Decision Making Models

Decision making models are a structured way for organizations or individuals to make decisions. A decision-making model is a framework that identifies the benefits and drawbacks of different options in order to help determine the best choice. It has been said that half of the decisions that managers make ultimately fail. That begs the question… why? How do organizations make more strategic, well-informed decisions that will succeed? Let’s jump into the “how” of that by first looking at the definition of a decision-making model, and second, what the top decision-making models are.

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Decision Making Definition

Before jumping into the different models, let’s examine a decision-making definition. Decision making is the process of considering various options and choosing the best one available. Every one of us has to make a wide variety of decisions on a daily basis. They range from simple decisions like what you wear and eat, to more complex decisions like which job to take and what house to buy. Decisions are made either at an individual or organizational level. Decisions made by managers and leaders affect others, sometimes in complex, far reaching ways. As a leader (or aspiring leader) it is important to be familiar with different decision-making models in order to best serve your situation and organization.

Top Decision Making Models

There are a variety of decision-making models you should consider. As you read through these examples, you will see some are best suited for individual decisions, some for teams, and some for more complex situations. Picking the right decision-making model for your situation will be the first step to making a well-rounded decision that will last the test of time.

Rational Decision Making Model

This one is often seen as the most classical approach and was one of the first attempts at developing a model for decision making. The rational decision-making model is a series of steps to be considered when making a decision that should lead you to the best choice. This is a good option if your problem or situation is well-defined and you have quantifiable options. Here are the steps:

    1. Identify the problem or opportunity
    2. Gather and organize information
    3. Analyze the situation
    4. Develop a range of options
    5. Evaluate and assign value to each one
    6. Select the option you deem is best
    7. Actively decide on that option and move forward

Retrospective Decision Making Model

The retrospective model allows the decision maker to be both biased and somewhat “irrational” in the process. The decision is essentially made on instinct or gut, but then the decision maker goes through the process of justifying their decision based on researching other options. As the decision maker cycles through the other solutions available, they may begin to see the strengths or weaknesses of their first choice. However, if all solutions are less favorable than the original, the implicit favorite can be selected. It is a wise idea to have a second candidate idea waiting in the wings if the first option doesn’t work out. This approach works best with decisions that are primarily personal in nature where other people won’t be affected as much as the one making the decision.

Recognition Primed Decision Model

The recognition primed model is a combination of making decisions based on intuition and rational information. This model is helpful for the leader who has to make an important decision when there isn’t much time to run analysis. This model involves three steps:

    1. Experience the Situation

You take in as much information as possible about the situation. Listen to those involved, gather as much data as you can, and assess the urgency of making a decision.

    1. Analyze the Situation

Now that you have a good grasp on the situation, you can move into the process of working towards a solution. You will most likely be looking at a variety of viable solutions. It’s important not to jump at the first thing that pops up. Give as much time as possible to let other options present themselves, and then analyze them all to determine the best one for this situation.

    1. Implement the Decision

This is where you take the decision from theory to reality. As you are analyzing, you should always have this phase in mind and be thinking about how you will implement. It’s also important to move quickly and not let yourself get stuck in decision paralysis.

OODA Loop

The OODA Loop is a simple, clear model to consider when you need a highly effective way to make decisions about the operations of your organization. It’s especially beneficial for operational activities – because it is a loop! Since operational activities are ongoing, this model serves these situations well. The steps are simple and will be repeated:

    1. Observe
    2. Orient
    3. Decide
    4. Act

It’s that simple. Most of these stages will be familiar to you, but the second one (orient) may need some explanation. The idea is to make sure you orient yourself correctly with the information at hand and don’t allow your personal past experience to get in the way of making the best decision today.

The Ladder of Inference

If you have a harder time differentiating between past experiences and the current situation, consider the Ladder of Inference model. The idea behind it is specifically to help you get past your own biases and other factors. With this model, you aim to make the best possible decision for the organization as a whole and set aside your own personal influence.

In this model, there are 7 rungs on the ladder that we go through while making decisions:

    • Reality and facts
    • Selected reality
    • Interpreted reality
    • Assumptions
    • Conclusions
    • Beliefs
    • Actions

You can look at the Ladder of Inference as a way of tearing apart your own preconceived ways of thinking. This is for the purpose of building them back up again in a way that incorporates more than just your perspective. It’s typical to begin making decisions quickly when faced with a challenge or opportunity. But, when this happens, it’s easy to miss critical information. The Ladder of Inference helps you look for holes in your logic so you can plug those holes and keep moving up the ladder. We break down the Ladder of Inference in more detail here.

Administrative Model of Decision Making

The administrative model is built on the belief that we often settle for a solution that doesn’t meet all of our needs because we are short on time or lack the necessary resources. Instead of searching for the best option, the decision maker simply takes the first one that comes along. This concept is called “satisficing.”

This decision-making model has its drawbacks. The quality of the decisions tends to be less researched. There are benefits to this model, though. Where time or budget constraints are a major factor, this model is especially helpful. A decision can be reached quickly and with little to no budget.

Vroom-Yetton-Jago Model

The Vroom-Yetton Model is based on the idea that there is no one “right” way to make a decision, but that your process will change based on the situation at hand. The first portion of the model asks seven specific yes-or-no questions such as, “Is the quality of the decision important?”

The way you answer these questions will guide you to choose one of five decision making processes ranging from making an autonomous decision to reaching a group consensus. The Vroom-Yetton model is highly flexible and can be used by anyone at any level. However, it doesn’t take into consideration the individual needs of the decision maker(s). In addition, this model doesn’t pick up on some of the more nuanced aspects of a decision.

Paired Comparison Analysis

Oftentimes, especially in business, we have competing priorities or considerations. This can create a hiccup in decision making when you are unsure which priority should be driving the decision. The Paired Comparison Analysis model helps you make decisions that are more complex in nature.

To follow this model, create a decision-making matrix that lays out all of your various options. Every option you are considering should be listed on the chart, both across the top and down the side. This is how you will compare all of your options “head to head” to see which one stands out as the best. Go through the list and compare each set of options until you have worked through them all. The one option that came out as the most frequent winner is the one you should go with.

Ethical Decision Making Model

Another important factor to consider is the ethics of a particular decision. Almost every decision involves an ethical element, so you must also look for an ethical decision-making model that suits your situation. Here are some questions to identify the ethical component of your decisions:

    • Is this decision fair?
    • Have I considered all of the people who will be affected?
    • Would I want to be on the receiving end of this decision?
    • Would I want this decision to be broadcast on the news?

Conclusion

All in all, these decision making models provide you with a wealth of options for the various types of decisions you will have to make. As you become more familiar with each type of model, you will begin to build your own decision-making framework. Making educated, fair, and ethical decisions is one of the hallmarks of great leaders. So, don’t be afraid to make a decision, try something new, and go out on a limb. It’s through practice that we become “perfect” at the art of decision making!

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Filed Under: Consulting skills, Corporate Training