Disruption in decision-making: new tool identifies hidden gems

A new tool challenges the traditional decision-making process that relies on gut-feel and market knowledge alone.

New research by expert decision analysts has turned one of the basics of business decision-making on its head. According to researchers from the University of Portsmouth, a new tool they built, MACBETHSort, can cut the time businesses spend on making major product decisions by ranking the viability of products based on its likelihood of being successful.

According to Alessio Ishizaka, Professor of Decision Analysis at the university, business decisions have traditionally been made through the ABC method, where products are graded based on potential turnover.

“Decisions in business are often of huge importance and the first step needs to be to define the problem. Traditional decision-making tools rely on giving products a grade, from A, B, or C. You can understand why such a simple tool might be popular with busy managing directors, but it’s too simplistic to be very useful in the end,” he said.

“MACBETHSort supports decisions, rather than makes decisions, so the quality of the result will always depends on the quality of what you tell it. If a decision-maker has no idea about the business, then no tool can make miracles or give good advice. But if the decision-maker has a sound grasp of the business and a clear vision about its future, the MACBETHSort tool can make an enormous difference to the company’s bottom line.”

The researchers tested their sorting tool on a medium-sized door manufacturer, whose products range from turnstiles to a high-end bespoke break-out doors for panic rooms.

Like most other SMEs, this particular business is used to relying more on instinct and understanding of the market, than on decision-making tools. To test MACBETHSort, the managing director was asked first to list their key criteria for a successful product and decided they were:

  • Speed – how quickly can it be manufactured;
  • Flexibility – how easily can it reconfigured to meet the needs and laws of different countries;
  • Return on investment – profit margin;
  • Market share – how competitive is it;
  • Dependency – how dependent is it on specialist versus generic components;
  • Production – how complicated is it
  • Skill – how skilled does the workforce need to be
  • Labour- how many people are needed to produce it.

He was then asked a series of questions, including which criteria were most likely to move a product from good to excellent.

By going through a relatively complex set of ratings, it emerged that staff skill and labour were of least importance because of the abundance of workforce at all skill levels. The process also revealed that turnstiles, which the company assumed was a lower league product for the business, was actually a middle-league product. Similarly, the company assumed that all-glass doors were their average grade product that performed reasonably well, but was in fact a hidden top league product that could generate the most revenue for the business, as a product most worthy of the company’s time and attention.

“Great leaders are almost always great simplifiers, who can cut through argument, debate and doubt to offer a solution everybody can understand.” – Colin Powell.

The rating, sorting and adjusting took a few hours, with a specialist decision-making analyst’s help. “We discussed the outcome with the company later and it was clear they were impressed. They’d noticed a significant reduction in time and effort in their decision process, they felt the quality of their decisions was improved, partly because they had a clear and consistent benchmark, and the decisions about production were clear and easy to communicate across the company,” according to Professor Ishizaka.

Richard Branson’s four rules for decision-making

Entrepreneurs are problem-solvers by definition, and decision-making is just part of the job. The most revered business leaders are known for making decisions from a sense of purpose, rather than just their position. This sense of purpose is generally relevant to your goals as well as that of the individual goals of people in your team.

Richard Branson’s four rules for making decisions are:
1. Don’t act on an emotional response
2. Identify the downsides to the decision
3. Look at the big picture
4. Protect the downside

The strongest best leaders have different sets of principles that they use in different situations, putting emphasis on speed of decision-making, fairness, consistency, impact, and other factors. We’ve rounded up some of the most widely used decision-making principles used by business leaders around the world.

  • Treat issues coldly and people warmly: Satya Nadella
  • Try to push decision-making down the organisation so that you only have to make very few (and very important) decisions: Mark Zuckerberg
  • Listen attentively to people before making a decision: Richard Branson
  • Don’t make up your mind too soon
  • Make the decision that is most aligned with your values: Elon Musk
  • If a decision turns out to have been misinformed, change it: Bill Gates

If it’s difficult to choose between A or B, it could be because both (or sometimes neither!) of them are good choices.

Praseeda Nair

Praseeda Nair

Praseeda was Editor for GrowthBusiness.co.uk from 2016 to 2018.

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