Business decision makers are confronted by a perplexing array of paths branching before them. Each path is complicated by information overload, complexity, and uncertainty. Managers need better ways to navigate the treacherous terrain of decision complexity.
In the petroleum industry, Shell and BP face substantial risks in projects with a small probability of outsized success. Carefully managing the risks and opportunities associated with decisions is essential to realizing long-term profits. In 2006, due to political circumstances, both firms had to back out of substantial projects in Russia. However, the firms had carefully weighed the risks beforehand via decision analysis and thus were able to limit their losses.
Due to the proliferation of increasingly powerful, low-cost computing and advanced software tools, you can now apply these same methods using a common desktop. All you need to start making timely, value-enhancing decisions is to gain an understanding of basic decision analysis methods.
Decision analysis guides managers and employees to make effective decisions in environments of uncertainty. Business analytics extends decision analysis by quantifying uncertainty through data analysis. Integration of business analytics and decision analysis allows companies to mitigate risks and to optimize value-creating opportunities. Not applying business analytics to decision analysis leads to substandard decision making.
For stakeholders responsible for making, facilitating, and supporting critical decisions, it is crucial to understand the basics of decision analysis. Thus, managers and employees need to know:
- What decision analysis and business analytics are.
- How to frame business objectives and refine them into analytics questions.
- How valuation models can be used in decision analysis.
- How to create and apply decision trees.
Does your company struggle with information overload and ad hoc decision-making approaches? Does your company apply formal methods and structured techniques to make high-quality decisions, or do GIGO (garbage-in, garbage-out) and HIPPO (highest-paid person’s opinion) attitudes rule the day? The Accenture Academy course Applying Business Analytics in Decision Analysis
can help you map out a clear path to decision excellence. This course outlines an integrated method for making high-quality decisions in environments of uncertainty. It also explores powerful techniques and comprehensive approaches that can help you safely navigate through unknown territory.