Decision Making For Dummies
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Strategic decisions are typically made at a higher level, have higher risk, and focus on a company’s longer term interests. Strategic decisions set direction and point toward the long-term vision.

Here’s an analogy. Think of a road trip. You first pick a destination (at a high level, this is the equivalent of your company’s vision; at the project level, it’s the equivalent of a goal), and then you decide which roads you’ll take to get there. Strategic decisions make up the route to your destination. In short, the vision is your destination, and your strategy is the way there.

Strategy fails when the sense of the future is fuzzy, short term, or non-existent, and when a high level of attachment to the current strategy exists. In these instances, the results can be dire. Failures in strategy can doom a company, as the fortunes of Eastman Kodak demonstrate.

Making high-level strategic decisions

You have your vision, you know what you offer to customers, and you know why you exist as a company. You also know what sets you apart from the competition. Next up? Strategy. Strategic-level decisions, which are often complex and high-stakes, describe what direction you’ll take to fulfill your vision.

The challenge with making high-level strategic decisions is that you generally must do so when the relevant facts are still uncertain — a typical scenario in fast-moving situations. These kinds of decisions are also complex (you must explore many layers that cross all functions within and beyond your company’s borders) and high risk (a mistake could result in failure, high cost, or serious loss.)

Making strategic-level decisions employs all your skills and intuitive instincts. It forces you to expand your knowledge base to understand all the company’s functions and to develop your partnership skills so that you can to build trustworthy relationships. Although you’ll be responsible for making the final decision, you can’t work in isolation; otherwise, you risk overlooking key information or considerations.

Strategic decisions provide direction at a higher level, regardless of how big your company is. Small companies can while thinking globally. To use strategy as a smaller company, practice seeing yourself as a global player so that you don’t fall into the trap of hoping nothing will change or affect you.

Bookstores that didn’t pay attention to the changes that social media and digital publishing brought about no longer exist. Expanding your thinking to see ahead helps you prepare for change.

Applying strategic thinking to lower-level goals

You can also apply strategic thinking to achieve lower-level goals. If your assignment is to create a strategic plan to reduce employee retention, for example, you would follow these steps:

  1. Gain clarity about the present situation by asking, “Where are you now?”

    To reduce employee retention, you would analyze things like employee turnover, how your company’s turnover compares with the industry average, and why employees are leaving your company. You may describe your present situation as follows:

    We’re losing 14 percent in turnover of high-value employees annually at a hard-dollar cost of $200,000.
  2. State your desired result (where you want to go) by asking, “What do you want to achieve?”

    The answer to this question should describe the endpoint as specifically as possible, covering both the relevant facts (“The company saved $__ by reducing loss due to employee turnover”) and the relationship side (“The company improved the workplace environment so that high-value employees know they are valued and choose to stay”). In the example you may state your desired result as follows:

    Retain 95 percent of our talented employees annually.
  3. Identify the tasks or actions you must take to move from your present state (Step 1) to the future state you identified in Step 2, by asking, “What needs to be done to achieve the desired result?”

    In the example, you would ask, “What needs to be done to achieve 95 percent retention of talented employees that are currently being lost to other firms?” This last question should give you a long list of actions, but only a few qualify as strategic.

  4. Organize your list into strategic and tactical (nonstrategic) action items.

    The strategic action items capture the Big Idea and serve as an umbrella for the rest. Pull those out, and you should have a super-short list of top-notch actions that lead the way. All the other action steps fit underneath to become steps on the road ahead.

Strategic directions come from filling in the gap between the present situation and the end result. They describe why the direction was selected over other alternatives and how you’ll move from your current state (identified in Step 1) to where you want to go (revealed in Step 2). The tasks or action plans you put in place help you successfully accomplish your goal.

Adjusting your strategy as necessary

Today’s business environment is just moving too fast. Strategy must remain fresh, vibrant, and in tune with emerging reality. To keep pace with changing realities, you must keep your strategy in the foreground. Ask yourself these questions weekly:

  • “Why are you doing what you’re doing?” and “What are you seeking to accomplish in terms of mission or vision?” You’ll check and validate your focus or direction.

  • “Who are your customers?” and “What do they value and care about?” You’ll identify and alter any assumptions being made about who the customer is, what your customers care about, and how they make their decisions. In a changing social environment, these questions helps verify that you aren’t relying on an old strategy in new circumstances.

  • “What results are we getting?” You know what you want, but how things are playing out may be quite different. Unless you recognize the effect of the strategy on employee or customer retention, for example, you may stick to an obsolete strategy.

About This Article

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Dawna Jones generates imaginative insights and applies 25 years experience in helping businesses and organizations make bold decisions. She co-designs the future of organizations, transforming them from "business-as-usual" to inclusive cultures of prosperity.

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