In search of clarity: Unravelling the complexities of executive decision-making.

In search of clarity
Unravelling the complexities of
executive decision-making
A report from the Economist Intelligence UnitSponsored by Business ObjectsIn search of clarity Unravelling the complexities of executive decision-making
Preface
In search of clarity: Unravelling the complexities of executive decision-making is an Economist Intelligence Unit white paper, sponsored by Business Objects.The Economist Intelligence Unit bears sole responsibility for the content of this report. The Economist Intelligence Unit's editorial team executed the survey, conducted the analysis and wrote the report. The findings and views expressed in this report do not necessarily reflect the views of the sponsor.Our research drew on two main initiatives:? We conducted a wide-ranging online survey in March 2007. In all, 154 executives took part from around the world.? To supplement the survey results, we also conducted in-depth interviews with senior executives and independent experts knowledgeable about decision-making at senior management levels.The author of the report was Paul Kielstra and the editor was Denis McCauley. Mike Kenny was responsible for design and layout.Our sincere thanks go to the survey participants for sharing their insights on this topic.
September 2007
© The Economist Intelligence Unit 2007 1In search of clarity Unravelling the complexities of executive decision-making
Executive summary
ecision-making is at the core of all business surveyed companies are experiencing, but it suggests activity, as executives set strategy and manage deeper problems as well.operations by weighing a vast array of factors This is the key finding of a major programme of Dt o arrive at the desired balance of risk and reward. The research, conducted by the Economist Intelligence enormous growth of companies' size and operations Unit and sponsored by Business Objects, into how in recent years-particularly across borders-is senior executives in different regions make decisions making this process increasingly complex. It is cause for their companies. It is based on a survey of 154 for alarm, then, that executives themselves perceive senior executives from around the world, as well the quality of decision-making at their companies as as a series of in-depth interviews conducted with mixed at best. practitioners. Other major conclusions of the research Well over half of executives surveyed for this include the following:report-61%-characterise management decision-making at their companies as moderately efficient Poor data leads to poor decisions. By far the most or worse, a figure which climbs to 72% for large important input into decision-making identified organisations. Nearly one in five-rising to over one by surveyed executives is good data. As one expert quarter in North America-thinks that management interviewed for this report remarks, "You cannot make frequently gets its decisions wrong. This may result in proper decisions without proper information." But part from the greater challenges of running a business the timeliness and quality of this information leaves in a period of rapid growth, such as many of the much to be desired. Less than one in ten executives
Five ingredients of good decision-making
1. High-quality data 3. Sound judgmentThis a prerequisite for consistently sound decision- Decision-making processes, whether formal or not, need making. The greater your understanding of your to leverage the strengths of human intuition. Data does company, your competitors and your environment, the not run companies; people do.more you can move from guesswork to making strategic choices. 4. TrustTo gain employees' confidence in management decisions, 2. Employees need access to good technology establishing transparency and trust is at least as and training essential as a good track record.Access to advanced information systems is crucial to improved decision-making, as is training in helping 5. Flexibilityemployees to make full use of them. Such tools must Approaches to decision-making, and even to the use of also be easy to use. There is no point in spending on data, need to reflect the fact that the world is a diverse new technology if people do not use it. place, and one size does not always fit all.
2 © The Economist Intelligence Unit 2007In search of clarity Unravelling the complexities of executive decision-making