Decision Making Framework - Types & Classifications | Marketing91

Hitesh Bhasin

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Decision Making Framework – Types & Classifications

June 29, 2021 By Hitesh Bhasin Tagged With: Management

A decision-making framework is used for effectively and accurately designing and developing assessment methods and tools for an organizational environment.

The framework effectively clarifies how and when different members and factors get involved in the decisions, the opportunities associated with the decisions, key terms involved in evaluating decisions, and the different decision-support types that can ensure more favorable outcomes.

Decision frameworks revolve around principles, procedures, and practices for proceedings from information and desires to choices that convert into favorable outcomes. In case you are also curious about the right decision-making framework, this post will guide you comprehensively.

First thing first, let us understand what is a Decision-Making Framework and later, we will dive deeper into different types of decision frameworks-

Table of Contents

What are Decision-Making Frameworks?

A decision-making framework analyzes the cause and effect relationship and helps a person make the best possible decision in the scenario. What every decision-making framework does is to facilitate the choice of an idea that has the least harmful consequences. The process helps analyze the situation and discard ideas with the worst effects.

A decision-making framework is all about cause and effect analysis and pinning down on the best possible outcome, given the situation. There are various ways to arrive at a decision, and these ‘ways’ are the decision-making frameworks. They help leaders make high-impact decisions.

Our life is the cumulative effect of the decisions we have taken up until this point. All decisions need the right framework to support them.

Every decision has two sets of ideas. These ideas are almost always opposite to each other.

What a good decision maker should do is to understand the ideas, and integrate them, and come up with a third idea.

This third or new idea is a unique combination of the best parts of the original, opposing ideas. The question now is how to do this? Here is where the decision-making framework comes into application.

Development of Decision-Making Framework

The development of a decision-making framework starts with the analysis of the planning and design process that incorporates all the decisions that directly or indirectly influence the productivity of the organization.

After identifying the key decisions, the decision-making framework can then be fleshed out to offer a more complete and comprehensive understanding of how crucial decisions can get influenced by the many factors and associated decision-support tools.

To understand the process more effectively, let us have a look at types of decision-making frameworks-

Different Types of Decision-Making Frameworks

Different people adopt different methods for decision-making. The decision-making framework that each individual makes use of is different in different situations.

Therefore there exist numerous types of decision-making frameworks. The types of decision-making frameworks mentioned here only serve as broad guidelines to figure out a decision-making framework that works best for you and your specific situation.

1. Integrative Thinking

This method involves accepting the fact that there are multiple solutions to the problem at hand.

This decision-making framework is about integrating the best solutions and arriving at the best possible solution.

2. Accepting Uncertainty

It deals more with those decisions that will have a long-term effect. Therefore, it deals with the possibility of uncertainty. What one should keep in mind is that the decision you take now is the first decision.

In the end, the long-term result is not wholly dependent on the first decision that you take. It also depends on other, intermediate, less critical, decisions that you took en route to the result.

What one has to remember here is that you can always make the result of what you want it to be by making the right intermediary decisions between the cause and the desired effect. We cannot control the uncertainty.

Therefore, the best way is to accept the uncertainty and move on with the decision by addressing the controllable factors and doing your best to control the uncontrollable factors.

The trick is to take the decision and believe that the uncontrollable can be handled by the lesser critical decisions that you take along the way.

3. Working Backwards

Most of the time, people approach problems only from a forward-thinking perspective.

Sometimes, the inverse of this process also helps. Imagining that the decision you are taking is a failure and asking yourself why it was a failure is an excellent way to work backward.

It will provide you with all the possible scenarios to be avoided and finally arrive at the right decision.

4. Regret-Minimization Framework

As the name suggests, this one is about minimizing regret. Think long-term and not of immediate gratifications.

Think about what it will feel like when you are 80. If you are going to regret it at 80, then you probably know what to decide. The point is you should not regret your decision at a later date.

Thinking long-term helps dissociate from the immediate repercussions and focus on the long-term consequences. It will help minimize the regret later on and make the decisions that will ultimately work out best for you.

5. Circle of Competence

It is all about evaluating your core strengths and working on getting better at it rather than dabbling in many things at a time.

If you are good at something, work at it, and you will reach where you want to. This method is about focusing on your strengths rather than your weaknesses.

It will make you twice as good as you were and better than everyone else in the field.

Capitalizing and improving on your strengths is always better than trying to tread into unknown territory.

6. Eisenhower Matrix

This matrix is named after ex-President of the United States, Dwight Eisenhower. It was his way of getting things done.

It helps you in prioritizing your decisions and making the right decision at the right time.

His mantra was what is urgent and essential takes priority and must be done right away.

What is necessary but not urgent should be scheduled to be done later in the day. What is urgent and not significant should be delegated to others.

And finally, what is not urgent and not important should make its way out of your schedule.

How to Design Your Decision-Making framework?

A framework is essential for decision-making as this makes your task all cut out and easy for you to arrive at a decision-making framework that best suits you. Below are a few indicators to get to your favorite decision-making framework.

