The 7 Step Decision-Making Process for Better Business Decisions

Decision making. It’s the bread and butter of managers and executives, who make about three billion decisions each year. Indeed, Bain & Company research found that decision effectiveness is 95 percent correlated with financial performance, while the UK Institute for Employment Studies found that decision-making underlies 50 percent of employee engagement. Needless to say, good decision-making is crucial. But how can organizations ensure they are making the right ones? Our 7-step decision-making process for better business decisions can help.

This business decision-making process is a step-by-step approach that professionals use to solve problems. These seven steps to faster, better business decision-making also includes a built-in review so businesses can track the effectiveness of decisions. Unfortunately, decision practices at most organizations fall short. Our study of over 500 managers and executives found that they fail to apply effective decision practices 98% of the time.

If decision practices are so important, why are our decision practices stuck in the dark ages? Behavioral science has the answer.

How to make better decisions?

It turns out that a mix of cognitive biases, busy days, relentless changes, and limited attention spans underlie our insidious bad habits and keep us from following effective decision practices. We think we are great decision-makers. And since we rarely write our decisions down and check them later, it’s easy to convince ourselves that we’re right, even when we’re not. But there is good news...

We can change. We can drive better, faster decision practices by using research-based insights to create new habits.

Consider this: In a three-month study of 100 managers, those who made decisions using best practices achieved expectations 90% of the time, and 40% of them exceeded expectations. Effective decision-making, which involves improving the quality of decision-making, considering alternatives, creative problem solving, gathering relevant information from various sources, and avoiding false tradeoffs, has been shown to increase the number of good business decisions sixfold and cut failure rates in half.

The 7-step decision-making process for better business decisions

Our popular Harvard Business Review checklist for decision-making is summarized below. This step-by-step process involves gathering information, assessing alternatives, and making final decisions that ensure a structured method for better decision-making:

1) Write down five business goals impacted by the decision. Framing the decision around what’s most important helps avoid the trap of rationalizing after the fact.

2) Write down at least four realistic alternatives. No other practice improves decisions more than expanding your choices.

3) Write down what you know…and what you don’t to gather relevant information. Writing down what you know and gathering relevant information is crucial for informed decision-making. This may include conducting market research or other activities to gather new information from external sources.

4) Write down what’s likely to happen in the future, good and bad. Telling the story of what you expect using a decision tree is a powerful tool to understand and communicate your choices.

5) Involve a team of at least two to six other stakeholders…or up to 12 people if you're using Cloverpop to help automate the process. More perspectives reduce bias and increase buy-in — but bigger groups bog things down without automation.

6) Write down what was decided, why, and who was involved. Also, include how much the team supports the final decision to increase buy-in, ensure everyone's on the same page to agree on the decision, and set a basis to measure results.

7) Schedule a follow-up to check in on results. We tend to forget decisions after we make them, missing the opportunity to learn from what happened. Adding a formal post-mortem follow-up to the decision-making process helps prevent fallacies and biases.

Spending a few minutes to follow these steps for every business decision saves 10 hours of meeting time and drives better decisions.

How Cloverpop improves the business decision-making process

Decision-making tools, including Cloverpop, help in organizing and prioritizing goals, removing bias, and making sense of data. Organizations can use these tools to support various types of decision-making models, such as intuitive, rational, and creative models, to suit different situations.

Cloverpop’s mission is to scale this approach across the business world. Built on what we’ve learned from our behavioral science research, Cloverpop is a software solution for tracking, communicating and improving decisions.

With Cloverpop, decision makers quickly frame decisions and invite stakeholders to weigh in using effective decision practices. The decision database tracks critical decision details while decision analytics give insights into the decision making process. Then, the system automatically communicates decisions across the enterprise for better alignment.

The result? Research shows businesses using Cloverpop make 75% better decisions twice as fast with half as many meetings and 20% better overall performance.

For fast ROI, learn more about our Cloverpop solution for improving decision practices. We’ll make sure you not only follow the most impactful decision practices, but also give you a quick and effective way to track, communicate and learn from decisions across your entire organization.

Change the game by keeping score

If you follow this approach, not only will your decision effectiveness improve, but as an added bonus, you will have a clear record to track your results. This is incredibly important as ineffective decisions can make or break a project, or even an entire business.

Despite this, very few of us keep track of the decisions we make. Think of it: we track sales, we track web clicks, but we don’t track the very most important thing we do at work – the decisions we make.

When it comes to improving decision practices across your organization, keeping score really changes the game. When you track decisions, they become data that you can manage. And what gets measured gets managed – when leaders can see the scoreboard, their competitive instincts motivate them to improve and win.

So check off these steps, start measuring decision practices, and start making them better.