What Is Decision Quality?

The focus on quality in manufacturing (kaizen) started in Japan after WW2 and morphed into Total Quality Management (TQM). Six sigma brought a western viewpoint, and we now have international quality standards for all sorts of things, including management processes (ISO 9000 and others). But how would you recognise a high quality strategic decision if you saw one?

Before you answer with “it turned out well”, meaning that the uncertainty you faced turned out positively, remember not to confuse outcomes with decisions. There may be a long time between the decision and knowing the outcome. How do you determine the quality of the decision—and give yourself a chance to improve it—at the time of making the decision?

When I ask this question of management groups, I get answers like:

• All the right people have been involved
• We had all the best information available
• Risk was considered
• A decision was made—action occurred!
• Everybody bought in to the process
• The process did not drag on and on and loop around
• We did not get bogged down in the details
• There was a clear set of choices
• We knew about the difficult trade-offs to be made: money vs risk vs saving jobs vs curing patients
• Implementation went smoothly
• Etc...

These are all important considerations, and the list goes on a long way. But, putting some structure on the list, each of the above falls into one of six buckets, the dimensions of decision quality:

• A useful frame—are we answering the right question?
• Creative yet feasible alternatives—having a small set of wide-ranging choices
• Meaningful and reliable information, particularly about risk
• Clear preferences and trade-offs
• Sound reasoning, and clear communication about complex issues
• Commitment to action.

In some circumstances, such a medical decision making, we might want to add another two dimensions regarding ethics and the competence of the decision maker (ie, is he/she is making the decision without any impairment to their judgment?). For business decision making, though, these six will do.

Quality in decision making requires quality in each of the dimensions listed above. A failure in any one will result in a failure of the decision process overall. For instance, if the frame is poor, it does not matter how good the alternatives are, or the information, preferences and reasoning. You may even have got commitment to a recommended course of action. But you have a great solution to the wrong problem! You have wasted your time...

Decision quality is only as strong as the weakest element in the six dimensions listed above. This article kicks off a short series looking at each of these dimensions in turn.