How to Choose the Appropriate Decision-making Method

Decision-making and Valuation


Best Practices
Anneke Zwart
Student (University), Netherlands

How to Choose the Appropriate Decision-making Method

Most decision makers in organizations rely on conventional decision-making tools - even in situations of high complexity and uncertainty. However, these basic tools are based upon the assumption that decision makers have access to all information that is needed. Therefore, these conventional tools can only work in stable contexts.
See also the Cynefin Framework or Taleb's 4 Quadrants to appreciate the difference between these decision-making circumstances/contexts: in uncertain and complex environments the conventional tools are useless, mainly because of the lack of reliable and complete information.
The problem with the above is not the absence of alternative tools; rather, it is the lack of clear guidance about how and when to use what tools. As a result, managers will use only those tools that they are highly familiar with, instead of using the most appropriate tools.

Courtney et al. (2013) explain a model of decision making that matches the right tools to the decisions to be made. Their model is based on three factors: an understanding of the factors that will lead to success; the predictability of outcomes; and the degree of centralization of information.

So what do you need to do as a decision-maker?

You need to start with asking 2 questions to analyze the context and find the appropriate tools in that particular context:
1. Do I have a clear understanding of the factors and conditions that are needed for a successful result? In other words is there a "strong causal model", in which the combination of Critical Success Factors (CSFs) and economic situations that lead to success are clearly understood.
2. Are the possible outcomes of a certain decision predictable? In order to determine which tools are appropriate, it is critical to know whether predicting the outcomes resulting from a certain decision is possible.

According to the authors, answering the first two factors/questions will direct you to the most appropriate kind of decision making tool, which could be Conventional Capital Budgeting Tools, Quantitative Multiple Scenario Tools, Qualitative Scenario Analysis, Case-Based Decision Analysis.

And what should you do next?

The third factor – the degree of centralization of information – has to do with choosing the right Information Aggregation tools. Such tools deal with capturing dispersed information and operate independently from the decision making tools. The related question is the following:
3. Is the information that you need centralized or decentralized?

Standard aggregation tools have been used for a long time, but nowadays also newer tools for aggregating dispersed information are used:
- One example is the use of information markets to obtain the knowledge of informed crowds with regard to important variables such as macroeconomic outcomes.
- Another example is called similarity-based forecasting. This approach asks individuals to rate the similarity between a certain decision to a past decision.
- The last example mentioned is incentivized estimation. In this approach certain people are estimating an important outcome; the person that most accurately estimates the outcome will receive a payoff.


This model of choosing the right decision making tools is highly simplified. In reality there will be many kinds of complications and problems when important decisions are made. Some of the most important complications in selecting the right decision making tools are the following:
1. Cognitive limitations and behavioral biases: It is simply impossible for human beings to always accurately predict the level of uncertainty. This might us lead to say that the above proposed model is not very practical. However, it is argued that these biases can be managed by choosing the decision-making tool in a systematic, transparent, public way in which peers are able to assess the decisions that are made.
2. Problematic organizational protocols: Because of the influence that money and power have on decision making behavior, organizations are required to establish some general decision making protocols. These protocols often get in the way of using the most appropriate decision making tool.
3. Reliance on one tool: Although decision makers often rely on one specific decision making tool, it is often more efficient to use more than one tool and combine certain tools.
4. The time/timing of the decision: Besides considering what decision to make, it is important to consider when to make the decision as well. Sometimes it is more efficient to delay a certain decision rather than making the expensive and high-risk decision directly.

Source: Courtney, H., Lovallo, D., and Clarke, C. (2013) “Deciding How to Decide” HBR November 2013 pp 62-70


Jaap de Jonge
Editor, Netherlands

Who Still Thinks Decision-making is Easy?

