When people talk about business value, it's typically in the context of business processes (and value chain), the actions, and the processes' outcomes. But how much value is created depends on the decisions being made and executed to drive these and how well you manage them.
This is the first of four articles I am writing to explain, at a high level, how to manage business decisions in your organization. The examples I use in these articles may not necessarily be in your domain. However, the core and essence of the problem you must address are the same. So, let us get started…
You can have a conversation with anyone in your organization about what a business process is, and you will get different ideas, details, and examples. The conversations will vary depending on the roles of the people you are talking to, but they will share a general understanding of the concept. This is true for almost everyone!
In contrast to the general understanding of what a business process is, I’ve come to realize that very few people know the difference between processes and decisions. What is more concerning nowadays is that given the data and AI hype and many recent technological advances, almost everyone (besides very few professionals) has very wrong ideas about business decisions. Not only that, they use them interchangeably with process, data, insight, rules, algorithms, AI/ML, BI dashboards – you name it!
Over the years, I’ve written many articles on this topic, so we are well-equipped to explain it at a high level along with the fine details. But before diving deep into how to manage business decisions, I’ll do a quick recap to explain what it is and why it is important first.
What is a Business Decision?
Business decisions are essentially business questions that need to be answered.
- Based on the policy terms, how much should a company charge a client for insuring their car?
- How much a hospital should charge a patient at check out?
- What citizens are eligible for a specific government service?
- Who do we identify as a gold member of our club, and what is their eligibility for access to different areas?
- What market segment should we start investing in for our go-to-market (GTM) efforts?
As you can see from the above examples, many different types of business decisions exist. Although there are similarities between business processes and business decisions, they are fundamentally different in nature. For example, structures, characteristics, ownership, authority, relations, intent, behavior, and so on.
These differences make it critical for organizations to recognize “business decisions” as a separate object, with their own metrics and KPIs, to manage them separately, particularly when it comes to business knowledge management.
What is the Purpose of Decision Management?
We’ve established that business decisions are different from business processes and that there are many types of business decisions. So, it makes sense to recognize and manage them throughout the organization. Why? Because “ultimately, a company’s value is just the sum of the decisions it makes and executes,” published at Decision-Driven Organization. Business decision optimization is a powerful lever to improve the bottom line.
Additionally, based on our experience working with many organizations globally, we see that decision-centric organizations are more innovative, future-proof, and can compete better in dynamic and changing marketplaces.
So, if business decisions are important and significantly impact the quality of an organization’s operations and revenue, wouldn’t it make sense to ensure decisions are managed properly?
- Business decisions require owners and people/teams that can be held accountable for their outcomes.
- How are business decisions made? Looking at the basis of decisions from different angles.
- Ensuring people and teams know what decisions are made in different situations.
- What version of a particular decision is being executed, and what is its far-reaching impact?
- Who (i.e., people, processes, and systems) will consume the outcomes of decisions, and at what point in time, or as part of what business processes?
Managing business decisions allows the organization to model (make), execute, analyze, improve, and monitor business decisions explicitly. And, of course, when possible, it is better to automate business decisions and potentially look at the decision automation piece end-to-end. Although not every decision can or should be automated, they should all be modeled and managed explicitly and cohesively.
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How should one go about managing Business Decisions?
Conceptually, managing business decisions requires multiple steps:
- Frame business decisions explicitly – Model business decisions and no, this is not a process model.
- Managing them in a centralized repository and potentially sharing them with stakeholders
- Automate them using a composite technique – the right technique and technology for the right decision.
- Ensuring the quality of the decision automation piece, including simulating the impact of the automated decisions
- Integrating the automated (or semi/manual) decisions deep into processes, systems, and teams’ workflows in organizations.
- Monitoring and improving the decision’s outcomes.
In the next couple of articles, I will look at the above process in more detail and explain how you can easily and practically accomplish them.
Last updated January 29th, 2024 at 09:47 am, Published January 24th, 2024 at 09:47 am
CEO and the founder of FlexRule – He is an expert in architecture, design, and implementation of operational decisions, business rules, and process automation. Created Decision-Centric Approach, a methodology that brings People, Data, Rules, and Processes together to automate operational business decisions.
This approach is recognized by Gartner as the missing link to provide business value to organizations.