Why Collaborative Decision Making Software
In business, in organizations, software doesn’t make decisions. Not real decisions.
People make decisions.
So why are we here talking about decision making software? Well, the answer is that people are sometimes not very good at making impartial decisions, especially if the people are from different departments and are working in a group. Bias creeps in. Group think. Politics.
In many organizations, teams use spreadsheets hacked together with some intuition and a lot of guesswork to support the decision process. These spreadsheets provide the appearance of structure, of “science” but they are usually improvised with arbitrary rules and are not at all transparent. Can you justify the weighting of the different criteria from your last group decision? Do you even know what they were?
Decision making tools can help. Tools that are based on real decision science research but which are built for people can;
- Speed up the decision-making process
- Improve the quality of your decisions
- Improve the transparency of and buy-in to your decisions
Gone are the contentious and disjointed interdepartmental meetings. Gone are the seemingly random outcomes and U-turns.
Instead, collaborative decision making software can let your teams cooperate easily, consistently and with transparency… and all without that ugly spreadsheet!
What is Collaborative Decision Making Software?
You know the score; you’re responsible for making a recommendation or decision but everyone else wants to have a finger in the pie! Finance, IT, marketing and production planning all have input they want to make… and you are the one who has to balance all of these competing requirements and boil it down to one decision.
Don’t worry. Decision software is here to help.
Decision software makes;
- Cross departmental collaboration easier
- Criteria and their relative importance explicit and transparent
- Decisions – and the thinking behind decisions – transparent to executives and other stakeholders
It allows multiple people, departments and companies to collaborate seamlessly at every stage. It also makes the decision criteria and outcomes transparent. This not only helps make the process easier to manage, but also improves buy-in and transparency.
When Should I Use Collaborative Decision Making Software?
CDM can speed decision-making in areas such as;
- Project prioritization
- Vendor selection
- Hiring decisions
- Corporate strategy
- Resource allocation
- Property or site selection
Anywhere, in fact, where you have;
- Multiple criteria driving your decision
- Different people or teams involved in the evaluation process
- Multiple viable outcomes of your decision
Collaborative Decision-Making Business Case
Collaborative Decision Making software varies in capability and cost. One thing they share, however, is that they are designed to make your decisions, well, better. Some products, such as TransparentChoice, help your team collaborate more easily, reducing the time (and cost) involved in making complex decisions. But the big savings come from improved outcomes from your decisions.
Really? Oh yes!
According to McKinsey, 60% of executives admit to making as many bad decisions as good. Think about that – half the decisions any executive makes are likely to be bad ones with poor outcomes. And this is the foundation for your business case.
Let’s look at one use case, project portfolio management. In this case, an organization might have a requests for 50 projects, say, whose total cost would be $50m, but they only have manpower and budget for 15 projects – let’s say $15m. Without good tools, prioritization decisions tend to get made based on, say, the most recent customer complaint, political expediency or on the basis of who has the loudest voice.
Let’s assume that a typical business will demand a 2x return on project spend, so the company should receive $30m of benefit from the $15m spend.
Remember, 50% of those decisions are bad decisions.
In other words, half of those projects will achieve far less than their targeted 3x return. If we assume they only achieve a average of 2x return on investment, then the company is wasting $15m per year. Clawing back just 20% of this would increase profit by $3m.
You know you want some of that!
Collaborative Decision Making Process
So what is this magical process that improves the quality of decisions? There are several methodologies, but the most common and the most powerful methodology is called Analytic Hierarchy Process (AHP), but you don’t need to be an AHP expert to get the most out of collaborative decision making software.
Decision making in an organization is often inconsistent. Decision software can help you put some structure in place to ensure consistency in your decisions but the right tools will leave you the flexibility to add the human touch, the “special insight” that can add so much.
At a high-level, the AHP process of decision making looks something like this;
Define you project – define the decision you want to make, such as to select a technology vendor or find a location for your new distribution depot. Focus on the business outcomes you are aiming for and the specific decision you need to make.
Add your alternatives – These are the potential outcomes of your decision. For example, it might be the different vendors in your evaluation. It might be the different potential locations for your new distribution centre. In any case, make your list as complete as you can.
Define your criteria – These are the factors you want to take into consideration when making your decision. For example, if selecting a technology vendor, price, risk and functional capabilities will all influence the outcome of the decision.
Set up the evaluation team – This is the team of subject matter experts and department representatives that will help evaluate the alternatives.
Prioritize criteria – There are likely to be a number of important criteria in your evaluation process. Not all criteria are equal, however. In fact, it is likely that different people / departments will weight different criteria quite differently. Good decision software should give you easy tools to derive the appropriate overall weightings from the input of those individuals.
Score alternatives – After gathering the appropriate information, each evaluator will score all the alternatives from their own perspective. The software will then combine the various inputs and calculate the “overall scores” for each alternative outcome making it easy for the decision makers to hone in the best solution.
Review and make decision – Decision software will take all of the weightings and scores from each evaluator and will then combine them and present the output to you as a series of scores. It will highlight areas where there were wide discrepancies between evaluators and will give you the opportunity to fine-tune your conclusions before making a final decision.
That’s it! Seven steps to better, quicker decisions, to better buy in from executives and cross-organizational teams.
To saving money and reducing stress.