Thank you for contributing this outstanding summary! An earlier 2007-article by Snowden and Boone al... Sign up

Yeshwant Moodliar
Consultant, India

Another Factor to Decide on Decision Making

A most important factor in any decision making is also the TIME FRAME to be observed in conveying yo... Sign up

De Monte

Wise Decision-making Requires Intelligence, Regardless of Method

The mind requires data/information and knowledge, just like a computer, to apply a program method/to... Sign up

Project Manager, India

A Real Taste of Decision Making

Decision making is not restricted to a certain level of the management, decisions have to be taken b... Sign up

Andrew Blaine
Business Consultant, South Africa

Blink and Making Decisions

And if you are still in a quandary after all this deliberation follow Gladwell and "blink"! (Prefera... Sign up

Nyasulu Pachisi, Malawi

Decision Making Depending on the Situation at Hand

Great discussion, analysis of the situation at hand is very important. Even after that it is always ... Sign up

Stefania Di Cristofalo
Coach, Italy

Clear Vision to Take Decisions

@De Monte: The Achilles heel of the decision making are all the resistances people have to see the r... Sign up

Victor Jurado
Business Consultant, Mexico

Quality and Acceptance Factors in Decision-Making Process

I think its important to take certain attitudes, behavior, interests and other human variables into ... Sign up


The Importance of Organizing and Cooperating by Management in the Decision Making Process

Summarizing what was said until know I think that the decision making process may depend basically u... Sign up

David Dicanot
Analyst, France

Decision-making Process Similar to the Chess Player's

Hello, consider the similarity between a decision-making process as described and how the chess play... Sign up

Greenhow, Sweden

Many Decisions Rest on Wrong Assumptions and Biases

1. This discussion helps to deal with an assumption decision-makers often make: that they have acces... Sign up

De Monte

The Decision-making Tool in a Complex Environment is the Computer

Assuming and presuming no bias, prejudice and conflict of interest to filter, the central collection... Sign up

Jaap de Jonge
Editor, Netherlands

If you don't Select the Right Decision Context, You're Dead

@Greenhow: I believe you hit the nail on the head. Those kind of wrong assumptions of having proper ... Sign up

Andrew Blaine
Business Consultant, South Africa

A Bad Decision is Better Than no Decision

@Jaap de Jonge: The importance of making the right decision is only outweighed by the value of a de... Sign up

Jillo K. Molu
Accountant, Kenya

Objectivity is Very Important in Decision-making

Not having a desired outcome, irrespective of how informed a decision maker is about the factors to ... Sign up

De Monte

Making the Right Decison Requires an Effective Plan

@Jaap de Jonge: Language, words and instructions require careful alignment just like a blueprint to ... Sign up

Jaap de Jonge
Editor, Netherlands

Is Waiting a Good Decision Making Strategy?

@Andrew Blaine: Whether postponing a decision, or involving experts, or involving many people in a d... Sign up

edward sevume

Decision Making Failure and the Reasons Why!

What really disturbs me is when decision making is influenced by confirmation bias! And what of that... Sign up

Bhavesh Sodagar
Manager, India

Agree on Importance of the Factors Before Taking a Decision

Very fruitful discussions, indeed! The factors mentioned in the above discussion also include the t... Sign up

Andrew Blaine
Business Consultant, South Africa

Making Decisions

@Jaap de Jonge: 50 years ago, as a young Officer Cadet, I was taught the process of making "An Appr... Sign up

Jaap de Jonge
Editor, Netherlands

The Appropriate Decision-making METHOD

Andrew, thanks for your reaction. Indeed the situation/circumstances should be taken into account in... Sign up


More on Decision-making and Valuation:
Methods, Models and Theories
Discussion Topics
🥇 Rational Decision-making
Decision-making According to Peter Drucker
🥈 5 Steps to Learn from your Mistakes
🥉 15 Obstacles to Making Decisions
The Role of Optimism in Decision-Making
Why a Leader Must Make Informed Decisions
Avoid These Common Decision Traps and Errors
Decision Making Process not Only for Managers
Conscious and Unconscious Decision-making
Individual versus Organizational Decision-making
Improving the Decision-making by Managers: Choice Architecture
Decision-making Reviews?
👀How to Choose the Appropriate Decision-making Method
🔥 6 Ways of Dealing with Uncertainty at Work
The Role of Opinions in Decision-making
Good Judgment in Decision Making
Making no Decision at All
What Makes a Manager Into a Good Decision-maker? 10 Traits for Decision Making
Avoid Hasty Decision-making
The Role of Religion in Decision Making
Silence Following a Decision is Sometimes Seen as Agreement
What is Institutional Theory?
Apps for Decision-making
Reasoning in Decision Making
Role of Artificial Intelligence in Organizational Decision-making

Decision-making and Valuation

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2023 12manage - The Executive Fast Track. V16.1 - Last updated: 6-6-2023. All names ™ of their owners.