Making Better Business Decisions

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© Strategic Business Development
Russell Cummings
Strategic Business Development
www.sbdbusiness.com.au
0414 929 585
DECISION MAKING
Making
Making Better Business Decisions

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© Strategic Business Development
DECISION MAKING
Decision Making:
The process of selecting a ________ of ________ from among _________________
_________________.
DECISION MAKING

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© Strategic Business Development
.PARETO ANALYSIS
This tool is used when you need to sort out the vital few from the trivial many. Pareto
Analysis is based on the premise that 80% of problems are due to 20% of the possible
causes. These 20% are the "vital few" problems a process improvement focuses on.
Vilfredo Pareto was an economist who is credited with establishing what is now
widely known as the Pareto Analysis or 80/20 rule. When he discovered the principle,
it established that 80% of the land in Italy was owned by 20% of the population.
Later, he discovered that the pareto principle was valid in other parts of his life, such
as gardening: 80% of his garden peas were produced by 20% of the peapods.
The 80:20 rule can be used to analyze any situation. You can view this tool in use in
the Mindmapping, Magic Wand and the Force Field areas of this tool box.
Step by Step Guide
1. Ask the group what the Pareto Analysis is. Most professionals will know it. If not,
provide the rule and background as above.
2. Ask for examples of the Pareto rule. Some examples are shown below:
20% of your customers provide 80% of your sales
20% of your products provide 80% of your sales
20% of your customers provide 80% of your profit
20% of your products provide 80% of your problems
20% of your customers provide 80% of your problems
DECISION MAKING TOOLS

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PRIORITISING
DECISION MAKING TOOLS

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GAP ANALYSIS
The Gap Analysis tool allows you to determine the gap between where you are
'Now' and 'Where' you want to be on certain factors of a problem. The factors where
the largest gaps appear are those to focus on.
Step by Step Guide
1. Draw on the white board a matrix with 5 columns (as per example below).
2. Determine the factors of the issue you are looking at by asking those in
your group. Write them one after the other in the 'factors' column.
3. Now ask the question and rate it on a scale of -5 to +5 scale, with -5 being
low and +5 being high. For example "Where you see the business in
relation to growth?" Now. Don't do the Where score yet, complete the
rating on all the Factors for Now.
4. Now ask the same questions for the Where column but ask: ''Where,
realistically would you like to be?''
5. Once all the ratings are in place go through and subtract the 'Now' from
the 'Where' rating. So if Where was +4 and Now was +2 the gap would be
+2.
6. Work through doing this calculation for each factor and stand back and
determine what factors have the largest gaps
7. Put a tick next to those three factors with the largest gap and state that
these obviously are those that need the most attention now so these will
be the focus.
DECISION MAKING TOOLS

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© Strategic Business Development
8. Now you can move onto developing a Force Field Analysis on each of the
three factors to determine the actions that need to happen to get
change occurring.
This tool takes practice. Remember, the more you practice the better you get.
EXERCISE
FACTORS NOW WHERE GAP ACTIONS
Skills
Knowledge
Cultural Fit
Behaviours
Team Player
Current
Performance
Potential

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© Strategic Business Development
DECISION MATRIX
The Decision Matrix is another problem solving tool. Its purpose is to pass your
decision making process through a selection filter and reduce the subjectivity of the
decision. When decisions are made it is rare that the factors that influence your
decision are weighted equally.
Example of a Decision Matrix for ‘Job Opportunities’
ALTERNATIVES
CRITERIA Weighting Option 1
Current Job
Option 2
New Job
Option 3
Own Company
New
Knowledge
30 25 15 18
Career Path 20 15 12 15
Salary 30 18 19 10
Fun
Environment
20 19 17 12
Total 100 77 63 55
Notice how the selection criteria are weighted differently. Each is given a weight
that records the order of importance and value to the issue. When they are totaled
together they must score 100 points. You must choose your own criteria and
weightings. Scoring each option helps you decide which option is ‘best’. The higher
the score you give to each of the alternative choices, the higher value you give it.
The score cannot be higher than the weighting score you have allocated. For
example if you look at ‘Fun Environment’ above in the Decision Matrix you will see
that ‘Current Job’ scores 25 out of a possible 30 points. This means you consider it to
be the most fun. The lower score represents the least fun.
Implementing your decision is critical. A good decision poorly implemented results in
failure. Keep making decisions until you get it right, in that way you can never fail.
Timing is also a critical factor in the implementation. Experience and intuition help.
If you make a decision and then find it is wrong don’t despair, just make another
decision! Remember, in order to learn, you must be prepared to make mistakes.
BUILDING YOUR DECISION MATRIX

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WORK AREA
1. Select one of your top three issues from your previous work that require a
decision or choice to be made and complete a Decision Matrix.
Alternatives
CRITERIA Weight
Option 1 Option 2 Option 3 Option 4
TOTAL

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© Strategic Business Development
About Russell Cummings, Business Consultant
Company Principal, Russell Cummings, has over 26
years comprehensive experience as a
Management Consultant and Coach to family
business, industry organisations, corporations and
government.
He has worked with clients in a wide range of
sectors including: agriculture, manufacturing,
horticulture, Defence, public utilities, dairy, meat
processing, IT, printing, environmental, service
industries, R&D bodies, Local Government
organisations and Industry Associations.
Russell is an accomplished facilitator, coach and trainer with a clear focus on
converting Strategy into Action.
Until 2004, he was also a Director of changedrivers, an innovative firm specialising in
change implementation services. He moved to Bundaberg 8 years ago for family
and a lifestyle change.
Russell has particular expertise in business development and strategic planning. His
main areas of strengths include:
• Strategic plans,
• Business growth and improvement programs
• Business coaching
• Large group facilitation
• Effective leadership development programs
Specifically, Russell brings a pro-active approach to business and leadership
development based on a strong understanding of strategy, leadership, strategic
marketing, business profitability and efficiency.
He is currently working with clients in all Australian states, New Zealand and the
United Kingdom - geography is no boundary.
M: 0414 929 585
W: www.sbdbusiness.com.au
E: russell@sbdbusiness.com.au
DECISION MAKING