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Proven Decision-Making Strategies for Business

January 08, 2020
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Imagine This

Things can get complicated incredibly quickly when you’re leading a group, and this is the crux of decision-making strategies in business. Decision-making strategies are the methods by which we use information to make a choice, and they can apply from everything from choosing next semester’s classes to setting a long-term business strategy.

A helpful example of this is to imagine that you and your friends are on a hike and trying to decide which trail to choose. If you were on your own, it would be an easy choice. You’ve taken plenty of hikes and you know your own physical capabilities. You may have even come to this mountain before, you have experience on several of these trails. But you’ve never had your friends with you when tackling this decision, and you’re not sure how to make this choice when you’re leading a group. You may be mentally processing information based on facts and personal experience, meanwhile, your friends may be coming up with different solutions. You may all get together to hash out the pros and cons of each trail and how to choose a path. Essentially, you’re all making a decision about how to make a decision about which trail to pick. In situations like this, decision-making strategies can be incredibly useful.

Below, we’ll walk through four proven decision-making strategies for business and for life.

Analytical Decision Making

This decision-making strategy should be used when you have all the relevant information at your fingertips. It’s the most methodical and step-by-step approach to make a choice, and it’s an attractive method since it breaks up a complex choice into smaller more manageable pieces. For example, if you’re trying to decide if you and the group are able to hike for a few more hours, you might take into account factors such as remaining daylight, amount of food, and energy levels of the group.

This decision-making strategy is methodical and easy to communicate to the group and it works well when the goals or variables can be expressed numerically. However, it’s most useful in very specific circumstances. And without proper expertise, it can be very tedious and time-consuming.

Use this method when:

  • You can clearly define your goals
  • You have complete and reliable access to all the data you need
  • You have the expertise to understand which information is relevant and which can be ignored
  • You have plenty of time to make a decision

Pitfalls of this method:

  • Thinking that the most easily remembered events are the most probable
  • Concluding that a single event is typical of an entire class of events
  • Believing that the first or last pieces of information are the most vital


Heuristics should be applied when you have some expertise and limited data. This decision-making strategy allows you to generalize based on a few key pieces of information. Think about driving. When you see red lights appear on the car in front of you, you’ll likely react by hitting your own brakes. Odds are, you didn’t spend time breaking down each piece of information in the situation, you just reacted instinctively based on your knowledge of what brake lights have meant in previous situations.

Heuristics aren’t always correct or rational, but they work often enough that they can be trusted in the right situations. They’re quick and easy, and with enough practice, they can become subconscious, freeing your mind for other things. On the other hand, they’re not always correct, so relying on the wrong cues for guidance can result in the wrong decision.

Use this method when:

  • You have reliable heuristics that are relevant to the circumstances and you’re certain that they’re accurate
  • The consequences are trivial

Pitfalls of this method:

  • Getting lulled into a false sense of security due to the familiarity of the situation
  • Remaining consistent with a previous decision, even when new evidence shows that our decision might have been wrong
  • Assuming that because others are doing it, the activity is less risky than it is

Expertise Decision Making

Use this decision-making strategy when you’re so knowledgeable about something that most of your choices are instinctive. Even when information may seem incoherent to others, you’re able to use expertise decision-making as a strategy. Think about sailors at sea: an experienced shipman will be able to tell if a storm is coming much sooner than a first-time sailor. The experienced sailor may only need the wind picking up and the smell of rain, while the new sailor might need more data like storm clouds rolling in and choppy waves.

Expertise provides quick, accurate decisions that often form above conscious thought by using some heuristics. However, expertise does not explicitly assign issues to specific heuristics, rather, you’ll rely on your experience and knowledge to identify issues and solutions. But because it’s a subconscious process, it can be hard to teach.

Use this method when:

  • You have enough knowledge and can easily check your choices against the right heuristics.

Pitfalls of this method:

  • Believing that because you’re an expert in one area then you’re an expert in other areas as well
  • Having trouble coaching others in things that seem obvious to you

Random Choice

This decision-making strategy is perfect for when you have no clue what to do but the stakes are low. This may seem odd, but flipping a coin is a perfectly legitimate way to make a choice. Random choice is the easiest of the four strategies, and when used correctly it can be effective and save you time. Imagine having to split your office into teams for a social event. If you made the choice yourself, you’d have to take into account interpersonal dynamics which would make it difficult to choose teams. Random choice is an easy way to take emotion out of the decision-making, and to get the choice made quickly.

When to use this method:

  • You have a limited amount of time, the consequences are minimal, and you lack access to other strategies
  • You’re choosing between decisions that have outcomes that are so alike that there’s no practical way to separate them
  • You can’t make the choice any other way

Pitfalls of this method:

  • Abandoning other decision-making strategies too quickly
  • Lack of control over the outcomes

Trying to Make a Decision Now?

The next time you’re contemplating making a decision, whether for business or personal reasons, stop to think about your choices. Which strategy should you use, which fits your circumstances best? When you understand your decisions and how you can make them, you become a better decision-maker in all facets of life.

Are you considering furthering your business career? Consider how California State University, Monterey Bay’s Online MBA program can help you gain the skills and knowledge necessary to become a successful and decisive business leader.