There are a number of models and techniques that propose decision-making strategies in the company , and that aim to simplify certain decisions.
When we make decisions, we must take into account that there are many variables that we will be able to control, but many others that will not depend on us. In addition, at a probabilistic level, there will always be a degree of uncertainty in any decision we make.
In this article we will learn about different decision-making models and other strategies that can be implemented in the company.
Decision-making strategies in the company: models
The models that we will review below, and that contemplate the decision-making strategies in an organization, aim, among other things, to reduce the cost/benefit impact on the “wrong” decisions, to finally achieve the objective set by the company .
These models help to choose the best option among the available options when deciding, taking into account that degree of uncertainty or possibility of making a mistake, which will always be present (although it can be reduced, as we have said).
1. Maximin (or Wald’s) model
The Maximin or Wald model proposes that, when making a decision, we focus or look at the lowest (bad) ratings within all possible solutions . That is, “graphically” it would look like this: the lowest scores would be 1 for solution A, 2 for solution B and 3 for solution C. Thus, within this range we would choose C, since it is the “highest of the worst” solution.
However, choosing through this model does not ensure that we decide “correctly” at 100%, as we can lose important information by not taking into account the other solutions. This means that the “best of the worst” option doesn’t always have to be the best or the one that fits our problem perfectly.
According to Wald, this is a “pessimistic” decision-making model.
2. Maximax model
The Maximax model would be the opposite of the previous one (it is therefore an “optimistic” model); it proposes to choose or work with the data or solutions that have obtained the highest score .
For example, if in our data table solution A has obtained 8 points, and on the other hand B has 10 points, and C 9 points, according to the Maximam model, we would choose solution B as the best solution, since its score is the highest, and therefore superior to all the others. In other words, we would base our decision on this reasoning.
As in the previous model, choosing through this model does not guarantee a correct decision , since we “leave out” a lot of information (solutions with fewer scores) and we may be choosing a decision that in practice is not the best.
Other strategies for choosing the best solution
Apart from these models that we have seen, there are other techniques or decision-making strategies in the company. Some of them are:
1. Assessing the overall situation
In order to make a decision, so as to reduce as much as possible the degree of uncertainty we are talking about, another strategy we can use is to assess the situation in its entirety, in a general way, taking into account the most relevant intervening variables .
To do this, it is important to take a certain perspective in relation to the problem or the situation, trying to see it from “outside”, assessing the situation as objectively as possible. In addition to focusing on the present situation, it will be important to look beyond it, understanding the past causes that may have generated the situation, and visualizing possible short and long-term solutions.
In this way, a comprehensive view of the situation will help us to shuffle all possible options in a more objective way .
2. Generate parallel alternatives
This second of the decision-making strategies in the company that we propose focuses on having a plan B (even a plan C) in case plan A fails; that is, on the one hand, we must logically bet strongly on plan A, on our decision, and trust that it will work. However, it never hurts to have alternatives in case things don’t turn out as we expected.
There will always be variables, however minimal (whether of the organization itself, of the workers, of the competitors, etc.), that will be difficult for us to control, or that we will not have the option of doing so directly. Therefore, having other options in the inkwell will allow us to act with a certain sense of security, since, if plan A fails, there are other options that we have already contemplated. Furthermore, plan B or plan C may be circumstantial or temporary, that is, they may be solutions to be applied while the situation is not definitively resolved.
Thus, if we use a strategy of creating alternatives in parallel, it will be easier to adapt to the problems that arise and not have to paralyse the whole project.
Deciding, after all, implies being able to plan the future and organize all the elements involved in it with the aim of achieving specific goals .
The fact that companies constantly have to decide between one or other options, and that they have to act in different areas of the organization (workers, investments, profitability, business plan, income and costs, etc.) to ensure that everything works as a perfect gear, makes the decision-making process frankly important, and the situation in each case must be well thought out.
However, making mistakes is part of the process, and should be seen as something possible and something to learn from in order to move forward day by day.
- González, R. (2013). Decision-making models: Maximin or Wald, Maximax, Hurwicz, Laplace and Savage. PDCA Home.
- Randstad. (2017). HR strategy and management. The decision-making process.
- Management challenges. (2017). Strategies for business decision making. EAE Business School, Harvard Deusto.