Welcome to the second of our two-part special on the art and science of decision making. Today, we’re looking at how good executive decisions can be driven by art.

The art of decision making is the application of the science of decision making to real-world situations, where the decision maker has to deal with incomplete, ambiguous, or conflicting information, multiple and diverse stakeholders, and uncertain and dynamic outcomes. It is the skill of making great decisions that balance short-term and long-term value, that are creative and innovative, and that are communicated and executed effectively.

One of the main principles of the art of decision making is maximizing vs. satisficing, which are two strategies for choosing the best option among a set of alternatives. Maximizing is the strategy of finding the optimal option, that is, the one that has the highest value or utility among all the options. Satisficing is the strategy of finding a satisfactory option, that is, the one that meets a minimum threshold of acceptability or adequacy. Both strategies have their pros and cons, depending on the number, quality, and variability of the options, and the preferences, goals, and constraints of the decision maker. For example, maximizing can lead to better outcomes, but it can also lead to more stress, regret, or disappointment. Satisficing can lead to more satisfaction, but it can also lead to missed opportunities or suboptimal outcomes.

Another main principle is scenario planning, which is a technique for exploring and preparing for different possible futures, based on the analysis of trends, uncertainties, and drivers of change. Scenario planning helps the decision maker to identify and evaluate the opportunities and risks of each scenario, and to develop and test the robustness and flexibility of the decision. For example, a business executive can use scenario planning to anticipate how the market, the customers, the competitors, and the regulations will evolve in the next five years, and how the decision will affect and be affected by these changes.

A third main principle is risk management, which is the process of identifying, assessing, and mitigating the potential negative consequences of a decision. Risk management helps the decision maker to reduce the likelihood and impact of adverse events, and to increase the likelihood and impact of positive events. For example, a business executive can use risk management to estimate the probability and severity of losing money, reputation, or customers, and to implement measures to prevent, control, or transfer these risks.

The art of decision making also involves the role of creativity, innovation, and experimentation in decision making, which are the sources of competitive advantage and value creation in business. Creativity is the ability to generate novel and useful ideas, solutions, or products. Innovation is the ability to implement and apply these ideas, solutions, or products to meet the needs or expectations of the market or the customers. Experimentation is the ability to test and learn from these ideas, solutions, or products, using data, feedback, or trial and error. For example, a business executive can use creativity to come up with a new business model, innovation to launch it in the market, and experimentation to measure and improve its performance.

The art of decision making also requires the importance of communication, collaboration, and feedback in decision making, which are the factors that enhance the quality and effectiveness of the decision. Communication is the ability to convey and receive information, opinions, or emotions, using verbal, nonverbal, or written means. Collaboration is the ability to work with others, such as colleagues, partners, or customers, to achieve a common goal or outcome. Feedback is the ability to give and receive constructive criticism, praise, or suggestions, to improve the decision or the decision making process. For example, a business executive can use communication to explain the rationale and the benefits of the decision, collaboration to involve and align the stakeholders and the team members, and feedback to monitor and adjust the decision as needed.

Don’t forget to check yesterday’s article on the science behind good decision making.