decisions as the risk element are very high and the outcomes are uncertain.  In strategic decisions, the slogan is ‘higher the risk higher the returns’.  They are made in tune with the organizational vision, values, principles, and philosophies based on imagination than intuition.  The middle-level management makes tactical decisions that support the strategic decisions.  In tactical decisions, the slogan is ‘medium the risk medium the returns’.  The lower level management involves in operational decisions which support tactical decisions.  The slogan for an operational decision is ‘lower the risk lower the returns’. These decisions are made with a short-term perspective where the impact is immediate.  At every level of management, the decisions are made.  Hence, decision-making is an integral part of every level of management.

Tools and techniques to make successful decisions

• Look at the big picture to understand the hidden challenges which are often ignored by others.  
• Prepare Plan A, Plan B, Plan C, and Plan D. If Plan A fails, you can explore other plans for execution.     
• Convince yourself first whether the decisions you make are feasible for execution.  If you are convinced, you may proceed further.  Don’t regret your decision because you have made the decision based on the available information at a particular point in time.  It is not necessary that all decisions must be successful.  If the problem is big, slice it into small pieces and assemble the same through synthesis.  
• Consult experts to get more ideas.  ‘Two heads are better than one,’ goes an ancient Greek proverb.  The quality of decisions will be higher if more than one person is involved in the decision-making process.  
• Give a break to your problem.  Go to a serene place and ponder.  Your creativity and out-of-the-box thinking will come to the fore.  You will be amazed to find your outcomes.   
• Don’t get into the paralysis of analysis.  Don’t brood over them too much on the problem.  Once you are convinced with the decision, it is time to take a final call without any procrastination. 
• Check your mood levels.  Make decisions when your mood is good.  When in doubt, postpone the devil of the decision to avoid adverse consequences.
• Never look at the individuals.  Look only at the issues and ideas to arrive at the solutions.  It is always what is right and wrong not who is right and wrong matters.   In extreme cases, not making a decision is also a decision. At times, time will solve the problems on its own.  However, treat it as an exception, not a rule.  
• List out the rational and realistic alternatives.  Check for long-term implications and complications. Avoid making decisions when in anger.  
• Sleep over the problem.  When you think about the problem before you go to sleep, the very next day morning you get better solutions as you slept with the problem.  When you go to bed by thinking about the problem it goes to your subconscious mind which automatically searches for solutions.  
• When you don’t get any ideas for your problems, take a break for some time.  During this period the subconscious mind searches the information for appropriate alternatives.  
• Think of repercussions before implementing a decision.  What is the best and the worst that can happen after implementing your decision?  
• Go by intuition, if the repercussions and fall-out are limited and the time is short.  In contrast, delay the decision when there is a possibility of more harm to others.  
• Look at the underlying reasons, factors and forces, and examine them analytically to arrive at feasible solutions.  
• Keep your decisions within yourself when you involve in group decision-making as it may influence others.  Listen to the group members first, weigh the pros and cons and offer your solutions.  It helps in arriving at the most feasible and viable solutions.  
• Be prepared mentally for failures as all decisions may not deliver the desired outcomes.  

Decision-making and leadership

Leadership and decision-making are closely connected.   Leaders must make decisions in a fog of uncertainty.  Good leaders know how to make decisions and commit to seeing them through.  They don’t invent excuses.  They have a higher internal locus of control.  They make decisions and implement them.  They are optimistic and have alternative plans ready if a specific decision boomerangs. They learn lessons from wrong decisions and bounce back quickly.  For leaders, failure is not final but it is a learning opportunity to become smarter and wiser.  

Leadership calls for stepping into the shoes of problems, encountering adversity squarely, and making tough decisions.  Whenever there is a crisis don’t act as though there was no problem as your subordinates know the same.  Pretending that there is no crisis will erode your authority to lead from the front.  Hence, accept the realities and declare that there is a crisis brewing and act tough by making the right decisions.  

If leaders fail to make the right decisions it costs the lives and careers of their team members.  The leaders must accept the blame for their failures and spread the fame for their successes.   

Communication and decision-making

Communication plays a crucial role in making successful decisions. Peter Drucker quoted, “The most important thing in communication is to hear what isn’t being said.”  Hence, be a good listener to make the right decisions. Once the decision is made it is equally important to persuade the team members to accept to ensure effective execution.   In this regard, communication plays a crucial role in getting across the message of decisions effectively to the team members.  At times there is a need to modify the decisions based on the inputs of the members.  When the team has certain reservations, it is essential to reconsider and revise the decisions.  

John McDonald said, “The business executive is by profession a decision-maker.  Uncertainty is his opponent.  Overcoming it is his mission.”  There is no magic wand to make successful decisions. Effective decision-making requires thorough discussions and deliberations.  The challenge with decision-making is you won’t always have all the data you want.  Decision-making is one of the key skills of soft skills.  It is also a key skill to achieving effective leadership.  One of the yardsticks to measure effective leadership is good decision-making skills. If communication is the mother of leadership, decision-making is the father of leadership. 

Conclusion

With the rapid growth of technology, it has become highly challenging to make the right decisions.  The old style of decision-making doesn’t work in the present context as things are changing rapidly.  Leaders must realize these facts and must reinvent themselves with innovative and creative decision-making tools and techniques.

Decision-making is a skill that can be honed over a period of time by practice and experience.  Once you practice making decisions you improve your confidence and become a successful leader.  Overcoming challenges in life can also make you a good decision-maker.  This skill is very much essential for leaders at the top-level management as the fate of the organization and its employees depend solely on them.  Hence, it is essential to exercise restraint and caution and demonstrate the maturity to make sound decisions.

There is no fixed formula to make decisions.  Follow your head when you have ample time and information to make decisions. Follow your heart when you have a paucity of time and information to make decisions. Follow your gut when you don’t have adequate time and access to information to make decisions.  In a nutshell, decision-making is situational.  To conclude, there is a need for situational decision-making in the 21st century to overcome turbulent times and achieve organizational excellence and effectiveness.  

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