The importance of effective decision making in the corporate world has continued to transform how many organizations make their decisions. The type of decisions made today influence the outcome and the face of the company tomorrow (Shaw, 2008). Decision analysis has continued to be a current trend in every decision making process. Business decision making is never a matter of just choosing between solutions. Managers have to daily analyze outcomes and choose among the options that they have (Shaw, 2008). Making decisions is always a collective process that requires teamwork and strategy formulation. Getting the best strategy remains to be the task that managers have to endure every day (Shaw, 2008).The changing technology has enabled decision making for both medium sized and large businesses easy. Decisions depend on data and business analytics gives the data necessary for decision making.
Moreover, analyzing the situation in the market continues to be a major challenge for most businesses. Businesses have to always avoid getting caught up or left behind by new technology. Most business decisions revolve around technology and its impact on business decisions today cannot be assumed. The increased use of business analytics has made the data-based decisions in business a common culture among managers (Mandinach, 2011). Decision-making that utilizes data has led to an important tool in making decisions known as Data-Driven Decision Making (Mandinach, 2011).. Investors and other stakeholders require facts in decisions. They, therefore, always have to provide facts on how they made their decisions. Decisions are normally based on risks and the assessing of the possible risks associated with a particular decision helps influence the outcome (Mandinach, 2011). Competition in business has continuously influenced most business decisions and therefore defining how decisions are made. However, some business decisions may be based on following the current trends in business which may make businesses incur great losses.
Following trends in making business decisions
Making management decisions for any company or organization is a significant step in the development of the organization (Stubbs, 2013). Any manager tasked with making a decision whether long-term or short-term has the future of the organization on their hands. Therefore, all decisions should be based on research by the organization. However, many organizations follow the crowd and tend to make decisions based on the decisions made by their competitor. “Keeping up with the Jones” remains a common phrase for such managers who choose the cheapest form of decision making in business. While this strategy may be economical and fast, some decisions may not affect all organizations in the same way (Robbins & Coulter, 2005).
Managers, and or business decision makers make the decision based upon profitability that often result in short-term gain, long-term losses. With the market becoming more and more competitive each day, it is crucial that a firm continuously find and search for the next best thing for consumers. Pressed by financial burdens, and tight deadlines, a company often jumps the gun when a new ideal hits the market in order to maintain that competitive edge over their competitors. For example, the cellular companies are always in constant competition for the next best mobile devise that will go well with their wireless service. Other companies may consider getting the same device and often overlook its compatibility with its service. This creates short-term gain with a long-term loss with their customers.
Many managers get caught up in following the crowd mainly due to competition. Every manager wants their company to be the best and better than their competitor (Robbins & Coulter, 2005). Fighting off a competitor and reducing the risks associated with business decisions may make a manager make a similar decision made by an opponent. The thought that if it worked for the competitor it woulddefinitely work for us pushes most managers into making risky and disastrous decisions. Managers, therefore, make short-term decisions and forget that the business needs long-term planning. The decisions may apply in the short-run but in the long-run, the business environment will change and hence the impacts of the decisions (Stubbs, 2013).
Consequently, managers need to strategize before making decisions. Decisions in the business differ from one organization to another. How one company operates may be different to how another works in the same industry (Shaw, 2008). This is so because companies have different resources, reputation, workforce, plans, mission, vision and background. Managers, therefore, need to formulate a plan and come up with a team to assess the situation that requires a decision (Shaw, 2008). The team will then evaluate the market and the company potential and give their recommendations based on their findings. This will give the manager time and information to make appropriate decisions.
Managers can often lose sight of the main purpose of the company as they get pushed to the limit from day to day operations. Many managers lose sight of the company mission and vision goals set forth to ensure long-term longevity. Managers should revisit the company’s mission statement and vision goals in order refocus on their main purpose for business. The managers can utilize data-driven decision making technology and software in order to aid their decision making more effectively. Research analysis will guide the management ability to make better steps for the future of the organization. Business can learn a lot from history. A business that take into account every aspect of functioning as a better business, will take into account the importance of proper research and new technological advancement in decision making process
Businesses need to learn from the mistakes of other companies or organizations not necessarily from the same industry they operate. Learning from mistakes ensures that companies make decisions that are wise and well thought off (Shaw, 2008). Frequent case analysis by the management on the mistakes of other companies will help make informed decisions. The management will get to know a variety of common mistakes made by other businesses and how they managed to get through those challenges (Robbins & Coulter, 2005).
Data-Driven Decision Making (DDDM)
The use of technology in data-driven decision making or otherwise known as DDDM or D3M has continued to pick over the years (Mandinach, 2011). Data –driven decision making is the making of sound business decisions through the collection and analysis of past data of the company and from the industry (Mandinach, 2011). The data collected is used to make decisions through the integration of technology in decision-making through the use of business analytics. Technology has in the past and present transformed the way businesses operate and has become a significant player in decision making.
