Decision-making According to Peter Drucker

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Decision-making and Valuation > Best Practices > Decision-making According to Peter Drucker

Decision-making According to Peter Drucker
Donato ochan Hakim, Interim Manager, Sudan, Member
Definition of a Decision
A decision is a choice whereby a person performs a conclusion about a situation. This represents a course of behavior about what must or what must not be done. It is the point at which plans, policies and objectives are translated into concrete actions. Planning leads to decisions guided by company policy and objectives and implies the selection from alternative objectives, policies, procedures and programmes.
Peter Drucker
The purpose of decision-making
With decision-making we try to direct human behavior towards a future goal. If there were no alternatives, there would be no need for a decision.

Types of Decision-making
Drucker distinguishes between:
- Tactical decisions and strategic decisions. Strategy can be defined as the behavior of management in trying to achieve success for company goals in an environment of competition. It is based upon the action, or possible action of others. Strategies are solely calculated to implement plans and objectives, bearing in mind all manner of uncertainties, so that an advantageous position is attained over an opponent.
‘Tactical’ decisions are made by management and involve ‘either finding out what the resources are, or what they should be’. These include decisions upon basic objectives and may affect the productivity, organization or operation of the business.
- Organizational decisions and personal decisions. Organizational decisions are those made in the role on an official of the company and reflect company policy.
Personal decisions refer to those made by a manager as an individual and cannot be delegated.
- Basic decisions and routine decisions. Basic decisions are long-range in scope e.g. the location of a factory in development area, or deciding what product to make. Wrong decisions on these matters can be costly. Routine decisions are those which are made repetitively and need little thought.

The process of decision making.
For a proper decision to be reached the following steps must be followed:
• Define the problem to solved
• Find alternative solutions
• Analyse and compare these alternatives
• Select the plan to be followed noting relevant factors
• Make the decision effective – by taking action to put the decision into effect

Influences on Decision-making
It should be noted that, whatever decision criteria are chosen, decisions are affected by:
• The importance of the decision;
• Characteristics of the organization;
• The personality of the decision maker
• His/her state of mind when making the decision

Decision Making is also Impacted by Emotions
McCallum, Accountant, Australia, Member
Decision making is impacted by emotions and the personality of the decision maker. For example many people admit that under time pressure they can make incorrect or bad decisions.

Factors Influencing Decision Making
V SHRIDHAR, Consultant, India, Member
Consciousness plays an important part in decision making. According to my experience decision making is affected by experience, knowledge, work culture, individual traits, attitude & intelligence.

Decision Making According to Peter Drucker
DR SAJAL SEN, Management Consultant, India, Member
The decision making is impacted by emotions when we do not take the decision support tools into account. I feel a decision supported with objective tools can be a better choice to overcome gut feeling influencing the decision.
In current fast moving world, the problem is one is required to make important decisions by yesterday, and not enough time can be spent on effective analysis.

The Significance of Proper Problem Definition
Malik Iqbal Kabir, Bangladesh, Member
I agree with Drucker that we need to be assured that before any decision making we should know what's the real problem is.
If the problem is defined properly, the decision is an easier task. So it is important to initiate a systematic approach for problem definition before moving on to decision making.

Organizational Decision Making Processes
Anand H, Member
Organizational decision making is a process...
But it's a challenge when there are multiple outcomes and dynamic variables which are not in control. Unfortunately, not everything can be modelled or simulated.. That goes into the realms of karmic management which is not everybodys cup of tea.

Emotion as a Factor in Decision Making
vp unnikrishnan Menon, HR Consultant, India, Member
There is an emotional dimension in decision-making, no doubt. The decision maker can intelligently utilize his emotions at the time of decision making.

Decision-making According to Peter Drucker
Rev. Matthias A. Idyu, Student (University), Member
Decision-making in any organization is paramount and necessary.
Decision-making is very critical at all levels of organization, parastatal agencies, commuinity, governmental and non governmental, institutions, local, states and national etc, etc., as it enhance good governance, provides organizational checks and balance, controls excessive abuse of power and control, large scale of corruption, and or embezzlement of public funds and waste.
As a strong proponent of radical decision-making and social change, I strongly believe that decision-making at any level should include all stakeholders, and should not be solely reseversed to corporate or organizational executive managers or CEOs as it is the people that make an organization what it is...

Fact-based Decision Making Reduces Risk
Anthony, Consultant, Malaysia, Member
Emotion does play a part in the decisions that we make. But if facts and data are used (for example using business intelligence), it reduces or eliminates the risks and fear of failure everyone has.
Therefore it is important to gather as much information as possible, and to tap into the thoughts of others and yours as well, and apply critical thinking to it.
A sound decision can then be derived with reduced risk. Although there remains always some extent of risk in any decisions we make.

