How to Make Better Business Decisions: A Guide for Great Decision-Making

Business leaders regularly make critical decisions with far-reaching consequences, from revenue loss and reputational damage to diminished competitive advantage. High-profile failures like Kodak’s reluctance to embrace digital photography and Blockbuster’s dismissal of streaming illustrate the risks of poor decision-making in evolving markets.

While hindsight makes these missteps seem obvious, the reality is that leaders face constant, complex choices. This article explores common decision-making mistakes and provides a step-by-step guide to making more strategic, informed choices for businesses, investors, employees, and customers.

What Is the Decision-Making Process?

The decision-making process typically follows a familiar trajectory: recognize a problem or goal, gather relevant data, weigh a variety of potential solutions, and identify the risks involved before opting for a particular path forward. After choosing a course of action, it’s essential to closely monitor and evaluate progress to allow businesses to make adjustments to the plan—or, when necessary, even abandon a strategic direction altogether and dramatically change course.

Key Takeaways

• In addition to feeling decision fatigue, many business leaders say they often regret or question their decisions.
• When contemplating important decisions, businesses often make the mistake of integrating irrelevant data, attacking the wrong problem, or failing to plan for the long term.
• The five steps to effective decision-making are identifying the objective, gathering relevant information, assessing risks, executing the decision, and evaluating the results.
• To improve decision-making, companies should solicit feedback from experts, welcome dissenting viewpoints, use frameworks to map out options, and leverage technology to assist with analysis.
• Companies that follow decision-making best practices often reach decisions more quickly, with fewer meetings.

Effective Decision-Making Explained

Business executives are inundated daily with complex questions that require them to make a wide range of thoughtful decisions, and coming up with the right answers can be tough and mentally taxing. In fact, decision-making can be so challenging that 70% of business leaders in a 2023 Oracle survey say they’d prefer to have robots make their decisions. Over time, decision fatigue can set in, leading executives to either make impulsive choices or delay too long when making a call—either of which can have negative consequences for businesses.

The good news is, business leaders can take steps to improve their decision-making capabilities. Indeed, effective decision-making is a critical skill that involves considering both short-term and long-term implications, balancing various stakeholders’ interests, and aligning choices with the company’s overall goals and values. It takes a structured approach to identifying objectives, gathering data, assessing risks, systematically executing a plan, and thoroughly evaluating the impact of a decision.

What Makes an Effective Business Decision?

An effective business decision considers a company’s strategic goals, is based on accurate and relevant information from reliable sources, and evaluates factors such as possible financial implications, market potential, and resource requirements. Ultimately, an effective business decision drives positive outcomes for a business while minimizing negative consequences. And highly effective decision-makers don’t rest on their laurels even when a decision is well executed. Instead, they’re adept at continually adapting their approach as new information becomes available.

Benefits of Great Decision-Making

Business leaders who rely less on gut instincts and learn to fine-tune their decision-making skills can reap a wide range of benefits, from attracting talent to boosting revenue. Companies that follow strategic best practices often make decisions twice as fast, in half as many meetings, and they find innovative solutions 75% more often than companies that don’t, according to a 2024 survey by Cloverpop.

Other advantages of great decision-making include achieving more streamlined workflows, better resource allocation, and improved financial performance. In fact, the 2023 Oracle survey of business leaders found that 93% believe that having the right type of “decision intelligence” could make or break the success of their organizations. Given the potential benefits of sound decision-making, businesses need to adopt a reliable process for making good choices.

The Five-Step Decision-Making Process

Today’s complex, constantly evolving business landscape moves at a faster pace than ever, putting pressure on business leaders to make more decisions in less time. And the stakes are high. After all, the right decision at the right time—or the wrong decision timed poorly—could spell the difference between a project’s success and its failure. The following five-step process, which has been widely adopted by successful businesses, provides a framework for making the kinds of informed, strategic choices that benefit businesses.

