Module 6- Skills for the future and next steps- Part 4
Strategic and tactical decision making
We want all MyBnk enterprise teams to feel empowered by the experience and to have the confidence to make informed decisions about their next steps be they in enterprise, education or employment.
All of our enterprise programmes involve reflection and looking to the future.
A strategy is a way of achieving an objective e.g. setting up a business, a dream career.
Everyone has to make decisions and think of a strategy in life. Young people in particular may be faced with lots of decisions as they choose how to move forward in life.
Some decisions may be fairly simple and routine e.g. what sandwich should I have today? whilst others are more complex and requirement management of time and effort e.g. should I apply for University?
Strategic decisions are high-risk and likely to have long-term impact e.g. should I invest in an expensive, 3 year training course? Should I leave my job to set up a start-up?
Tactical decisions are fairly routine, predictable, short-term and fairly risk-free. e.g. what should I eat for lunch today?
Decision making methods
There are lots of different was of making decisions. Some teams or young people may find it helpful to use a set method for making a decision, particularly for strategic decisions.
Traditional decision-making process
This process is often used by businesses but can also be used by individuals. It involved working logically through 8 steps.
- Set objectives- these need to be achievable, realistic and identifiable.
- Gather data- use market research to collect as much information as possible on the issue and options
- Analyse the data- look at the different courses of action and decide which ones look the most achievable and realistic to meet the objective.
- Make a decision- this stage is vital to the whole process.
- Communicate- the decision has to be shared with others so that the decision-maker feels accountable
- Implement the decision- the course of action that has been decided upon is acted on.
- Look at the results- what has the decision changed?
- Evaluate the outcome- did the decision work? Was it the best course of action ? How can it be improved next time? What went wrong?
Decision tree
A decision tree is useful for decisions involving discrete actions. It shows the chance (or probability) of an occurrence. It sets out actual values to be expected should a particular course of action be followed. These can then be multiplied by the relevant probability of that event happening, to give an expected value, which represents the average pay-off if the decision was taken many times.
Simpler decision trees may just sent out the course or path of different options. Decision trees give a visual or numerical depiction of potential consequences.
For example: Mr. Smith owns a piece of land and he wants to sell it to raise some money for his ailing business. He can sell now for £5,000 costs or in 6 months for £7,000 costs.
The decision-tree below illustrates the above scenario:
Calculation of expected value at node B:
£325,000 x 0.6 = £195,000
£250,000 x 0.3 = £75,000
£200,000 x 0.1 = £20,000
Total expected value = £290,000
The tree diagram points in favour of delaying the sale of the land for 12 months, since it predicts that IF THE DECISION WAS TAKEN MANY TIMES then Mr.Smith would ON AVERAGE receive £283,000 (£290,000 minus £7,000 costs), instead of the £245,000 (£250,000 minus £5,000 costs) that he would receive by selling the land now.
S.W.O.T analysis can also be used for decision making.
The Futures Wheel
The Futures Wheel is a way of considering the consequences of a change or a decision. It involves mapping direct or first-order consequences of the change and the consequences of these consequences (second-order and third-order).
Once all levels of the Futures Wheel have been completed- there will be a clear picture of the possible direct and indirect consequences resulting from the change. Actions can then be identified.
