It seems to us strange that the practice of corporate decision-making, an activity so vital for the survival of all organizations, finds itself emulating rather than inspiring disciplines such as project management.

As regular readers of this newsletter will know, we at Numerix have an intense interest in the art and science of decision making. We were therefore particularly pleased to see the Harvard Business Review devote its entire January edition to decision-making. One of the most interesting articles (“ Stop Making Plans; Start Making Decisions ” by Michael C Mankins and Richard Steele), questions the utility of strategic planning in its traditional form of annual departmental submission and executive assessment of initiative proposals.

The major criticism is that these sessions are constrained by calendar and departmental boundaries and that there is insufficient opportunity for real debate and the thorough questioning of the assumptions that underlie various ideas. Consequently, according to the authors, very few strategic decisions emerge from this process, most being made outside of it in order to sidestep these constraints.

A new approach based upon decision-making
Instead it is suggested that an ongoing focus be maintained on strategic issues and their systematic resolution, even if these span departmental boundaries. This can be implemented by means of a continual decision-making process which will encourage executives to move from a static and rigid ‘review and approve' mentality to a dynamic and flexible ‘debate and decide' approach. It will also force the separation of decision-making and planning and yet ensure their interdependence.

It has been our observation that strategic planning is often simply strategic wish-listing with frequently inadequate analysis provided to support feasibility claims. Constructive planning should follow the identification of ‘wants' and ‘must haves' so that questions of feasibility, profitability, priority and strategic fit can feed the decision-making cycle. This is the point of convergence between project management and decision-making.

The project management precedent
Given our strong focus on both of these disciplines, all of this makes perfect sense to us. Yet if organisations are to follow a rolling issues-based process like this, they will require significantly improved decision-making skills. In particular, they will need to settle on methodologies and tools, and apply these consistently and wisely to the challenges that lie ahead.

In short, they will need to do exactly what they have done over the past twenty years in the context of project management. When it was recognised that all projects have the same fundamental structure, the way was open to use a uniform and general approach. So it is with decisions - a point we have driven with zeal since the establishment of our decision-making training and consulting services three years ago.

Will business leaders see the precedent? Will they insist on rigour, process, consultation, skills, tools and accountable reporting? Will we begin to see the emergence of the ‘Decision Office', staffed by professionals and specialists. For if legal, financial and risk management departments exist, why not a team dedicated to the maintenance of the very life-blood of the organization? Will 2006 see a commitment to analytical decision-making that begins to bear some relation to its importance?

We are hopeful. And if a model would be helpful to guide the way, we need look no further than the project management experience.

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