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McKinsey Global Survey on Strategic Decision Making


Consulting firm McKinsey conducted a global survey on strategic decision making to ascertain how well executives were applying rational thinking and sound decision making processes to their strategic decisions.

The results of the survey revealed critical flaws and the lack of logic in decision making and debunking the assumption that "managers will always behave rationally to achieve the best possible outcome". The result of this is less than ideal outcomes.

The survey aimed to identify the frequency and intensity of the most common managerial biases in companies, focusing on the role bias played in recent strategic decisions that clearly had a satisfactory or unsatisfactory outcome.

The outcome was that satisfactory decisions producing better results are associated with less bias. In such cases bias has been diluted through objective assessment of facts, open debate between all stakeholders and a realistic assessment of corporate capabilities.

Other clear revelations included:

  • Most companies value and employ rigorous decision making processes
  • Companies are not being effective in aligning incentives with strategic objectives
  • Insufficient forecasting of competitors’ reactions
  • Good decisions focus more on ability to execute

The best outcomes were obtained when strategic decisions:

  1. Were aligned to a mix of financial and strategic targets
  2. Considered both short and long term impacts
  3. Were realistic in terms of the organizations ability to execute
  4. Evaluation and analysis was fact based and sought out contrary opinions
  5. Evaluation approach was tailored to each specific decision

The value of BI tools in this process is evident, and as such, this survey has provided solid grounds for BI solution consideration.

 

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