The Decision-Making Model Explained (In Plain Terms)

Any form of the systematic decision-making process is better enhanced with data. But making sense of big data or even small data analysis when venturing into a decision-making process might be easier said than done. With so many decision-making models at our disposal, certain circumstances deem specific models more appropriate. What is the decision-making model in the first place, and which should we apply to our situation?

The decision-making model is a process utilized to achieve a reasonable outcome when facing a choice. There are multiple types of decision-making models, and each is suited best for a specific scenario.

Let’s take a look at a basic decision-making process and some of the most well-known decision-making models to best resolve which model suits each scenario for the best results. We’ll start by looking at a rudimentary decision-making process that finds application in multiple industries and scenarios.

Highly Recommended Articles:

Will Algorithms Erode our Decision-Making Skills?

10 Reasons why Decision-Making Is Important in Management?

Decision-Making Environments: Types & The Riskiest Environment

A Basic Decision-Making Process

The decision-making process begins when you understand there is a choice to be made and ends with making that choice. Upon completion, a new cycle of review or acceptance may occur to follow the decision-making process, but the truth is that once that decision is chosen, the process ends. For this reason, we’ve made some inferences based upon the standard accepted model.

This basic decision-making process is based on a 7 step process identified by the University of Massachusetts and other institutions. However, we’ve innovated it to suit a more direct decision-making agenda. Let’s take a look at this original research:

  1. Identify The Decision or Choice
  2. Gather Historical Data
  3. Gather Recent Data
  4. Weigh All Evidence
  5. Identify Alternatives
  6. Review Implications of Alternatives
  7. Make An Informed Decision
Decision-Making Model

A Brief Description of Each Decision-Making Process Stage

Understanding each of our decision-making processes’ necessary steps ensures that you’re on the right track and won’t stray too far from an efficient process. As mentioned, this process is based on a process taught in universities across the United States. The necessary innovations have been made to identify the more classically based description with a more modern approach to decision making and its related processes.

●     Identify The Decision or Choice

The first requirement to any decision-making model is to identify the decision that requires investigation. Try looking at the decision from multiple perspectives. Understand how this decision can be interpreted, and you’re partway to having an informed choice.

The identification stage of decision-making typically finds tremendous success when a group is involved. Often when a single decision-maker is faced with decision identification, there is a much greater chance for overall misunderstanding. Due to this inherent danger, it becomes clear that a group or team is beneficial for the proper identification and understanding of the initial decision and its subject matter.

●     Gather Historical Data

Any decision must be investigated and studied if an informed choice is to be the outcome. The investigation and research must begin with the oldest available information first. It builds a history of data, allowing for a much greater understanding of relevant information’s historical significance. 

●     Gather Recent Data

Recent data must next find its way into your line of sights. Gather and organize all recent data after accomplishing the task of gathering and organizing the historical data. We’ve separated the historical from the recent data to show that the historical data should not be taken for granted. Often there is a lesson to learn in the past, and data analysis is no different in most circumstances.

●     Weigh All Evidence

Gathering information is one thing, organizing it is another, and understanding it is something else altogether. But once you’ve gathered and organized all of your data, you need to make sense of it. It is the stage where weighing the evidence is vital to proceeding through the decision-making process. Due to the impact this particular stage has upon the decision-making model, this stage is often the one where the most time is spent. It is the data interpretation stage.

Similar to our first stage of decision identification, weighing a collective of evidence is best accomplished by a group instead of an individual. It is this stage that finds visual data presentation beneficial in the data’s interpretation.

To more easily assess your decision validity, please use one or a combination of the types of analytics shared in this article.

●     Identify Alternatives

With all the evidence gathered, one must next identify all possible decisions. That is to say, and one must identify the choices the decision is presenting. From those seemingly not acceptable to those that appear at face value to be the best solution, this stage intends to characterize all possible alternatives. If, for nothing else, to eliminate the choices one-by-one to find an acceptable outcome.

Much like a doctor weighs their choices when discussing treatment options with a patient, you too must identify the possible choices your decision-making has available to you.

●     Review Implications of Alternatives

Like the Southern New Hampshire University, many universities tend to include taking action and reviewing the results as integral parts of the decision-making process. Although this may be true for many situations, it stands to reason that reviewing possible implications of decision alternatives makes sense to attempt before choice execution. How can reviewing a choice (after the fact) be a part of the initial process?

And without further to-do, we introduce the next stage in the basic decision-making model to prevent a choice that ends in an unsuitable outcome. Let’s try to review any possible implications of the alternatives before execution. It allows a more conservative and lower-risk approach to the classical decision-making model.

