Performance Management

  • Stéphane THION
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Does decision process matter?
Does decision process matter? 150 150 Stéphane THION

This was the question posed by Dean & Sharfman nearly 30 years ago in their paper: ‘Does decision process matter? A study of strategic decision-making effectiveness’ (Academy of Management Journal, 1996, n°39).

To examined whether decision-making processes are related to decision effectiveness, they studied 52 decisions in 24 companies. More specifically, the goal was to determine if procedural rationality and political behaviour influence decision success.

The main finding of their research was that ‘managers who collected information and used analytical techniques made more effective decisions than those who did not’. And ‘those who engaged in the use of power or pushed hidden agendas were less effective than those who did not’. But their research also confirmed that ‘environmental instability and quality of decision implementation play important roles in influencing decision effectiveness’.

If this well-known research confirms the importance of rationality, in an increasingly unstable environment, most chief executives and managing directors acknowledge the importance of analytical thinking in skills management.

  • Stéphane THION
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The challenge of strategic decision-making in a VUCA world
The challenge of strategic decision-making in a VUCA world 150 150 Stéphane THION

In a volatile, uncertain, complex, and ambiguous environment, strategic decision-making, and more generally, organizational decision-making become more and more complex. The creation of new knowledge, the dissemination of information via networks (particularly social networks), and the development of technology to automate the collection and processing of this information are all evolving exponentially. What was complicated yesterday is even more so today.

Since the 1970s, a great deal of research has sought to shed light on how strategic decisions are made and what the consequences are.

In their research named “Strategic Decision-Making”, Kathleen M. Eisenhardt and Mark J. Zbaracki (1992) identified three major “choice paradigms”:  rationality and bounded-rationality, politics and power and garbage can (the later taking place in ambiguous settings designated as organized anarchies). A few years later, James W. Dean and Mark P. Sharfman (1996) showed that strategic decision-making effectiveness was influenced by decision processes and that “managers who collected information and used analytical techniques made decisions that were more effective than those who did not”. Ten years later, a literature review carried out by Said Elbanna (2006) suggested strongly that rationality and more specifically procedural rationality is positively related with decision effectiveness. Rationality, bounded rationality, and procedural rationality highlight the path towards a more precise concept. Herbert A. Simon defined procedural rationality as the ‘extent to which decision-making process reflects a desire to make the best decision possible under the circumstances’ (1978). Later, James W. Dean and Mark P. Sharfman (1993) define rationality as ‘the extent to which the decision process involves the collection of information relevant to the decision, and the reliance upon analysis of this information in making the choice’.

From these numerous studies, the main skill underpinning the effectiveness of strategic decision-making is analytical thinking. Analytical thinking has been defined as a cognitive process that consists of (1) identifying and decomposing a complex concept, problem, system, or process into parts, (2) examining those parts and their distinct characteristics or functions, and (3) communicating or articulating how the parts relate to the whole (Christopher W. Brandt and Will Lorié, 2024).

Chief executives and managing directors acknowledge the importance of analytical thinking in skills management, with 68% considering it to be the most important skill in the coming years, and almost half of them planning this skill as a priority in their upskilling or reskilling programmes (Report Future of Jobs, World Economic Forum, 2023).

Learning analytical thinking (and the related skill of critical thinking) is a complex, time-consuming process.

Would you like to acquire these skills? Contact us.

References:

Brandt, W. and Lorié Will (2024). Measuring student success skills: A review of the literature on analytical thinking. NCIEA, Center for Assessment

Dean, J.W. and Sharfman, M.P. (1993). Procedural rationality in the strategic decision making process. Journal of Management Studies, 30, 587–610.

Dean, J.W. and Sharfman, M.P. (1996). Does decision process matter? A study of strategic decision making effectiveness. Academy of Management Journal, 39, 368–396.

Eisenhardt, K.M. and Zbaracki, M. (1992). Strategic decision-making. Strategic Management Journal, 13, 17–37.

Elbanna, Said (2006). Strategic decision-making: Process perspectives, 8, 1, 1-20.

World Economic Forum (2025). Future of Jobs Report.

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