Strategic decision making is a complicated manner that includes studying various factors, thinking about multiple options, and making picks that may drastically affect the lengthy-time period fulfillment of an agency. However, numerous commonplace problems may arise during strategic decision making.
Issues in Strategic Decision Making
The issues in strategic decision making are as follows:
1) Contextual Issues
Many researchers and writers have issues regarding the ambiguous and fluid nature of the prevailing business environment. This has created doubt about the effectiveness of the strategic decision making process as it does not consider such factors. Another critical issue in the business environment is complexity. In addition to this, fluidity is not just about change. Instead, it also denotes unpredictability and instability. Therefore, it is essential for strategic decision-makers to make sure that the contextual issues are addressed in the models or methods they are adopting. It is one of the issues in strategic decision making. At last, using a simple, neat, orderly, and rational model will not be helpful in the current scenario.
2) Personality/Style
One of the critical factors to be considered in strategic decision-making is the style and personality of the decision-maker. People have different viewpoints; therefore, decisions vary from person to person. Some people rely on data, some have self-belief and make decisions independently, some go with their intuitions and do remarkably well, while others depend on others’ opinions.
There are situations where conflicts are managed effectively, and in other cases, it is covered up, which often harms the organization and its overall decisions. Such personality and style issues must be categorized while making and implementing the strategic decision-making process. This enables the organization to run smoothly and without facing any problems regarding personality/style. It is one of the issues in strategic decision making.
3) Effects of Biases
Another major issue that must be considered is the biases of people in the decision-making process. It is one of the issues in strategic decision making. Research usually identifies three kinds of bias:
i) Causal Attribution
In this type of bias, a person takes credit for good results and blames others for inadequate results. This leads to misinterpretation of information and hinders the overcoming of situations.
ii) Escalating Commitment
It is the trend of deliberately lining up large amounts of resources toward a course of action that is not sound. Washing good money post bad money happens frequently, but most decision-makers do not confess it quickly.
iii) Distorted Recollections
Often it is heard that “if memory serves” Inappropriately, it does not do that many times. Memories are not only selective, they are even distorted sometimes. It makes little difference whether it happens intentionally or unintentionally. But, since not many of the thoughts and plans are jotted down on paper, it is essential for the memory to remain intact and for the decision-makers to take care of the distorted recollections. These biases can be guarded in a few ways and used by strategic decision-makers.
4) Role of Values
The role of values is very similar to personality/style. Values are promoted by the leaders and redirected in their actions. These sets of values outline the issues in strategic decision making which are to be addressed in its process. These will also be shown up while designing substitutes, the course of action they are judged on, and the final procedure to be followed. In such a case, it is advisable to formulate a strategic decision-making process to analyze the organizational values carefully.
5) Role of Consensus
According to many researchers and writers, consensus plays a vital role in strategic decision-making. This is because consensus provides the best proof of commitment towards the decision, in the absence of which the decisions are carried out ineffectively. Other than this, the challenging process of striving towards the fulfillment of commitment yields commitment and improves decisions. Notably, striving to achieve consensus means that neither harmony is needed nor authority is handed over. It is ultimately the decision-maker who makes the final decision.
However, strategic decisions cannot be conveniently taken by a single person with an autocratic approach as he would not be aware of every detail required for making a strategic decision in an organization. Therefore, consensus plays a significant role in strategic decision-making in most organizations. It is one of the issues in strategic decision making.
6) Nature of Strategic Decisions
As discussed earlier, strategic decisions are referred to as complex, ambiguous, fluid, and uncertain. Strategic decisions have some outlining features, which are as follows:
i) Direction
Strategic decisions modify or approve the organization’s direction.
ii) Finance
Strategic decisions also have few financial implications. It is an issue of “betting the company” in some instances.
iii) People
People having critical roles in an organization are highly impacted by the strategic decisions which affect their morale, commitment, and motivation.
iv) Risk
At last, strategic decisions have considerable risk. In this case, the results are uncertain and involve high-end threats. These are the issues in strategic decision making.