1. Listing out All Possible Outcomes

Listing out all possible outcomes is a good start in the direction of the right decision.

These are all the possible choices that you have, and you can start eliminating the wrong choices from here.

Here you can use some idea-generating or brainstorming process to make the selection of fixed choices.

2. Setting up a Time Scale and Delegating responsibility

Sometimes a quick decision might prove more useful than making the right decision. Sometimes the right decision might prove a better choice than a quick decision. These are a few questions that you might want to answer if you would like to set a time and decide on who the responsibility of the decision rests.

Time Available for Taking the Decision
Is There a Deadline? Consequences of Missing the Deadline.
Is Taking a Quick Decision Advantageous?
Is it Important to Make a Decision? What if the decision is wrong?
Will More Pondering Time Improve the Quality of the Decision Taken?

Before making a decision, you should decide who will be responsible for making the decision.

This question assumes significance as the amount of risk a person is willing to take depends on their share of responsibility.

If the decision needs to be taken is at work, then the organizational structure should be considered.

Will the Individual be Responsible for The Decision in His Capacity or Will the Company be Held Responsible for His Decision?
Who Will Carry Out The Decided Course of Action?
Who will be affected if something Goes Wrong?
Are You Willing to Take Responsibility for a Mistake?

These are the questions that need to be answered before handing over the responsibility of a decision to an individual or a group of individuals.

3. Information Gathering

The next step in the decision-making framework is to collect all the information available before jumping into a conclusion. Ensuring that the decision is a well-informed one ensures you are one step closer to the right decision.

Gather all the information, and weed out the irrelevant stuff. Focus on the most relevant and most recently available information. Focus on this information for making a decision. The most relevant, meaningful, and latest information will steer you towards the right decision. Do not lose focus on the clutter of a lot of information.

4. Risk Assessment

Though you are getting closer to the right decision, you can never be too cautious about the risks involved and how much risk you can allow yourself to take. The amount of risk an individual is willing to bring depends on the following factors.

The Effects of Taking a Wrong Decision
The Benefits of Making the Right Decision
What Is The Worst That Can Happen?
How likely is it that the Worst Will Happen?

5. Deciding on Values

Every individual has a set of values that he/she holds essential. A decision that a person takes will reflect these values.

For an individual to decide, it is only his/her values that come into play.

But if the onus of the decision is on a group of individuals, there should first be a consensus on a representative set that needs to be upheld while taking the decision.

The decision should then reflect these chosen values and not every value significant for each individual of the group.

6. Weighing the Pros and Cons

It is an obvious step in every decision-making process and is an integral part of the decision-making framework.

Writing down the pros and cons of each possible solution to the problem and picking the best is not a difficult task after all the earlier steps have been taken care of.

In case of the decision being a work issue, the financial aspect of your decision might also come into question. So your final decision should be the result of serious deliberation, the culmination of all the earlier efforts to arrive at this decision.

Classification of Decision Making Contexts

1. Simple Contexts

These are simple problems with straightforward solutions that do not need a lot of deliberation.

You are probably capable of deciding these things out of habit or from experience. These are mostly unanimous decisions that everyone will agree upon. Some of these decisions are process-based.

These decisions are generally dealt with by sensing, categorizing, and responding.

The facts are assessed, and the response is decided upon depending on the category the issue falls into, and the general response to an issue of that category.

2. Complicated Contexts

A complicated context is when a problem has multiple simple solutions.

It needs a little more thought as the decision that you arrive at should address the issue in the best possible way available. It requires sensing, analyzing, and responding.

You understand the facts of the issue; you see multiple solutions to the issue, analyze the solutions available, and respond with the best possible solution.

3. Complex Contexts

Complex contexts are different from complicated contexts because, in a complex context, no right answer or decision exists.

The right answer or the right decision can only be discerned in hindsight and does not immediately present itself.

In this case, the decision-maker must wait for the situation to unfold itself. They need to probe first, then sense and respond after.

4. Chaotic Contexts

In this context, the right answers and decisions cease to exist. What matters most here is to get the situation under control. Once this is achieved, identifying the problem areas from the rest and identifying patterns in the problem are the next steps.

Once the patterns are identified, this can help evade future problems and help solve the current crisis.

Decision-Making Framework for a Company

If you are setting up a company, having a decision-making framework will lighten the burden of decision-making on the top management.

It will let the employees know what the values the company stands for are, what are the steps to be followed in case of a daily or recurring scenario where a decision needs to be made, etc. These are the guidelines that you can follow to base your decision-making framework.

Make a Code of Decision-Guiding Principles for your Company
Improve Team Alignment in the Decision Making Process
Have a System for Reconciling Difference of Opinion
Have a Clear Structure on Who is Responsible for the Decision
Remember the Importance of the Time Factor
Make the Decision and be Responsible for It

Final Thoughts!

Decision-making is an art, and practice and experience help in making better decisions.

To reach a level of experience where you are confident enough to make the right decisions, a decision-making framework will always be of assistance.

We hope this post would have guided you in understanding what decision frameworks are comprehensively, so before we end, we’d like to hear your Decision-Making Framework definition in the comments.

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