●     Make An Informed Decision

The final and obvious stage of the primary decision-making model is the final informed choice making. After careful analysis and consideration, it is the decision that stands the test of time and proves worthy of selection.

13 Reasons Why Data is Important in Decision-Making

This multi-step basic process of decision-making is but a straightforward model of many available models and processes. Now let’s review some of the most commonly applied decision-making models to gain an even greater understanding of the decision-making process.

5 Perspective Decision-Making Models

According to Wikipedia, there are five basic decision-making model types:

  1. Economic Rationality Model
  2. Social Model
  3. Simon’s Bounded Rationality Model
  4. Neurocognitive Model
  5. Incrementalism Model

Economic Rationality Model

This model is assumptive. The assumptions are as follows.

  1. The decision-maker is entirely rational and genuinely objective.
    1. The decision rationality depends on the end justifying the means.
    2. A complete and consistent system exists for a final choice available amongst alternatives.
  2. The decision-maker is entirely aware of all alternatives and their implications.
    1. Probability calculations are used without fear or judgment.
    2. No limits are placed on computational analysis for the determination of the most suitable alternative.

Social Model

The model for social determination of decision-making leans heavily on the emotional state of the decision-maker. This model’s basis is the idea that people are inherently a collection of emotions and instincts and that both of these drive us subconsciously to make most of our decisions.

Simon’s Bounded Rationality Model

Herbert Simon developed an innovative approach to the classical economic rationality model of decision making. In Herbert’s interpretation, the approach was based on modern business management practices and a very corporate decision-making approach. Here are the essential points:

  1. A manager gravitates toward a satisfactory result. Not a liability-based, but a profit-oriented, ‘good enough’ mentality is utilized.
  2. The manager recognizes that their perception of the world is simplified. They know they exist within a microcosm of reality.
  3. The manager may rush to a conclusion by selecting only the acceptable choice rather than maximizing the possible outcome with a review of all alternative scenarios.
  4. Choices selected by the manager are completed with the understanding that reality is void, and thus a simple rule may find application to the decision-making process. This willful lack of more in-depth analysis is a reflection of the void with which we all exist.

The techniques and general ‘feel’ of Simon’s model are somewhat dark, and it wouldn’t be wrong to make this assumption. However, the model allows for much faster decision-making and less strain upon those who make decisions. It is, perhaps, a ‘quick cheat’ sort of philosophy to decision-making.

Neurocognitive Model

The neurocognitive model describes the brain’s ability to evaluate multiple possibilities and determine the best solution. The model is focused on the cognitive process-oriented interpretation of the human brain’s ability to understand itself fundamentally, nature, and the decisions it makes.

Perhaps, the neurocognitive model is a more general model referring to a view from a neuroscience perspective. This observance maintains that subsequent models that fit within the neurocognitive model’s criteria yet stand independently from it as individual perspective models. 

Take the recognition-primed decision model of rapid decision making. Gary A. Klein explains, in his interpretation of the classical model of decision making, how traditional models don’t take into account operational settings found in current scenarios.

The concept behind a recognition-oriented decision-making model is that a person or, I suppose, an AI could use the recognition patterns of memory to ascertain the best possible choice. If combined with an incrementalist methodology, a potentially conservative yet effective model begins to present itself.

Incrementalism Model

The simplicity of the incremental model of decision-making is in the form it takes. What the incremental model does is break down the decision-making process into further smaller steps. Each of these steps maintains three primary stages: identification, development, and selection. (source)


Is Singular Decision-Making More Or Less Effective That Group Decision Making

There is often debate as to the effectiveness of a single person deciding on a group of people.  One could argue that a decision based solely on a singular person’s perspective is placing more responsibility upon an individual when a group should make the decision best. However, the outcome’s weight often defines our interpretation of whether or not an individual should be singularly burdened with such an endeavor.

Depending on the weight of the decision’s outcome and the individual’s or individual’s knowledge of the subject matter, a single person or group may deem the subject’s best decision-maker.

Decision-Making Model

When it comes to computer data analysis, you can apply the same thought process, but it depends on the task’s physical requirements. For example, blockchain technology works best with multiples computers chained together in a symbolic matrix of decision making. Is a program, after all, not a programmed decision? The parameters and pathway are laid out for the application to follow, much like a decision-making model is laid out for a person or group to make an informed decision. 

Want to watch a great video on decision-making? Take a look at this video from TEDx Talks about three steps to better decision making with Matthew Confer.