1. Identify the objective: When developing a particular goal, be specific. Instead of simply saying “increase sales” or “reduce operational costs,” specify the amount and the timeline. For instance, an objective might be phrased as follows: Increase sales of a particular product by 10% in the next quarter through targeted marketing campaigns; or, reduce productivity bottlenecks by 15% by the end of the year by adopting automation technology that streamlines workflows.
2. Gather all relevant information: This step may sound simple, given all the data at our fingertips. Yet, in an era of information overload, selecting the most relevant and reliable data can be tricky. It’s important for decision-makers to not only gather current data but anticipate future trends and disruptions, and consider potential biases in the information. Corroborating quantitative information gained through data analytics with qualitative methods, such as interviews and focus groups with customers, employees, and other stakeholders, is recommended. Then be sure to ask, based on all of the data gathered, is the objective reasonable and feasible?
3. Evaluate the risks: Risk evaluation is a crucial, yet often underestimated step in the decision-making process. Decision-makers must consider a wide range of threats, including financial implications and reputational hits, when assessing the potential impact of a choice. For example, if a company is considering expanding into a new market, it might evaluate potential threats, such as economic instability, regulatory hurdles, and competitive pressures in a particular region. Every decision comes with a certain level of risk, but businesses can’t let every “what-if” stop them from moving forward or they could face another huge risk: impeding progress. At the end of the day, leaders may need to ask themselves what risks they’re willing to live with.
4. Execute the decision: After carefully gathering data to support an objective and assessing the risks involved, it’s time to pull the trigger and commit to a chosen course of action. Prior to executing a decision, business leaders should communicate the plan to all stakeholders, as well as explain the justification for the decision and prepare any resources needed to help the process run smoothly. If a decision results in pursuing a new objective that changes employees’ typical ways of working, businesses need to provide proper training to make sure staff will embrace and properly implement the plan.
5. Evaluate the decision: Evaluating a decision once it has been executed is vital, as is making adjustments based on whether the idea is flourishing or flopping. Identifying what’s working well—and what isn’t—leads to steady improvement and prevents companies from repeating costly mistakes or missing out on potential growth opportunities. Advanced software programs can quickly analyze data-driven decisions and provide performance metrics that businesses can use to address challenges and refine their strategies.

Ethical Decision-Making

Incorporating ethics into business decision-making fosters trust and a strong reputation among investors, employees, and customers who expect companies to be socially responsible. In fact, PwC’s Voice of the Consumer Survey 2024 shows that 46% of consumers are buying more sustainable products to reduce the impact on the environment—and many are willing to pay more for these products. In this increasingly socially conscious consumer landscape, businesses should consider choosing an ethical framework to ensure that they’re making responsible choices.

One popular approach is the PLUS Ethical Decision-Making Model, which encourages decision-makers to consider policies, legal aspects, universal principles, and self-reflection when evaluating alternatives. When implementing artificial intelligence (AI) tools, for instance, businesses can use this model to help address potential privacy concerns and gender or racial biases. Another framework, known as the Triple Bottom Line, emphasizes evaluating decisions based on three pillars—people, planet, and profit—to encourage businesses to consider societal impacts along with financial outcomes. For example, a company choosing a supplier from among several candidates can prioritize those that are committed to sustainable practices. And another option, the Blanchard-Peale framework, urges leaders to ask three ethical questions when making a decision: Is it legal? Is it fair? And how does it make me feel?

Decision-Making in Different Roles

The type of decision-making required often differs depending on one’s role within a company. At the C-suite level, for example, executives grapple with high-stakes decisions, such as whether to expand into a new market or acquire another company, which can impact the business’s strategic direction, financial health, and long-term survival. Middle managers and team leaders typically focus more on making operational and tactical decisions related to allocating resources, tracking team performance, and keeping tabs on projects. For example, a marketing team lead might need to decide how to spend the department’s budget across different campaigns, balancing short-term sales with long-term brand building.

