Decision making frameworks: How to choose?

As a former industrial engineer who became a lean management expert, I’ve witnessed innumerable decisions that have impacted the destiny of businesses. Decision making frameworks are excellent resources that can turn haphazard decisions into systematic answers. So, you’re about to learn how these frameworks can change your problem-solving mindset and ultimately succeed in your continuous improvement journey. So let’s dive into the world of decision making frameworks and determine which one is best for you.

Evaluating Approaches to Strategic Choices

Decision making frameworks are step-by-step processes to help you navigate through a complex decision. These frameworks are excellent at organizing your thoughts and ensuring you evaluate information in a systematic way. I’ve leveraged them in my manufacturing and consulting career to make difficult decisions.

You’ll find decision making frameworks to be extremely helpful for a few reasons. They minimize bias, ensure you’re evaluating information in a consistent manner, and allow you to explain to others why you made a specific decision. This is particularly beneficial if you need to justify your decision to a stakeholder or team member.

Most decision making frameworks share the same basic steps. You define the problem, gather relevant data, evaluate next steps, and select the best solution. Some may also include steps for execution and reviewing the decision.

These frameworks are best used for major strategic decisions. Therefore, you should use a framework when you have a decision with far reaching consequences and/or several relevant factors. However, for basic daily decisions, frameworks often aren’t practical.

When selecting a framework, think about the nature of the decision, the available information, and your time frame. While some frameworks are excellent for quick decisions, others are stronger when you have more complexity and/or uncertainty.

Widely Used Approaches for Choosing Wisely

SWOT Analysis is a more general framework that I’ve applied in various industries. It evaluates internal Strengths and Weaknesses and external Opportunities and Threats. Here’s how to do a SWOT analysis:

• List out the strengths and weaknesses of your organization.
• Consider external opportunities and threats.
• Analyze how these items intersect.
• Develop strategies from your analysis.

SWOT is great for strategic framework. However, it can oversimplify the nuances of more complicated situations if you don’t use it thoughtfully.

PESTEL Analysis looks at only external factors. It examines Political, Economic, Social, Technological, Environmental, and Legal factors. To carry out a PESTEL analysis:

• Research how each factor impacts your decision.
• Consider how important each factor is relative to the others.
• Determine how these factors present an opportunity or a risk.
• Use your analysis to inform your strategy.

PESTEL is excellent for understanding macro-environmental trends. It’s most helpful when you’re entering a new market or industry.

Kepner-Tregoe Decision Analysis is a structured problem-solving framework. It emphasizes making objective evaluations and decisions. The process includes:

• Defining the decision and the objectives.
• Establishing decision criteria.
• Listing out all alternatives.
• Evaluating the risks of each alternative.
• Making and executing the decision.

This framework is useful when you need a very analytical decision. However, it can be time-consuming, and it’s excellent for more technical, complex decisions.

The Cynefin Framework for Complex Decision Making

The Cynefin framework is a tool for categorizing decision making contexts. It’s most helpful when dealing with uncertainty. The framework outlines five decision making contexts: Simple Complicated Complex Chaotic Disorder

Each of these decision making contexts requires a different strategy:

In simple contexts, you can sense the situation and respond with best practice. Complicated contexts require sense-checking an analysis with an expert and then responding. In complex contexts, you probe the system to see how it reacts and then respond. Chaotic contexts require taking action to sense where the system stabilizes and then respond.

The Cynefin framework is most valuable because it helps you identify which decision making context you’re in. Once you know that, you can use the correct decision strategy. This is particularly helpful in a fast-changing environment, when the context you’re in could change at any minute.

Quantitative Decision Making Frameworks

The Decision Matrix Analysis is another tool I’ve used extensively to compare various options. To create and use a decision matrix:

• List the options and decision criteria
• Assign weights to the criteria
• Score each option on each criterion

Multiply the criterion score by the weight and sum them up for each criterion
Compare the total scores to help determine the best option

This method is great for comparing many criteria. I find it most helpful when making larger purchases or strategic investments.

Pareto Analysis is the application of the 80/20 rule to decision-making. The Pareto Principle states that 80% of the effects come from 20% of the causes. To perform a Pareto analysis:

• Identify a list of problems or causes
• Score or measure each item
• Rank the items from highest to lowest in score
• Calculate the cumulative percentage of the total score
• Focus on the items that add up to 80% of the total score

Pareto Analysis is excellent for prioritizing actions and resources. It’s particularly powerful in quality control and making processes more efficient.

Creative Decision Making Frameworks

Edward de Bono’s Six Thinking Hats is great for considering a variety of perspectives. Each “hat” represents a different thinking style:

• White: Factual thinking
• Red: Emotional thinking
• Black: Negative thinking
• Yellow: Positive thinking
• Green: Creative thinking
• Blue: Process thinking

To use Six Thinking Hats for group decision making:

• Introduce the concept to your group.
• Appoint a facilitator to manage the process.
• Determine the order in which people will wear the hats.
• Allocate time for each to offer their perspective.
• Encourage everyone to think in each style.

This approach ensures that all ideas receive a fair hearing and reduces conflict in group decision making.

Mind Mapping is a visual tool that’s excellent for making decisions as it allows you to organize your thoughts and visualize connections. To create a decision-focused mind map:

• Write the decision you’re facing in the middle of a piece of paper.
• Draw branches outward for different considerations related to your decision.
• Create sub-branches for options and potential problems.
• Use colors and symbols to emphasize specific points.
• Review and make improvements to your mind map.

Mind maps are great for brainstorming and thinking through complex decisions. They’re especially helpful for decision making in creative industries and for decisions you make on your own.

Decision Making Frameworks for Business Strategy

The RICE Framework is a prioritization framework that helps you evaluate projects based on four factors: Reach, Impact, Confidence, and Effort. To calculate RICE scores:

• Assign a numeric estimate to each factor
• Multiply Reach, Impact, and Confidence
• Divide the result by Effort
• Compare scores to prioritize projects

RICE is useful because it allows you to consider multiple factors when evaluating a project. It’s especially common in product management and resource allocation.

McKinsey’s Three Horizons of Growth framework is a model for long-term strategic planning. The three horizons are:

1. Maintain and defend core business.
2. Build emerging opportunities.
3. Create truly new businesses.

To use the three horizons framework:

• Identify initiatives for each horizon.
• Allocate resources across horizons.
• Balance short-term results and long-term growth.
• Regularly review and optimize your portfolio.

This framework ensures organizations maintain current success while also preparing for the future.

Jeff Bezos’s “70% Rule” is the idea that you should make a decision when you have 70% of the information you want. To use the 70% Rule:

• Recognize when you have enough information.
• Embrace some level of uncertainty.
• Make a decision and play offense.
• Be willing to course correct.

This framework strikes a balance between the need for speed and the desire for certainty. It’s particularly relevant in fast-paced business environments as you’ll rarely have perfect information.

When implementing these decision-making frameworks, it’s important to consider how they align with your development goals for work. Continuous improvement in decision-making can be a valuable skill to develop in your professional journey.

In Closing

Decision making frameworks are key to making intelligent decisions in any situation. I’ve watched these frameworks turn messy decision processes into orderly frameworks that generate reliable results. You now know a selection of frameworks to apply to different decision types, from basic to complex. Just be sure to select the right framework for your specific decision. With some practice, you’ll internalize these frameworks and become a better decision maker. So just start using them today. And as you make better decisions, you’ll achieve better results and succeed in your journey to becoming a better decision maker.