Technological components required for data-driven decision-making
Hardware components comprise of the tangible technological innovations that are necessary for analyzing and the collection of data (O'Neal, 2012). The most important hardware component of the technology is the computer. The generation of new computers over time has led to the faster incorporation of data analysis in decision making. Computers are fast, and they give a better ground to analyze data (O'Neal, 2012). Unlike in the past, computers make the analysis of data and storage easier. The use of computers in business analytics includes data storage, collection, entry, analysis and presentation. Business analytics relies on the use of computers in data analysis (Streifer & Goens, 2004).
Any business that needs to make the best decisions today relies on an efficient data storage system. Data storage systems ensure that a larger amount of data is stored compared to the past where the data storage was limited (O'Neal, 2012). Most data backups also require the installation of a backup system to help ensure that no data is lost. Moreover, communication system installation is important in coordination. Any company investing in business analytics needs to have an efficient communication system program to help in organizing the various departments that help in data collection (Mandinach, 2011).
Buying the best available computer and the installation of the best communication system is not the start of any victory for a manager at any business (Sugden, 2014). Employees usually need training on the use of technology. The effective transitioning of the technology into the current system without interrupting the business process is important. An operations manager is therefore needed to ensure that the technology works in the best way. (Sugden, 2014) The hardware components help ensure that data is securely stored and provide a platform for the installation of the software part.
Choosing the best systems is essential in ensuring that everything works according to plan (Sugden, 2014). The business should, therefore, purchase the latest available hardware components. Purchasing of hardware components also requires the assessing of the data needs of the company. A large corporation will need comprehensive systems compared to a smaller company (O'Neal, 2012). The communication and data storage systems will require maintenance and the hardware components should, therefore, have spare parts as needed by the operations and IT managers (Sugden, 2014).
Any business needs employees. Competition makes companies go for the best available skills and the most experienced human resource. Efficient human resource ensure that they make any process swift and productive (O'Neal, 2012). The integration of technology in data-driven decision making highly relies on the employees employed by the business. Employees help in the efficient organization of business activities. Consequently, companies need to have enough skilled human resource in the IT department.
The human resources help in the operation of the new technology and the efficient data collection and analysis. Data collection, analysis, interpretation, and presentation will need a human resource team with a statistical background (O'Neal, 2012). Operation of new software, maintenance, and repair needs the input of a creative and skilled human resource team. A trained management team in the IT department and data analysis will also help ensure that the data reflects the desired output (Streifer & Goens, 2004).
Training employees on the use of new technology is a significant step in redefining technology (Streifer & Goens, 2004). Technology depends on the ability of the employees to understand how it works and know the interpretation of the desired output. Technology changes with time and the management will, therefore, need to update constantly its system to guarantee effective compliance. Employees also analyze the system for any mistakes and detect possible data fraud or loss or inefficiency in the system (Sugden, 2014). A highly qualified and skilled technical team will also help integrate the system in the current system used by the organization (Streifer & Goens, 2004). They can also help improve it and ensure that it meets its full capacity.
The software part of technology remains very vital in any integration of technology (O'Neal, 2012). The software component of technology may vary depending on the needs of the company. A business that needs to have the most efficient data-driven decision-making plan needs to ensure that its software components are quality and meet their business needs. The software component sis installed in the hardware to help in the functioning (Streifer & Goens, 2004). It is, therefore,an important tool since without softwaqre components, the hardware component will remain useless. Organizations implementing technology need to have an interactive website to help keep their clients up-to-date. The increased online presence for most companies has pushed this further with time. A company will also need statistical software and packages to help integrate the data and interpret it (O'Neal, 2012).
The software component needs constant updating (Streifer & Goens, 2004). The technical team, therefore, needs to be aware of the latest technology and ensure that their business remains up-to-date with current software, website maintenance and integration is also important in enabling data collection and analysis. Listening to feedback and responding to suggestions is important in building on technology. Getting the latest and most efficient software will; ensure maximum efficiency in the business (Sugden, 2014). The employees should also be taught on the operation of various software’s in the business. This will help make sure that every software component is maximally utilized. Statistical software such as SPSS and EVIEWSassist in the analysis of big data. Using such material will help make the business quickly collect and analyze data. The available software should also enable automation of services (Streifer & Goens, 2004).
Even with the highest skilled workers, high quality software and the best technology, implementation and the integration of the technology into the business system remains the most important part of data analysis and implementation (Sugden, 2014). Data requireseffective organizing and collection at the right time and analyzed, presented and interpreted in the best way to make it useful. Implementation of the technology and its effective integration into the company remains the best and most important part in business analytics. This stage makes the output of business analytics useful to the company. The manager making a decision is more interested in results than the process of getting the results (O'Neal, 2012).
The installation of hardware components and the software components in the business helps develop a framework for the comprehensive business decision-making tools made by the organization. Ensuring that the system is up to date is important in making sure that the business keeps up with the changing technological trends. The human resource remains an important figure in data-driven decision making. They coordinate the whole process and help give a full report on the applicable decisions. Employees give their instincts and views which are important in decision making. Technology remains the best solution to most business decisions.
Decision making in business remains a very important part in strategizing for a successful business. Following trends in decisions requires caution while the use of Data-Driven decision making as a tool for making decisions remains a key study area. Technology has continued to influence the effectiveness of business decisions over the years. Making technology part of the decision making process ensures quality and faster decisions in business. The technological components remain an important part of making business decisions today.
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