Meanwhile, those in technical roles, such as IT managers and engineers, focus on system performance, security, scalability, and cost-effectiveness when making decisions about which technologies to adopt and how best to harness new software to streamline workflows. Staff in nontechnical roles, on the other hand, such as human resources professionals, must prioritize people-centric decisions, including what types of benefits should be offered to employees and how to attract and retain talent. Regardless of the role, effective decision-making requires employees at all levels to understand their sphere of influence and anticipate the broader implications of the choices they make.

Common Decision-Making Mistakes

The 2023 Oracle survey found that 85% of business leaders have suffered from decision distress—that is, feeling guilty about, regretting, or questioning a decision they made in the previous year. With the sheer volume of decisions piling up on a daily and weekly basis, it’s not surprising that the vast majority of leaders admit they’ve made mistakes along the way. Not only that: Teams can spend a lot of time spinning their wheels in their efforts to arrive at decisions. In a 2024 PwC survey, CEOs complain that 35% of the time they spend in decision-making meetings is inefficient.

To avoid wasting time and feeling post-decision-making regret, it’s helpful to be aware of some of the most common missteps, including:

• Relying on only one source or data point: Depending too much on a sample of one can skew decision-makers’ perspectives and lead to making overly broad generalizations based on a single data point or source of information. For example, a company making pricing decisions solely on the basis of supply and demand conditions may be overlooking a competitor’s lower rates or the amount the average customer is willing to pay. Businesses must make sure they’re incorporating enough updated, relevant data to make well-rounded decisions that consider all relevant factors.
• Leaning into confirmation bias: In the 2023 Oracle study, 74% of employees say they believe businesses often put the highest-paid person’s opinion ahead of data, and 78% of business leaders say people often make decisions and then look for the data to justify them. Falling into a confirmation bias trap involves favoring information that aligns with a person’s existing beliefs and ignoring contradicting evidence. For instance, a retail company may decide to enter a foreign market solely because of a team manager’s belief that customers will clamor for its clothes—but the business may be dismissing consumer surveys and other data that indicate significant regulatory and cultural challenges that could thwart success. Overcoming confirmation bias requires business leaders to actively seek diverse viewpoints, challenge assumptions, and gather reliable data to support their decisions.
• Caving to groupthink: Internal chatter about launching a new product may be so overwhelmingly positive that market researchers are reluctant to raise the fact that a few honest people in focus groups are finding flaws with the item’s features. The desire for harmony and consensus can override realistic assessments and suppress dissenting opinions, which can lead to risky choices. To combat groupthink, foster a safe, open culture where people are given license to speak up when they have doubts or spot problems. Asking team members to play devil’s advocate, just to make sure all potential risks are considered, is a smart way to encourage people to make waves in the interest of the company, rather than going with the flow.
• Failing to plan for the long term: A 2024 Truist survey revealed that many small-business owners are laser-focused on short-term challenges and putting long-term strategizing on hold. Yet making decisions only for short-term gains at the expense of long-term planning can stifle growth. For example, a company might delay critical software upgrades to meet short-term financial targets, thus risking experiencing chronic system issues and cybersecurity attacks that could slow down operations, compromise sensitive data, and threaten the business’s stability. Business leaders must strike a balance between addressing a company’s immediate needs and plotting future growth.
• Having too many cooks: It can be tough to get anything done when too many people are inserting their opinions and jockeying for control. To avoid the chaos that can ensue when too many cooks are in the decision-making kitchen, businesses should clarify decision rights by clearly defining employees’ roles, identifying the people who will make the ultimate call on a particular project, and fostering a culture of trust where decision-makers feel empowered to act without fear of people second-guessing their every move.
• Being too risk-averse: To avoid making costly mistakes, it can be tempting to err on the side of caution, but being excessively risk-averse can mean missed opportunities, particularly in industries where bold moves might be necessary to remain competitive. For instance, a company hesitant to adopt emerging technologies, such as AI and cloud computing, may find itself lagging behind more agile competitors that capitalize on these advancements. Companies should carefully assess risks while encouraging a culture where daring decisions are rewarded and failure is viewed as a learning opportunity.
• Attacking the wrong problem: Failing to thoroughly analyze a company’s problems can cause decision-makers to misdiagnose challenges and barrel down the wrong path, wasting time and money. A cosmetics company experiencing declining sales might overhaul its marketing strategy without realizing the true issue lies in the lower-quality materials a new supplier is providing. To avoid misinterpreting the roots of problems, be sure to conduct comprehensive research and gather feedback from all stakeholders to thoroughly understand the core issues the company faces before committing resources to a solution.
• Integrating irrelevant data points: Businesses today have access to reams of data related to their internal operations, customers, products, and services, yet leaders can also find themselves drowning in too many numbers, increasing the chances that the wrong data ends up muddying the waters. Businesses may also inadvertently find themselves relying on inaccurate data, particularly when figures are manually gathered and analyzed. It’s important for managers to critically evaluate the relevance of the data they use and constantly question whether certain information should be filtered out or factored into their decision-making.
• Becoming overwhelmed or fatigued: Leaders are tasked with regularly making all kinds of decisions, from minor operational tweaks to major strategic changes. After prolonged decision-making periods, decision fatigue can set in, leading executives to lose focus, which can result in hasty, overly simplistic choices or delayed decision-making. To prevent fatigue, companies should regularly prioritize critical decisions, take periodic strategic breaks, and delegate lower-level decisions to appropriate team members. Leaders may also want to focus their mental resources on the most important choices earlier in the day, before the need to make other decisions takes its toll.

