Finding the right question, setting the objectives and determining the rules together constitute the first phase in decision making. They find the problem. The next phase is analyzing the problem: classifying and finding the facts.
It is necessary to classify the problem order to know who must make the decision, who must be consulted in making it and who must be informed. Without prior classification, the effectiveness of the ultimate decision is seriously endangered for classification alone can show who has to do what in order to convert the decision into effective action.
The principles of classification have been discussed. There are four: the futurity of the decision (the time span for which it commits the business to a course of action and the speed with which the decision can be reversed); the impact of the decision on other areas and functions: the number of qualitative considerations that enter into it: and the uniqueness or periodicity of the decision. This classification alone can insure that a decision really contributes to the whole business rather than solves an immediate or local problem at the expense of the whole. For the classification proposed sorts out problems according to their correlation both with over all business goals and with the goals of the component that the individual manager runs. It forces the manager to see his own problem from the point of view of the enterprise.
Get the facts is the first commandment in most texts on decision making. But this cannot be done until the problem has first been defined and classified. Until then, no one knows the facts, one can only know data. Definition and classification determine which data are relevant, that is the fact. They enable the manager to dismiss the merely interesting but irrelevant. They enable him to say what of the information is valid and what is misleading.
In getting the facts the manager has to ask: What information do I need for this particular decision? He has to decide how relevant and how valid is data in his possession. He has to determine what additional information he needs and do whatever is necessary to get it.
These are to mechanical jobs. The information itself needs skillful and imaginative analysis. It must be scrutinized for underlying patterns which might indicate that the problem has been wrongly defined or wrongly classified. In other words, getting the facts is only part of the job. Using the information as a means to test the validity of the whole approach is at least as important.
A monthly trade magazine found itself in financial difficulties. The problem was defined as one of advertising rates. But analysis of the fast and figures showed something no one at the magazine had ever suspected: whatever success the magazine had had was a source of news for its subscribers. The subscribers were over supplied with weighty monthlies; they lacked a smaller news publication and valued the particular magazine the more it closer to came to a news magazine in format and editorial content. As a result of this analysis of readership figures the whole problem was defined: How can we become a news magazine? And the solution was: by becoming a weekly. It was the right solution too, as the magazine’s subsequent success showed.
The manager will never be able to get all the facts he should have. Most decisions have to be based on incomplete knowledge — either because the information is not available or because it would cost too much in time and money to get it. To make a sound decision, it is not necessary to have all the facts, but it is necessary to know what formation is lacking in order to judge how much of a risk the decision involves, as well as the degree of precision and rigidity that the proposed course of action can afford. There is nothing more treacherous or more common than the attempt to take precise decisions on the basis of coarse and incomplete information. When information is unobtainable guesses have to be made. And only subsequent events can show whether these guesses were justified or not. To the decision making manager applies the old saying of doctors. The best doctor is not the man who makes the largest number of correct diagnoses, but the man who can spot early, and correct right away, his own mistaken diagnosis. To do this, however, the manager must know lack of information has forced him to guess. He must define the unknown.