Making Better Business Decisions

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© Strategic Business Development

Russell Cummings

Strategic Business Development

www.sbdbusiness.com.au

0414 929 585

DECISION MAKING

Making Making Better Business Decisions

http://www.sbdbusiness.com.au/

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DECISION MAKING

Decision Making:

The process of selecting a ________ of ________ from among _________________

_________________.

DECISION MAKING

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.PARETO ANALYSIS

This tool is used when you need to sort out the vital few from the trivial many. Pareto

Analysis is based on the premise that 80% of problems are due to 20% of the possible

causes. These 20% are the "vital few" problems a process improvement focuses on.

Vilfredo Pareto was an economist who is credited with establishing what is now

widely known as the Pareto Analysis or 80/20 rule. When he discovered the principle,

it established that 80% of the land in Italy was owned by 20% of the population.

Later, he discovered that the pareto principle was valid in other parts of his life, such

as gardening: 80% of his garden peas were produced by 20% of the peapods.

The 80:20 rule can be used to analyze any situation. You can view this tool in use in

the Mindmapping, Magic Wand and the Force Field areas of this tool box.

Step by Step Guide

1. Ask the group what the Pareto Analysis is. Most professionals will know it. If not,

provide the rule and background as above.

2. Ask for examples of the Pareto rule. Some examples are shown below:

20% of your customers provide 80% of your sales

20% of your products provide 80% of your sales

20% of your customers provide 80% of your profit

20% of your products provide 80% of your problems

20% of your customers provide 80% of your problems

DECISION MAKING TOOLS

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PRIORITISING


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GAP ANALYSIS

The Gap Analysis tool allows you to determine the gap between where you are

'Now' and 'Where' you want to be on certain factors of a problem. The factors where

the largest gaps appear are those to focus on.

Step by Step Guide

1. Draw on the white board a matrix with 5 columns (as per example below).

2. Determine the factors of the issue you are looking at by asking those in

your group. Write them one after the other in the 'factors' column.

3. Now ask the question and rate it on a scale of -5 to +5 scale, with -5 being

low and +5 being high. For example "Where you see the business in

relation to growth?" Now. Don't do the Where score yet, complete the

rating on all the Factors for Now.

4. Now ask the same questions for the Where column but ask: ''Where,

realistically would you like to be?''

5. Once all the ratings are in place go through and subtract the 'Now' from

the 'Where' rating. So if Where was +4 and Now was +2 the gap would be

+2.

6. Work through doing this calculation for each factor and stand back and

determine what factors have the largest gaps

7. Put a tick next to those three factors with the largest gap and state that

these obviously are those that need the most attention now so these will

be the focus.


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8. Now you can move onto developing a Force Field Analysis on each of the

three factors to determine the actions that need to happen to get

change occurring.

This tool takes practice. Remember, the more you practice the better you get.

EXERCISE

FACTORS NOW WHERE GAP ACTIONS

Skills

Knowledge

Cultural Fit

Behaviours

Team Player

Current

Performance

Potential

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DECISION MATRIX

The Decision Matrix is another problem solving tool. Its purpose is to pass your

decision making process through a selection filter and reduce the subjectivity of the

decision. When decisions are made it is rare that the factors that influence your

decision are weighted equally.

Example of a Decision Matrix for ‘Job Opportunities’

ALTERNATIVES

CRITERIA

Weighting

Option 1

Current Job

Option 2

New Job

Option 3

Own Company

New

Knowledge

30 25 15 18

Career Path 20 15 12 15

Salary 30 18 19 10

Fun

Environment

20 19 17 12

Total 100 77 63 55

Notice how the selection criteria are weighted differently. Each is given a weight

that records the order of importance and value to the issue. When they are totaled

together they must score 100 points. You must choose your own criteria and

weightings. Scoring each option helps you decide which option is ‘best’. The higher

the score you give to each of the alternative choices, the higher value you give it.

The score cannot be higher than the weighting score you have allocated. For

example if you look at ‘Fun Environment’ above in the Decision Matrix you will see

that ‘Current Job’ scores 25 out of a possible 30 points. This means you consider it to

be the most fun. The lower score represents the least fun.

Implementing your decision is critical. A good decision poorly implemented results in

failure. Keep making decisions until you get it right, in that way you can never fail.

Timing is also a critical factor in the implementation. Experience and intuition help.

If you make a decision and then find it is wrong don’t despair, just make another

decision! Remember, in order to learn, you must be prepared to make mistakes.

BUILDING YOUR DECISION MATRIX

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WORK AREA

1. Select one of your top three issues from your previous work that require a

decision or choice to be made and complete a Decision Matrix.

Alternatives

CRITERIA Weight Option 1

Option 2 Option 3 Option 4

TOTAL

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About Russell Cummings, Business Consultant

Company Principal, Russell Cummings, has over 26

years comprehensive experience as a

Management Consultant and Coach to family

business, industry organisations, corporations and

government.

He has worked with clients in a wide range of

sectors including: agriculture, manufacturing,

horticulture, Defence, public utilities, dairy, meat

processing, IT, printing, environmental, service

industries, R&D bodies, Local Government

organisations and Industry Associations.

Russell is an accomplished facilitator, coach and trainer with a clear focus on

converting Strategy into Action.

Until 2004, he was also a Director of changedrivers, an innovative firm specialising in

change implementation services. He moved to Bundaberg 8 years ago for family

and a lifestyle change.

Russell has particular expertise in business development and strategic planning. His

main areas of strengths include:

• Strategic plans,

• Business growth and improvement programs

• Business coaching

• Large group facilitation

• Effective leadership development programs

Specifically, Russell brings a pro-active approach to business and leadership

development based on a strong understanding of strategy, leadership, strategic

marketing, business profitability and efficiency.

He is currently working with clients in all Australian states, New Zealand and the

United Kingdom - geography is no boundary.

M: 0414 929 585

W: www.sbdbusiness.com.au

E: [email protected]

DECISION MAKING

http://www.sbdbusiness.com.au/

mailto:[email protected]