Problem Defining Stage in Decision Making
Ivan Kohlinsky, Management Consultant, United Kingdom, Member
@Malik Iqbal Kabir : as regards to 'defining the problem', systems thinkers would say that one should look at the problem and see if it is a 'symptom' or just part of a wider problem - that one should always look at least 'one level up' from where the initially identified problem is...
Is this really the problem? Etc, etc. Teams normally don't spend long enough at the fundamentals at a high level at the start and just dive in because of the timescale pressures.

Selecting the proper Amount of Information in Organizational Decision Making
eugenio bastianon, Professor, Italy, Member
The search of Shannon (The Mathematical Theory of Communication, 1949) on measuring the amount of information is essential to reduce risk in decision making.
From Shannon, we can say that an organization maintains equilibrium if management selects the proper information flows, taking different decisions (Bastianon 2011).

The Importance of Timing when Making a Decision
Bernhard Schleidt, Student (MBA), Member
One aspect of decision making has been neglected so far: WHEN is the decision required to be effective? (Editor: compare Real Options on postponing strategic decisions) We need to plan backwards at what point of time we finally need to decide. Depending on the time pressure we can go for a different decision making process: either intuitive, consultative or team decision.

Short Term Decisions are More Prone to Errors
Julius Nyangaga, Consultant, Kenya, Member
- Long term decisions can be taken through a structural process, where it is easy to demonstrate the options there were available and why a particular line of though was selected.
- Short term decisions on the other hand, even if they are sometimes just as important and crucial, and come in high numbers and frequency, are more exposed to erroneous direction due to insufficient time for analysis. They require skill, experience, wisdom and … risky guts.

Objective Decision Making is a Product of the Subjective Mind
DD Chhaya, Coach, India, Member
@Dr Sajal Sen: objective is a product of the subjective mind! In order to have objectivity, the subjective mind of the decision maker needs to be uncontaminated.
We have seen very objective data based performance appraisal formats used to fix an employee when the mind is contaminated. Again, decision making is an intellectual process and led by conviction.
Evil conviction can lead the intellect of decision maker to evil pursuits. Example of 9/11 World Trade Center is before us, wherein a very high level of intellect was used for evil pursuits due to contaminated minds and evil convictions to take a decision to terrorize.

Decision Making Must be Rational
Deepti Choudhary, HR Consultant, India, Member
Decision makers should base their decisions basis relevant facts and logical evaluation of alternatives. We need rational decision-making. Any decision which is devoid of the above and is purey based on emotions can lead to undesirable outcomes.

Decision Making According to Peter Drucker
kvssiyer, Consultant, India, Member
Decision making is a choice of one alternative amongst a set of choices available.
The pros and cons of or consequences of a choice made is analysed or tabulated and in principle, the best one with minimum disadvantages or maximum advantages is chosen as the decision.
We can also give weightages to each choice to quantify the outcome of the choices to arrive at the most rational decision.
However despite the above, sometimes we don't pick the choice with the best net advantages, when we are driven by our gut feeling which influences us strongly.
Such gut feeling is based on our experience and holds the upper hand in decision making. Sometimes it goes right and sometime it goes wrong. Again, how the decision impact our personal interests influences the choice of the alternative.
As such decisions-making is more intuitive than rational.

Decision Making According to Peter Drucker
Even if there are no alternatives, there is a need for a decision: to solve the problem or to let it and make no decision at all...

Decision Making According to Peter Drucker is Useful for African Leaders
Abel Ogundeji, Consultant, Member
African leaders should learn from Drucker's decision making process. You will note that the right alternative may not be popular or politically expedient in Drucker's estimation. Most African leaders prefer taking decisions that deceive the people instead of beneficial futuristic decisions.

Decision Making Across Cultures
Tambe Larry, Student (MBA), Brazil, Member
Decision-making varies across cultures and locations. A more paternalistic society like Africa and the Latin Americas require a separate approach as opposed to a pragmatic rational community in Europe and the US.

Decision Making Process Redefined
Jagdish Mehta, Entrepreneur, India, Member
It is not always possible to take decisions strictly as a management process.
There are times when we bypass all the learnings and take decisions to challenge our own genetic or cultural make up and try to adopt a new learning curve that is thinking out of the box...
Leaders, I believe, do more of this...

The Purpose of Decision Making
Lee Lai Seng, Entrepreneur, Malaysia, Member
@Walter Pascal : Decision making process arises when a person has more than one options, whether organisational or personal decisions.
In my opinion Peter Drucker rightly said that "if there were no alternatives, there would be no need for a decision".