How to Improve Your Decision-Making Process

Even seasoned leaders experience obstacles in decision-making, such as cognitive biases, fatigue, and data overload. To navigate these challenges, businesses must adopt strategies to refine their decision-making processes. This section explores the actionable steps companies can take to improve their approach to decision-making, from identifying the root causes of problems to leveraging cutting-edge technology that helps evaluate options.

Clearly Identify the Problem

Businesses often struggle with properly framing the problem, which requires articulating the precise challenges they face before attempting to apply solutions. One powerful technique for identifying the true root of a problem is through adopting the “five whys” method, which involves asking “why” five times (or more) to drill down until the underlying issue is revealed. Consider a company wrestling with frequent product defects. Managers might start by asking and answering these five questions:

1. Question: Why are product defects occurring regularly?
   Answer: Manufacturing errors are being introduced during production.
2. Question: Why are manufacturing errors happening?
   Answer: The company’s machines aren’t calibrated correctly.
3. Question: Why aren’t the machines calibrated correctly?
   Answer: The recommended maintenance schedule on the machines wasn’t followed.
4. Question: Why wasn’t the maintenance schedule followed?
   Answer: The maintenance team was understaffed and fell behind schedule.
5. Question: Why was the maintenance team understaffed?
   Answer: Budget cuts led the department to lose positions through attrition.

In this case, the company may determine that the root cause of the product defects was a budget decision that reduced maintenance staff capacity. Armed with that information, the business can discuss solutions.

Solicit Feedback From Your Experts

A 2024 HSBC survey found that 45% of business leaders say the decisions they make on their own usually turn out to be poor. Perhaps that’s because many make decisions based on gut instinct. While that approach may pan out in some cases, it’s often better to take a breath and seek input from experts first, particularly those closest to the problem that needs to be solved. To solicit feedback, businesses can develop surveys and questionnaires, organize feedback events and workshops where people can share their ideas in a structured way, and conduct one-on-one interviews to dig deeper and gain more nuanced insights.

Businesses can also leverage technology to disseminate in-app surveys and provide feedback terminals featuring touchscreens that allow users to quickly provide real-time input on specific issues. For example, a company might implement a feedback system within its project management software that collects information from internal users on workflow efficiency to identify weaknesses and allow the business to narrow down effective solutions.