When group decision-making is applied to management or business, the fundamental differences between individual decision-makers and the group are apparent. Again determined by the individual situation, groups offer to do away with a singular person’s possible misdirection. However, an individual may deem a more cost-effective decision-maker due to a group’s potential for disagreement. For these reasons, each individual decision must adhere to a specific set of criteria to determine whether a singular or group mentality is the best decision-making process.

Furthermore, any group decision-making process must include each individual of the group, and these individuals must understand the group’s fundamental methodologies.

One will inevitably determine a single decision maker’s overall effectiveness versus a group of decision-makers on a case-by-case basis. For general purposes, one cannot be systematically removed from contending with the other.

Further Methodologies For The Decision Making Process

Group Decision Making Using An Additive Consistency Model

In this model typically employed by group decision-makers, expert information or data is added only in its relative fundamental case. Take a decision requiring scientific knowledge. For example, an environmental assessment requirement to rezoning land for a specific type of manufacturing. In this example, individual scientists contributing data to the decision-making model’s research data collection phase may not have all the answers about the example environmental impacts of the decision. With this possibility, the scientist would only contribute relevant data they know to be accurate and not data that could be speculation. In this sense, the only data or relevant information entered into the decision-making process is consistent with known facts and lacks speculative inconsistencies.

Adaptive (Humble) Decision Making Model

The issue with classical decision-making models is that the idea was for the decision-maker to have comprehensive knowledge about a particular subject. In our modern civilization, we are faced with information overload. It would be nearly impossible for an average human to glean enough knowledge in a subject to be a master of the knowledge of that subject’s grand design.

Similarly, if a person embraces an incrementalist methodology to decision-making, that person may lose the perspective of the subject’s overall perspective. When we focus too intensely on a particular tree, we may lose sight of the forest, metaphorically speaking.

The adaptive decision-making model bridges the gap between a purely microcosmic and macroscopic view. This relatively new form of decision-making is, in truth, another rendition of a classical decision-making model formerly used by doctors. (source)

The adaptive strategy concept is to take a broad approach and then whittle it down to a selective goal. In the doctor’s case, this may have played out by a doctor saying, ‘Okay your symptoms look like X so we will test for X to rule it out. If that isn’t it, we will test for Y.’ This general approach uses available data to point in the right direction and specialized data to hone down the results. 

3 Tips For Decision Making For All Models

Any person who acts as a decision-maker is faced with a variety of unusual and common decision-making scenarios. From a parent to a data analyst, the decisions we make and face every day contribute to our overall success, whether deciding which school is best or analyzing some big data for a company.

When in decision-making roles that affect others (from your kids to staff at work), utilizing standard practices for your decision-making process is critical to success. Here are a few tips from the Harvard Business School that can help anyone from managerial roles to make decisions.

  1. Frame the issue at hand for ensuring the right questions are asked.
  2. Involve your team to help with the aid of multiple points of view.
  3. Foster collaboration within your team.

These three steps each come with their tip. For framing the issue at hand, you need to control the perspective views taken by your team. Their views regarding the overall subject matter of the decision-making process influence their ideas and contributions to solving the decision and making a final choice.

Involving a team has its benefits. First, it keeps the leader from isolation. Second, it allows for other perspectives and ideas contribution. And third, the group can help by providing multiple points of view that may prove invaluable to solving a specific problem. Two heads are better than one.

To achieve the highest level of success with your team, you want to foster a sense of collaboration from the beginning of the decision-making process. In doing so, you ensure that the entire group is contributing members to the best of their ability and that the group’s effectiveness is unsurpassed overall.

Highly Recommended Article: This is How Data Science Improves Business Efficiency  


We’ve defined what a decision-making process is. We have discussed the basics of a fundamental decision-making process. And by now, you ought to find yourself well-armed with knowledge of the significant types of decision-making models that we have at our disposal. The real decision now is how best to implement these models into your daily life and work.

