The first step in improving business decisions is to understand different types of business decisions and then how you can improve them, in what aspects.

“Data and analytics leaders are investing heavily in analytics, machine learning, data science, AI and other related technologies. The belief is that such technologies can drive better decision making and thus business outcomes. However, there is a real gap between this belief and the idea about what a decision really is.”

Analysis by Andrew White, Gartner

There are three types of business decisions in any organizations:

3 types of Business Decision

Strategic decisions provide guidelines and direction for both tactical and operational decisions. For instance, an organization may take a strategic decision to focus on a specific market for the next couple of years. The tactical decisions will then define internal procedures and processes to deal with this market and penetrate the market in a specific segment. And, operational decisions will prescribe how to price products and services based on a customer profile.

Strategic Decisions

The strategic decisions are complex, deal with uncertainties, that require a significant amount of analysis. The understanding of stakeholders and decision-makers will mature over time, and decision-making criteria evolve as they progress.

These decisions are made by senior executives and members of the board. They set directions for business operations to deliver business values.

Some examples of this type of decisions are:

  • Should we acquire a company and expand our market and product offering to grow?
  • Should we use focus on specific geography for certain services?
  • Should we use out-source, offshore or local resources?

Tactical Decisions

On the other hand, tactical decisions are more structured than strategic decisions. Tactical decisions define and structure, processes, and procedures of acceptable business operations based on Strategic Decisions. They will provide and define processes, policies, and procedures.

For instance, customer segmentation, teams' short-term and long-term goals, availability of some offers, or certain discounted services are part of the tactical decisions.

Some examples of this type of decisions are:

  • What are the products or service offering for a particular geographical location i.e. South America vs North America?
  • What services are eligible for a discount, under what circumstances?
  • What are the priorities of service offering to customers?

Operational Decisions

The operational decisions happen every day, hundreds of thousands of them daily in business operation. They are made during the production of products, providing offerings or services.

Operational decisions are structured, repeatable, and are likely to be part of the customer engagement transactions or part of the companies' back-office operations.

Some examples of this type of decisions are:

  • What products offering this particular customer is eligible for?
  • How much a patient should be paying?
  • What amount of discount a customer is entitled to?
  • What is the next step after registration in a specific course at the university?

The reality of today's world!

Because of so many changes in today's world, and the amount of uncertainty, organizations change how they approach business decisions. It used to be a certain people responsible for certain decisions based on the traditional definition and structure (i.e. strategic, tactical, and operational) of business decisions.

However, the lines between these types of decisions are blurred. This means Strategic, Tactical, and Operational Decisions are converging. Business decisions' impacts are far-reaching, the agility required by businesses and the pace of change in the market need the business decisions to be made at the same time by the same authorities and groups of people.

Therefore, the traditional view of business decisions does not match the reality that companies need to make and execute business decisions.

Improving Business Decisions

In every organization, the quality of business decisions determines the quality of business operations. And from the other hand, the quality of the business decisions is significantly influenced by sources of changes:

  • Market Volatility
  • Laws, Regulations, and Policies
  • Data and Information

Therefore, we can define improving business decisions from two aspects:

  • Quality of the outcome i.e. consistency, accuracy, auditability and etc.
  • Speed of the delivery and adapting to changes

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The reality of today's business decisions that are converging demands a new technological approach to managing and automating business decisions. The operation team must be able to manage the automate business decisions end-to-end, ensuring they are contextual, connected and can influence business operations continuously.  Consequently, to ensure organizations can continuously improve the metrics around the KPI of the business decisions, they should have the ability to model, execute, monitor, and reconfigure the decisions quickly, with minimum effort and investment for applying changes.

Last updated August 21st, 2023 at 12:08 pm, Published January 6th, 2021 at 12:08 pm