Decision Making Model

I’ve seen several decision making models with certain parts of revenues, costs, intangible data. Revenue, cost and business performance categories are extracted and presented in decision models. They are placed into kind of new environment, decision trees and workflows, specialized structures for decision models.

I don’t like them!

Problem is that this decision making models I’ve seen are partial. They count with most important Performance Indicators. They are partial and they distort picture of company information flow, actually of true company information. With all respect even top management reporting is kind of distorted pictured of true processes within the company but it is still stable and consolidated Information Model. Me as many other decision makers like known information environment (complex, very complex or simple…information environment).

Decision making should not be new model by itself… new workflow, new rules, new formulas… at the end new information set. It should not be totally new environment for user. No, this is exhausting way with doubtful results. It is not realistic to expect that managers, decision makers, will use new models that are totally different but their information environment: their financial statements and their own key performance indicators used in operative work.

Transparency of Decision Making Model

Decision making model should be behind figures not in front of them, as a new reporting environment… strange and new information set to be conquered. Decision making model must be a platform that uses current reports in simulation environment. Simulation is crucial, especially fine tuned simulation because it can provide hidden knowledge.

Decision making model needs to support all named decision making steps involved in company information flow.

So, all steps need to be incorporated in reporting and business analysis environment but not being visible. Incorporation means allowance of information collection, information question, evaluating alternatives, making decision, controlling results of decisions. And all that through existing management information environment.

To conclude…

1. Decision Model in corporate environment needs to collect data from production systems (data repositories, data warehouse) and external environment (market analysis, macroeconomic analysis)

2. Modeling should be made in KNOWN environment. Those are management reports. They are the best modeling environment for any manager.

3. Decision making model must provide choosing between choices, different business scenarios. This is the feature that must be behind known environment – standard management reporting.

4. Solution implementation must be on the level of corporate processes and information flow.

5. Is choice adequate? Tracking results must be once again through KNOWN reporting environment.

This is the best decision model because it is transparent and provides decision basis through known figures, that everybody understands.

If you’d like to know how to make transparent, effective, and in real time decision model please visit Total Controlling Concept.