Feedback Effects in Decision Making
Some decisions when taken have a feedback loops (feedback effects) that can cause them to be more or less effective. I'm not seeing this aspect here.
Does someone know an evolutionary decision-making process (no static picture).

What Influences Decision-making?
Per Wickman, Analyst, Sweden, Member
I believe the most important influences on decision-making are:
• Culture and how we think…
• Knowledge
• Methods
• Principals
• Complexity

Decision Making is also Determined by a Person's Intelligence
KISHOR KUMAR, Manager, India, Member
It is the intelligence of a person that allows her/him to make an decision (that fits ) to the situation.

Decision-making in the Public Sector
Bornface Chinyuku, Student (University), Member
In the public sector many decisions are made basing on their "political correctness". If the decision choice is not in sync with those in the upper echelons who have the power, it means that the decision taken may not be correct or the best.
Better alternatives can exist, but external controls in the form of political power dictate the selection of the choice.

Decision Making Involves us
Christian Buzane, Student (MBA), Mexico, Member
I agree with most of all the comments presents here... However I believe there is always an opportunity to choose, wether we're dealing with a big, small, important ot routine situation.
To achieve positive or avoid negative results of our decision, we always have the opportunity to make a choice.

Decision Making Process Redefined
srinivas, Lecturer, India, Member
Is decision making an evolutionary process, where we unlearn some of the things of past, and where we relearn and adapt to new ways? We need approaches which are in line of the true spirit of change and experimenting and incorporating feedback.

Looping Decision Making Process...
@Srinivas: you're right I'm wondering if there is a conceptual framework dealing with this looping decision making process?

Influences on Decision-making : Stress and Tunnel Vision
David Guild, Consultant, Australia, Member
Stress plays a huge role in decision making too. When people are stressed, whether it is immediate stress or prolonged stress, both induce tunnel vision. The correct decision may not be made due to missing information to use in the decision.

Definition of a Decision: The Role of Delegation and Empowerment
tan liong choon, Management Consultant, Singapore, Member
Decision-making is closely tied to empowerment. Everybody makes decisions on a daily basis, i.e. decision-making is seen at every level. All staff should be allowed to make decisions at their own level.
Criteria for delegation of decision can be:
- Impact/influence should be within the staff's sphere of responsibility and control.
- Decisions are best devolved to the level of the source of information (so that as rational/objective and as informed decision can be made). (Ed: see also managers that can't delegate).
As for strategic versus operational decisions: Strategic decisions should be based on long term, broad outcomes. They should not be "counting beans" and their impact is more organisational (cuts across biz/geographical lines) and can involve intangibles rather than specific things.

Centralized Decision-making in Organisations
Ann Wallace, Business School Marketer, Barbados, Member
@Rev. Matthias A. Idyu: you have made an excellent point. The problem with decision-making in far too many organisations is that decision-making is viewed as the territory of the head of the organisation, regardless of whether there is a process as detailed by Drucker and others. The influence of the head is what prevails. Either as a lobbying tactic, or simply autocratic enforcement (Ed: compare Core Groups for more details on how that autocratic enforcements works).
Remove that view and the decision-making process will be more effective.

Using Emotions to Improve Decision-making
Leena Bissoonauth, Student (University), Mauritius, Member
@McCallum: Indeed decisions are based upong (strong) emotions. And when emotions are not dealt with in a constructive way, they can easily lead to bad decisions.
But people have a high degree of Emotional Intelligence, they use their emotions to improve their thinking. To see things clearly even when feelings are strong. Making good and solid decisions althought they may be angry at the time. Balancing their thoughts and feelings. They make more informed decisions and do not ignore uncomfortable facts.

Decision Making in Organisations
PratapachandranK, Management Consultant, India, Member
Decisions are the end result of a complex process of problem solving based on information availability, urgency, expertise and experience of the decision makers, whether in it in a open or closed system, and influence of other factors like organizational culture, politics etc. Hence there is always some amount of ambiguity in any decision making.

Problem-knowledge Coupling for More Appropriate Decisions
KRS Raman, Professor, India, Member
Problemistics is a science of problem-dealing and helps in a thorough understanding of the problem to be solved. It has to be then coupled to a relevant knowledge base for finding options for appropriate decison making. Problem-knowledge couplers are software tools available for this.

