What is a decision? We talk about decision making all the time. We tell people they should “just make a decision.” But just what is a decision and how do we go about making them? If you have had trouble defining what constitutes a decision and what does not, read on.

A decision is an allocation of resources against a target outcome. If we cannot define the outcome, there is not decision. If we have not defined the allocated resources, we do not have a decision.

Outcomes are defined by what is to be accomplished, not by the tasks. A failure to define an outcome can create a false decision. Without a defined outcome, resources may be expended without clear purpose. This would be a strategic waste and a leadership failure. A team working in the absence of a defined outcome cannot be held accountable for not delivering the outcome.

There are two kinds of resources. There are discrete resources and perishable resources.

Discrete resources are capable of being applied or held in reserve. They can be utilized at a specified time in a prescribed amount. Discrete resources are associated with expenditure of capital. For example, a decision may allocate $20,000 in funds to be used in pursuing an outcome.

Perishable resources are time constrained. They may be continuously expended. An example of a continuous expenditure would be having people getting paid regardless of whether work towards the outcome is getting done or not. Perishable resources may also be resources that must be used by a certain point in time. An example would be a developer with a number of options to purchase property. These options would have to be exercised or renewed by a certain time or they expire.

Leaders facing tough choices may delay making a decision. Making the choice to delay is a decision to expend the resource of time. If the decision involves something in the distant future the delay may have little consequence. Repeated delays of a decision involving what appears to be the distant future may have an additive impact if allowed to continue too long. If the decision involves something in the immediate future a delay would consume a proportionally larger portion of the available time. Having less time to deliver the outcome could change the risk profile.

Viewing decisions as having the dimensions of scope defined by an outcome combined, perishable and discrete resources can facilitate delegation. The three decision dimensions can be viewed as a cube. As long as the work is constrained to the three dimensions of the cube the work is in bounds. For example, if a team is a assigned to deliver three new products within a defined budget by a certain time and they deliver the outcome within the perishable and discrete resources assigned, they are successful. The area inside the cube is the innovation space they have to work with. If they make mistakes, learn from the mistakes, and still stay inside the innovation space, the organization has a success. Because the team was not judged on every micro move made, they have a chance to develop and grow.

Innovation Space

If the team falls outside the box they have, they are out of bounds. Teams can be encouraged to bring out of bounds situations to leaders. Leaders can then decide if a continued resource allocation is warranted.

So what’s your decision on this topic? Does your executive team have a shared understanding of decisions and how they are made in your organization? If not you may want to allocate some resource toward the outcome of figuring that out.

Joe Thompson