James Taylor's Decision Management

The first critical characteristic of a decision-centric organization, obviously enough, is a focus on decisions instead of processes or functions. The decisions an organization makes, the actions it selects from the possible alternatives are critical. Decisions are what make strategy real and drive results and performance against metrics. Implementing a strategy defined at the highest level of the organization comes down, in the end, to the decisions made about how to interact with partners, suppliers, customers, employees. It is these decisions that make a strategy real. Business metrics and Key Performance Indicators (KPIs) are affected by the decisions made throughout the organization--the offers made to retain customers, the prices offered, the suppliers selected, the approvals given, the claims paid.

Organizations make many different decisions and these fall into three broad categories based on the value of each decision and the frequency with which those decisions are made. As shown below, decisions can be divided into strategic, tactical and operational decisions.

In the lower right of the chart are operational decisions, high volume but individually low value decisions. The primary focus of a decision-centric organization is on operational decision making--the day to day decisions taken by organizations as they run their business: the eligibility, pricing, risk and marketing decisions that drive transactions and customer interaction. Small improvements in these decisions often make a big difference, thanks to the multiplying effect, and these decisions are at the core of the business operations that must be improved.

Tactical decisions, shown in the middle of the chart, are taken less often but are less structured and repeatable. Typically the domain of knowledge-workers and managers, these often include escalations from and exceptions to operational decision-making. Unstructured decisions, such as those in complex cases, are a major class of tactical decisions in many organizations. Tactical decisions are important to a decision-centric organization. They are important because they represent the point where people must be engaged in otherwise automated processes. They also represent an opportunity for technology to act as a multiplier on the value of experience, knowledgeable staff.

Strategic decisions are taken rarely but are high value. These are one-off, ad hoc decisions taken at the highest level in an organization. While these decisions are important, all organizations make these decisions and a decision-centric organization is no different in how these are made, only in how they are implemented and made real.