Recognize and Challenge Bias

Bias can creep in when making business decisions, often without people realizing it. Common biases include confirmation bias, where individuals favor information that supports their existing beliefs; anchoring bias, which causes people to give too much weight to the first piece of information they encounter; overconfidence bias, which leads decision-makers to be overly optimistic about their judgments; and authority bias, which causes people to give greater credibility to opinions from sources they view as authoritative. Plus, gender and racial biases often manifest in a range of decisions, including hiring, promoting, and evaluating talent. To recognize and challenge these biases, business leaders can:

• Acknowledge biases: Start by recognizing that biases exist in people’s thought processes. Awareness training can help teams acknowledge cognitive, gender, and racial biases that may interfere with sound decision-making.
• Collect information objectively: Introduce tools to assess data in an unbiased manner. For example, blind hiring systems can prevent managers from being influenced by names, gender, and other identifying information on resumes.
• Challenge assumptions: Conduct “devil’s advocate” exercises that require teams to scrutinize decisions and search for flaws by asking “What if this assumption is wrong?”

Plan for Both the Short and Long Terms

It can be tempting to focus only on addressing low-hanging-fruit issues that lead to short-term gains, but it’s important for businesses to implement a mixed planning approach that incorporates the long game as well. Companies can start by clearly defining their goals and making sure they’re not just focused on quick wins, such as meeting customer needs or optimizing cash flow, but are also keeping an eye on where the company wants to be in five to 10 years and designing a road map to achieve those goals.

This approach entails setting aside resources to accommodate immediate needs, as well as to satisfy long-term objectives. For instance, a software company might decide to dedicate 65% of its resources to maintaining and improving existing products and allocate 35% to research and development of new software to lay the groundwork for future innovations. Regular check-ins and accountability measures, such as monthly progress reviews of both short- and long-term goals, can help companies maintain the right balance between both timelines.

Encourage a Diversity of Opinions

Many businesses make the mistake of prioritizing consensus-building or adhering to top-down decision-making, often to avoid conflict or to get an initiative off the ground more quickly. But suppressing alternative viewpoints and leaving people feeling hesitant to speak up when they spot potential red flags could create blind spots in decision-making that might culminate in a project’s failure.

To encourage a wide range of diverse opinions, companies should start by creating a culture where dissent is not met with ridicule or retribution but is actually welcomed. Businesses can also set up small-group brainstorming sessions where each team member’s opinion is considered. And, if leaders suspect people are still fearful about offering their opinions, they can create anonymous feedback channels. In addition, team leads should model inclusive behavior by actively listening to opposing views with an open mind and letting teams know how they’re incorporating people’s ideas into the company’s strategic decision-making.

Prioritize Issues to Prevent Decision Fatigue

Many executives feel mentally drained by their decision-making responsibilities, which can contribute to decision fatigue and even burnout. In fact, the 2024 HSBC survey shows that 56% of business leaders feel ill-equipped to manage the decisions they have to make, and 42% are so uncomfortable thinking about decisions that they defer them.

When faced with a constant barrage of decisions, it’s important for business leaders to prioritize those that are the most urgent and important to prevent the quality of responses from deteriorating. In addition, business leaders can reduce their overall decision load by delegating less impactful decisions to other team members, establishing clear guidelines for making routine decisions, and even scheduling important decision-making for times when their mental energy is strongest. In some cases, it may be appropriate to automate certain routine decisions—for example, those related to operational efficiencies—to help leaders focus on more complex, strategic challenges.

Understand Your Data Sources

In a 2023 Drexel University survey of data and analytics professionals, 77% say data-driven decision-making is an important goal and is necessary to support other goals, such as improving operational efficiency, reducing costs, generating revenue, and improving regulatory compliance. Indeed, it’s crucial for businesses to understand the data sources they use to guide their strategic decisions and ensure that the information is reliable, relevant, and accurate.