Influences on Decision Making: Biases
Handa, CEO, India, Member
It's important you realize that cognitive biases and similar errors can also affect decisions. For example when:
a) The focus shifts from problem to personality, opinion differences become personal differences
b) Pushing one's view point extremely hard and considering acceptance of the same as victory - ego issues
c) Past experience - blind application to fresh situations
d) Temptation to material gain or prevention of loss for self
e) Fear of consequence
f) Poor research
g) Contextual shifts and pressures
h) Improper analytical tools
i) Casual and convenient approach
j) Taken during mood swings and anger
k) Without consulting those affected by such decisions.

The Role of the Situation in Decision Making
Helmer Pardun, Journalist, Germany, Member
I think, that by relating "decision making" to "a conclusion about a situation" one shifts the problems to the "definition of the situation", its beginning, ending and pointing to other (upcoming) situations.
The "definition of the situation" always includes elements like people, data, things, ideas, locations, emotions and also ethics to consider.
As far as I know, the "definition of the situation" goes far more back in (semi-) scientific think, than the theory of decision-making.

About the Top Decision Maker in an Organization
Karel V , CEO, South Africa, Member
I believe it's important to have an agile, intuitive, experienced and intelligent thinker in a final decision-making position. This person won't have to consult or refer to books to make most decisions in an organization. A lot of time will be saved.

The Problem with Decisions for Wicked Problems
Nick Snowden, United Kingdom, Member
@Malik Iqbal Kabir: I'm sure Drucker was right regarding the need of understanding the problem before deciding on a solution.
But the concern for me is that more and more key problems seem to be "wicked" in nature - i.e. complex, interrelated, interdependent, morphing etc. They don't stay still long enough to be effectively analysed and have an effective fix applied to them. This tends to mean we end up trying to solve the wrong problems as our traditional problem-solving "systems" are too slow and incompatable with the nature of the wicked problems we face.

Components for Effective Decision Making according to Peter Drucker
A. Flippo, Business Consultant, Netherlands, Member
As a past student of Drucker's classes, I remember the following as components to "the effective decision":
1. What happens if we do nothing? (Only act if that result is unacceptable)
2. How much time do we have?
3. There are no facts only opinions.
4. Listen to what is not said.
5. Do what you have to do fully. (Cut once, not twice).
I use those guiding principles all the time...
They are very different from traditional decision making.

Bottom-up Approach in Decision Making
Mrs c usha rani, Professor, India, Member
Decision making is a key function in any organization. At every level, decision making authority is vested to certain managerial personnel.
Taking decision on right time at right place is important. But Drucker said that top level persons before they take decisions have to approach people at bottom level and people at operational and tactical level should share their ideas by participating in decision making.
Workers participation in management (Bottom-up Approach) is one of the important techniques which were the outcome of Peter F. Drucker's thinking.

Additional Factors That Affect Decision Making
Belay Gezahegn, Director, Ethiopia, Member
@Per Wickman: Decision making also depends on the environment we are working in. Participatory leadership, for instance, may be considered as weakness in certain societies and authoritative leadership as strength.
Power and authority also limits decision making process. When I say this power is the ability to make decision and authority the discretionary limit to exercise power.

Information Sources for Making a Decision
JEREMIAH MUNENE, Teacher, Kenya, Member
Decision making process is key and inevitable at the workplace. But to make an informed decision you must have relevant knowledge. So where do you get these knowledge?
Sources of knowledge to base decisions on include: experiments, observation, self evident truth, postulation, authority, experience and relying on formulated theories.

Emotion and Reason - the Siamese Twins of Decision Making
Les Hirst, Project Manager, United States, Member
Western dichotomous thinking asks us to decide which is most valuable in good decision-making. Wise men in any culture know that intuition (emotion) informs reason and vice versa. Read 'Blink' for a good lay description of how this works.

Comprehensive Coverage but Long Term, Strategic Effects of Decisions are Missing
jorge anibal hoyos hoyos, Manager, Colombia, Member
I think it`s missing to include the long term effects of the decisions, the strategical map to be considered in beforehand which must involve all of the points swayed, the environmental metrics likely to affect, the possible recurrence of the problem, just this case. To fend off possible unknown or impossible to be controlled aspects such as governmental policies or natural changes.

Research Decisions, but not Forever
Julius Nyangaga, Consultant, Kenya, Member
@Nick Snowden: yes, this is a typical problem with those with a strong research background. You investigate the problem to death!.. And never get to make a decision in order to go ahead. However, research has its value; one need good reliable information to make a good decision. The challenge is when to stop searching and start acting.

Decision Making versus Policies
Mrs c usha rani, Professor, India, Member
Decisions at different levels may be flexible and fixed on certain issues. As Drucker said, to make decision effective, by taking action to put the decision into effect, a well defined policies and corporate governance based on vision and mission of an organisation is one of the important factor to be considered. The word "policy" must be well defined before taking any decision which has the impact on decisions.

