Well-founded business decisions are not made by chance. Behind them, there is always a process – whether conscious or instinctive. The following 5-step model is Tatar Strategy Advisory's own decision-making framework, developed during our work with Business Leaders.
Step 1: Defining the Decision Situation
Most decision-making errors can be made right here: solving the symptom instead of the real problem. The first step is always to precisely define: what is the true essence of the decision situation? What question are we looking for an answer to? What are the stakes, deadline, and scope of the decision?
Step 2: Information Gathering and Situation Analysis
What data is available? What information is missing, and how can it be obtained? A good decision can be based on: financial data, market analysis, internal capacity mapping, and examination of external environmental factors.
Step 3: Developing Alternatives
Rarely is there only one possible path. Good decision preparation always identifies multiple options and presents them in a comparable format. Ideally at least 3 alternatives: the optimistic, the conservative, and the exit (Go/No-Go) scenarios.
Step 4: Risk and Consequence Analysis
We assign a risk profile to each alternative: what is the worst-case scenario, what is the most likely outcome, and under what conditions does the chosen path work? This step prevents most later surprises.
Step 5: Decision and Defining Feedback Point
The decision itself is just one point in the process. It's equally important to define: when and how will we evaluate the outcome of the decision? What metrics indicate that we are moving in the right direction? When should we intervene and modify?
Why is this model important?
Structured decision preparation:
- reduces the impact of bias
- increases the quality and defensibility of the decision
- helps communicate the decision to stakeholders
- and – last but not least – reduces leader stress
“Good decisions are not necessarily born from more information, but from a clearer framework for thinking.” – Antal Róbert Tatár
Summary
Decision preparation is not a privilege – it is accessible and applicable for every SME leader. If you would like to apply this model in your own business, please contact us.
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