To fully understand and manage their data sources, businesses should first map out where and how their data is generated and stored, and whether it comes from internal systems, such as customer relationship management software, or external sources, such as third-party vendors. Companies should make sure all data is up to date, since stale or inaccurate data can result in poor decisions. Additionally, leveraging data analytics tools can help companies crunch large volumes of data more efficiently and identify patterns or discrepancies that might otherwise go unnoticed.

Deploy a Decision-Making Framework

Decision-making frameworks provide a structured, systematic approach for evaluating options to make sure decisions are based on clear criteria, rather than fueled by emotions or biases. Frameworks help remove ambiguity, often by breaking down complex problems into manageable parts, making it easier for leaders to assess the benefits, risks, and potential outcomes of choices.

In addition to those outlined in a later section, effective decision-making frameworks include the Golden Circle, which focuses on understanding the “why” behind decisions before considering the “how” and “what,” and the CSD Matrix, which helps people systematically analyze the context of decisions by categorizing factors into certainties, suppositions, and doubts. Businesses may want to consider the type of decision that needs to be made when choosing a particular framework, since some models are useful for understanding complex situations, whereas others may be suited to prioritizing decisions.

Leverage Technology to Optimize Analysis

Businesses should leverage technology to process large datasets, identify patterns, and generate analytical reports to gain insights that can be used to inform their next steps. AI and machine learning algorithms can play a strong role in enhancing decision-making processes, allowing businesses to analyze customer behavior, scrutinize market trends, and track a company’s performance, all with the goal of improving business outcomes.

Also, companies often use enterprise resource planning (ERP) analytics systems to collect, consolidate, and analyze the data they need to inform their daily decision-making in a variety of areas, such as finance, human resources, project management, and supply chain logistics. When choosing the appropriate technology, businesses should focus on implementing scalable and flexible systems that can manage increasing volumes of data as a company grows and confronts changing business needs.

Decision-Making Tools and Frameworks

As business operations become increasingly complex, it’s important to rely on decision-making tools and frameworks to help evaluate options and assist with making optimal choices. A variety of frameworks are available to provide structure and clarity to the issues a business faces, and to reduce bias to allow for more objective decision-making and creative thinking when examining multiple scenarios. Some of the most popular decision-making frameworks include:

