Whatever a manager does he does through making decisions. Those decisions may be as a matter of routine. Indeed, he may not even realize that he is making them. Or they may affect the future existence of the enterprise and require years of systematic analysis, But management is always a decision making process.
The importance of decision making in management is generally recognized. But a good deal of the discussion tends to center on problem solving that is on giving answers. And that is the wrong focus. Indeed the most common source of mistakes in management decisions is the emphasis in finding right answer rather than the right questions.
The only kind of decision to really centers in problem solving is the unimportant, the routine, the tactical decision. If both the conditions of the situation and the requirements that the answer has to satisfy are known and simple problem solving is indeed the only thing necessary. In this case the job is merely to choose between a few obvious alternatives. And the criterion is usually one of economy the decision shall accomplish the desired end with the minimum of effort and disturbance.
In deciding which of the two secretaries should go down stairs every morning to get coffee for the office to take the simplest example the one question would be: What is the prevailing social or cultural etiquette? In deciding the considerably more complex question shall there be a coffee break in the morning, there would be two questions: Does the break result in a gain or in a loss in work accomplished, that is, does the gain in working energy outweigh the lost time? And if the loss outweighs the gain: Is it worthwhile to upset an established custom for the sake of the few minutes?
Of course, most tactical decisions are both more complicated and more important. But they are always one dimensional, so to speak: The situation is given and the requirements are evident. The only problem is to find the most economical adaptation of known sources.
But the important decisions, the decisions that really matter are strategic. They involve either finding out what the situation is, or changing it, either finding out what the resources are or what they should be. These are the specifically managerial decisions, anyone who is a manager has to make such strategic decisions, and the higher his level in the management hierarchy the more of them he must make.
Among these are all decisions on business objectives and on the means to reach them. All decisions affecting productivity belong here: they always aim at changing the total situation. Here also belong all organization decision and all major capital expenditures decision. But most of the decisions that are considered operating decisions are also strategic in character: arrangement of sales districts or training of salesmen; plant layout or raw materials inventory; preventive maintenance or the flow of payroll vouchers through an office.
Strategic decisions whatever their magnitude, complexity or importance should never be taken through problem solving. Indeed in these specifically managerial decisions, the important and difficult job is never to find the right answer it is find the right question. For there are few things as useless – if not as dangerous – as the right answer to the wrong questions.
Nor is it enough to find the right answer. More important and more difficult is to make effective the course of action decided upon. Management is not covered with knowledge for its sake; it is concerned with performance. Nothing is as useless therefore as the right answer that disappears in the filing cabinet or the right solution that is quietly sabotaged by the people who have to make it effective. And one of the most crucial jobs in the entire decision making process is to assure that decisions reached in various parts of the business and on various levels of management are compatible with each other and consonant with the goals of the whole business.
Decision making has five distinct phases: Defining the problem; analyzing the problem; developing alternate solutions; deciding upon the best solution; converting the decision into effective action. Each phase has several steps.