Decision Risk Today & the Role of Analysis.

By Babette Bensoussan

Many companies amass data and information in the hope of managing organisational risk while at the same time not recognising that knowledge or insights is not the same thing as information. The conversion of information to business insights and action to minimise risk requires competence in analysis and sense making.

Today, the interval a company enjoys as “market leader” has fallen to previously unforeseen levels. The cycle time underlying new product/service introductions is also shorter, and companies have to continually develop and deploy new strategies to maintain some competitive advantage.

While “strategy” is often an overused word that means different things to different people, I do know that successful strategies essentially are based on originality and uniqueness—being “different” to competitors in ways that customers value. In strategic management terms, this means developing distinctive organisational resources and competencies.

Further, management decisions may differ depending on the timing and the responsibility of the decision makers. These decisions would most commonly be identified as strategic, tactical, or operational.

  • Strategic decisions (usually made by top management) affect the direction and resource allocation of the organisation, set precedents or the tone for decisions further down the organisation, and may actually be irreversible. These decisions have a material effect on the organisation’s competitiveness within its marketplace and affect the long term viability and reputation of the business. These decisions carry some of the highest risk to an organisation.
  • Tactical decisions (generally made by mid-level managers) are less all-encompassing than strategic decisions and contribute to formulating and implementing policies for the organisation. They often materially affect functions such as marketing, accounting, production, or a business unit or product as opposed to the entire organisation. Tactical decisions generally have lesser resource implications than strategic decisions.
  • Operational decisions (typically made by lower-level managers) support the day-to-day decisions needed to operate the organisation and take effect over a few days or weeks. Operational decisions are distinct from tactical and strategic decisions in that they are made frequently and often “on the fly”. Operational decisions tend to be highly structured, often with well-defined procedure manuals or within readily understood parameters.

At all these levels of decision making, executives need to have the necessary insights to enable them to make better decisions and bring to account the risks involved for the organisation. No senior executive can be expected to know the entire competitive terrain well enough to correctly call all the shots.

Within today’s complex, chaotic, globally competitive environment, the pressing need for making sense, strategic thinking, and improved understanding of the competitive terrain is why organisations need to develop and enhance their analytical abilities.

Good analysis of existing and potential competitors, the environment in which your organisation operates, and your strategy should help you deliver the following:

  • confidence that decisions are based on systematically derived understanding that reduces ambiguity and complexity to low levels;
  • early warning of potential opportunities or emerging threats in your competitive environment;
  • the ability to help your organisation to more quickly and easily adapt to changes in the environment;
  • an objective and arm’s length assessment of your organisation’s relative competitive position; and
  • the means for basing your organisation’s strategic, marketing, sales, or product plans on relevant and timely insights.

Improving the quality of decision making should hopefully improve the quality of strategies that provide a competitive advantage, which in turn delivers performance results that are superior to your competitors.

About the Author

Babette Bensoussan is an internationally esteemed leader in the field of Competitive Intelligence (CI) and Strategy. Her credentials are built upon a long-standing series of outstanding achievements, both business and academic. She is Australia’s only awarded CI professional and is one of the most published business authors.

She is a Senior Associate of Validity Group and a Director of The MindShifts Group, an Australian globally networked consultancy specialising in strategic planning, competitive intelligence and strategic marketing in the Australasian region.

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