• Pros and cons list: When wrestling with a decision, sometimes the best way to move forward is to determine whether the positives outweigh the negatives. A pros and cons list works by encouraging decision-makers to outline potential advantages and disadvantages of a decision, allowing teams to visualize factors as they stack up in each column. It helps to assign values to each benefit and drawback to quantify the impact of each one before making a difficult decision.
• Decision matrix: Akin to the CSD Matrix mentioned above, a decision matrix allows teams to assess various options in a chart that spotlights different criteria to provide a clear, quantifiable way to prioritize and compare choices. It’s especially useful in group decision-making processes, because it allows team members to agree on the criteria and approach before they make a decision. For example, let’s say a company needs to select the best software platform for project management from among three options. The decision matrix could rate each product based on specific criteria, such as cost, ease of use, scalability, customer support, and integration capabilities, before a choice is made.
• Tree diagram: A tree diagram starts with a central question or decision that needs to be resolved as the root of the tree, which then branches out into different alternatives, outcomes, or consequences of possible actions. Each main branch may represent a particular choice, with smaller sub-branches outlining the risks or rewards associated with each option. For example, a company considering international expansion might use a tree diagram to map out potential markets, starting with the question, “Which country should we expand into?” The main branches might name the countries being considered, and the sub-branches could describe significant factors, such as local market demand, regulatory requirements, the cost of operations, and cultural considerations.
• Mind map: To build a mind map, start by writing the problem or decision that needs to be made in the middle of a page, then draw spokes that represent the major factors involved in the decision, such as the costs, risks, and benefits. Create subdivisions that delve deeper into each factor. For instance, the “costs” branch might involve looking at the initial investment, ongoing expenses, and potential savings. A mind map can be useful when planning the necessary steps and potential challenges when developing a new product. The central issue would be “launch new product,” and the spokes could explore key considerations, such as product design, target audience, and production costs, with supporting spokes that delve into details.
• SWOT analysis: This strategic planning tool assesses the strengths, weaknesses, opportunities, and threats that contribute to a business initiative. Let’s say a manufacturing company is considering whether to adopt new eco-friendly packaging. To formulate a SWOT analysis, the company would start by creating a grid with four quadrants, then identifying the potential project’s strengths (fostering strong brand recognition), weaknesses (high production costs), opportunities (meet the increasing demand for sustainable packaging), and threats (fluctuating raw material prices). This analysis could fortify decisions about the type of sustainable packaging to use and how to adjust pricing strategies to maintain profitability.
• The Delphi technique: The Delphi technique involves assembling a panel of experts that anonymously provide their opinions about a business decision through multiple rounds of questionnaires. After each round, a facilitator summarizes the responses and shares them with the group, allowing the experts to refine their feedback. This process typically continues until the group reaches a consensus. The technique aims to minimize the influences that often emerge during face-to-face discussions. A company contemplating the acquisition of a smaller business might pull together financial experts to evaluate the investment opportunity through several rounds of surveys, ultimately helping the company decide whether to proceed with the purchase.
• The 80/20 rule: This rule, also known as the Pareto principle, states that roughly 80% of outcomes stem from 20% of causes. To apply the 80/20 rule to decision-making, businesses should start by identifying the 20% of causes that yield the most significant impact and focus their efforts and resources on these areas. For example, a company might aim to increase its marketing campaigns with the 20% of customers that generate 80% of sales, prioritize resources for the 20% of products that result in 80% of profits, or address the 20% of issues that cause 80% of productivity problems.

Harness Technology to Enable Better Decision-Making

To prosper in today’s competitive business environment, businesses need to leverage technology to collect, analyze, and process large volumes of data, which, in turn, provides insights into how to make more accurate and timely decisions while minimizing human errors. NetSuite ERP helps businesses make smarter, more strategic decisions by providing a real-time view of their operational and financial performance. With an integrated suite of applications that manage accounting, order processing, inventory levels, production, warehouse operations, and more, NetSuite’s AI-powered cloud solution tracks performance, identifies operational inefficiencies, and analyzes financial trends to provide a holistic view of the business and help leaders make better decisions. In addition, NetSuite ERP automates routine processes, such as invoicing and order fulfillment, allowing employees to focus on higher-level strategic decisions that drive stronger business performance.

Effective decision-making is key to any successful business strategy. By implementing a clear, structured decision-making process and avoiding common mistakes, such as relying on limited data or succumbing to groupthink, businesses can make better informed and more impactful choices. Addressing biases, soliciting expert feedback, prioritizing ethical considerations, and inviting diverse perspectives are all important when teams are wrestling with important questions and working to get to the best possible answers. Developing structured frameworks, including mind maps and pros-and-cons lists, and leveraging advanced technology can further empower businesses to make data-driven decisions that assess risks and rewards and lead to positive outcomes.

Decision-Making FAQs

What six factors affect decision-making?

Six of the most important factors impacting decision-making are having access to accurate, relevant, up-to-date data; how much time a business has to make a decision; a company’s staffing and technological resources; the level of business risk; an organization’s values; and external factors, such as market conditions, competitive forces, and regulatory changes.

What are the three types of decisions in business?

The three main types of decisions businesses must make are:

• Short-term decisions: These tend to involve tactical choices that improve outcomes quickly.
• Operational decisions: These day-to-day decisions involve evaluating routine activities and making process improvements in areas.
• Strategic decisions: These high-level decisions shape the long-term direction of the business and involve bigger-picture questions.