Decision-making is the Prime Aspect of All Human Activities
Ashok Panda, Professor, India, Member
A human being is a lovely outcome of a spiritual imagination. We take help of knowledge by books and experience. What happens actually, when we take a decisions? There is a proper insight of all intersects of the body and mind, swimming together with an objective to ensure accomplishment. And many of the times it is correct because this exercise is no less than a turn around effort of an experienced and learned individual. Thanks.

Views by Peter Drucker on Decision-making still Useful
Martin Parry, Management Consultant, South Africa, Member
I still think Peter Drucker's views are valid and insightful. Decision-making remains one of the key skills in any organisation, and one which should be developed and honed in order to develop effectiveness and organisational performance. Time and resources invested in developing decision-making skills will produce a real return on investment.

Decision Making Must be a Group Process
Lesele, Management Consultant, South Africa, Member
Bureaucratic mindsets must be removed from our minds. In an establishment, decision making must be conducted by a group of professionals and not only by one superior.
If there is an integration of diverse ideas on how to go about some situation, a group decision will be superior. Also the idea of teamwork will be instilled among the co-workers improving their motivation to deal with future problems.

Decision Making by Peter Drucker
Bonginkosi Dlamini, Student (University), South Africa, Member
I agree the decision making is a reaction to an event and can be more effective if it is more collaborative and participative. Though at times we have to be persuasive depending on the event. People are needed with expertise, dedication and redibility to make those decisions that will be followed or adopted by every member of the organisation.

A Foolproof Art of Decision Making...
Mohd Norfaizin Bin Hj. Md Salleh AFA (UK), Director, Malaysia, Member
Decisions are basically the essence of our daily life:
- Those who strongly believe in fate will say that things are already destined to be.
- Those who refuse to go down without a fight will say that you would have to apply all knowledge necessary prior to making a good decision.
Whatever you prefer, there are consequences to your decisions in life.
And yet mankind still has to discover a foolproof art of decision-making, simply because there isn't any.
Why don't you decide for yourself...

Rational Decision Making?
mario ianniello, Italy, Member
Beware of "rationalists" approaches. There is plenty of literature on how muddy and non-linear decision making processes are (See Lindblom 1959 or Cohen, March and Olsen 1972 - Garbage Can Model). I am confident that you will find answers to some of your questions there.
At the same time, decision making has always a content and interests, and so the "power"-issue should also not be ignored, especially in some contexts.

Decision Making: The Power-issue
srinivas, Lecturer, India, Member
I agree that the "power-issue" cannot be ignored. The person weilding power and making decisions needs to have attained a state of equanimity (Editor: a stable, wise, serene state of mind) where his decisions are not affected by the negative emotions.
The person making decisions will be happy once he has attained this state of equanimity. Here I think the aspect of consciouness in decision making process plays a very important role.

Additional Factor Influencing Decision Making
prince henry morrison, Student (University), Ghana, Member
@V SHRIDHAR : I agree with your submission. I believe that the availability of resources (such as time, capital and the like) could be another factor to influence decision making.

Decision Making Has Several Human Elements
Ivan Kohlinsky, Management Consultant, United Kingdom, Member
I agree that emotions, culture and, rightly or wrongly, sometimes acceptability overlay any rational scientific process. Often tactics come into play for pragmatic reasons...'we will do this now to gain acceptability and then move on to what we really want to achieve - but the leap is just too far now'... Etc.

Decision Making Requires Data of Good Quality
kvssiyer, Consultant, India, Member
Decisions are made at every moment and every situation demands a decision of one sort or the other. Sometimes decisions are forced on us if not taken at the right time, considering the factors influencing such decisions.
The best and optimum decisions are based on a database (real and authentic). The quality of decisions is influenced a lot by the right database and a relevant database.
In this context, the best decisions are taken in a meeting with the affected people and the people responsible for the execution present. This helps to evaluate alternatives from various angles and choose the best alternative with maximum benefits and the least cost and risks.

Decision Making Involvement and Participation
Bornface Chinyuku, Student (University), Member
@A. Flippo: I agree that situational analysis is key before embarking in the decision making process.
Besides that, essential elements of TEAMWORK also should come into play and need not be underestimated. Whatever decision is made, when there has been involvement, participation, empowerment, shared responsibility and commitment it will be evident that this will greatly help in the pursuit of set goals. Considering whether a perfect decision has been made or not might turn out to be less important than that the execution of the strategy is done with great zeal.

Decision-making and Valuation

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