Sources

  1. Featured image by Gerd Altmann from Pixabay
  2. http://nationalforum.com/Electronic%20Journal%20Volumes/Lunenburg,%20Fred%20C.%20The%20Decision%20Making%20Process%20NFEASJ%20V27%20N4%202010.pdf
  3. https://www.sciencedirect.com/science/article/abs/pii/S0277953699001458
  4. https://eric.ed.gov/?id=ED577251
  5. https://d1wqtxts1xzle7.cloudfront.net/62235127/5f06ae853c5ce3f7da5e86bb9f59c88b50b320200229-84777-abct9q.pdf?1582997842=&response-content-disposition=inline%3B+filename%3DDECISION_MAKING_IN_ACTION_MODELS_AND_MET.pdf&Expires=1614029539&Signature=NlAJdOeQF9nS~rPKdmdHV24TY8XMLfHJ7KwohQnqTCdfcjLqLKI7OKvFK4RrRNOuFzdhCMto7tz4NyUkES9–RTpvGerOwMZWhm8h6IrrNsMGh9rpvgw0pHUKUpCGdIRjfmKmAnAJWTxbaWLOuVR3yzpXTx13SeC6RoZRtONjRlukgD84ANIOoia4oOg9Hj8ZvclXA4l-odSJp0XadGKjTyrpeQNczlBDBzO0X5OSCddORWfbBCH5B7-FFgKEzFqmF1bXAvYaiVMNNkVz6v2qexDEkD2BDt6CiNP7Kd3bBWE7DFuMw6l-1viNb3GUoFy7awn6p3CUDs21c9ifVePFg__&Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA#page=150
  6. https://journals.sagepub.com/doi/abs/10.1177/104225879301700202
  7. https://hr.mit.edu/learning-topics/teams/articles/models
  8. https://link.springer.com/chapter/10.1007/978-3-662-03900-7_5
  9. https://psycnet.apa.org/record/2001-17194-004
  10. https://en.wikipedia.org/wiki/Decision-making_models
  11. https://www.unf.edu/~gbaker/Man6204/Decision.PDF
  12. https://www.umassd.edu/fycm/decision-making/process/
  13. https://www.lucidchart.com/blog/decision-making-process-steps
  14. https://www.snhu.edu/about-us/newsroom/2018/03/decision-making-process
  15. https://www.sciencedirect.com/science/article/abs/pii/S0167923607001005
  16. https://psycnet.apa.org/record/1994-27371-001
  17. https://www.researchgate.net/profile/Ihsan_Yueksel/publication/274863692_Developing_a_Multi-Criteria_Decision_Making_Model_for_PESTEL_Analysis/links/569aaf1708ae6169e55dad01.pdf
  18. https://www.sciencedirect.com/science/article/abs/pii/S0956053X06000213
  19. https://content.iospress.com/articles/informatica/inf20-2-10
  20. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2157020
  21. https://d1wqtxts1xzle7.cloudfront.net/38902679/ejbo_vol12_no2_pages_12-17.pdf?1443322166=&response-content-disposition=inline%3B+filename%3DA_Discussion_of_Rational_and_Psychologic.pdf&Expires=1614030471&Signature=OoaiyImfw0RpisdrdD4wawpmEQ9iSJ0qnISDDOItKk7v6PyDORs7seXhEEvwB1uMmecARQkZBTr-o22NQJanQZd8ffpSYthh6eWjVfY8NWcZ-~uaUP~kXtNiE5fb8fyjrT0flN9wires4-rQHTyKOY6sNSRYoQTXQaqhOUDObAsxYeWv8JhefacYT2VPRIIqsPoyNXWqd4wVwkl5-nEnAxJWo1bGmr9RWsO5rMK9KSv8N65LszPV4P0I0gv0D03KCSP4N7BU–NO1mkFsvZaE8sdt~~ioiwCz~2k5EAGDjKSble0rb4atmqrnTyW5zhrnG5QRc6o165DB5K~k3TOSg__&Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA
  22. https://ieeexplore.ieee.org/abstract/document/1046070
  23. https://www.sciencedirect.com/science/article/abs/pii/0001879179900654
  24. https://journals.aom.org/doi/abs/10.5465/amr.1991.4278958
  25. https://www.sciencedirect.com/science/article/abs/pii/S0957417411000510
  26. https://ieeexplore.ieee.org/abstract/document/4067078
  27. https://online.hbs.edu/blog/post/decision-making-techniques
  28. https://www.mindtools.com/pages/article/newTED_00.htm
  29. https://www.businessnewsdaily.com/6162-decision-making.html
  30. https://study.com/academy/lesson/decision-making-skills-techniques.html
  31. https://smallbusiness.chron.com/decisionmaking-tools-techniques-strategic-planning-20890.html
  32. Will Algorithms Erode our Decision-Making Skills?

Emidio Amadebai

As an IT Engineer, who is passionate about learning and sharing. I have worked and learned quite a bit from Data Engineers, Data Analysts, Business Analysts, and Key Decision Makers almost for the past 5 years. Interested in learning more about Data Science and How to leverage it for better decision-making in my business and hopefully help you do the same in yours.

Recent Posts