What Are Business Decision Models? A Brief Guide

What makes your company smart are the business decisions they make, and in particular, the operational business decisions they make. 

For a number of purposes, business models can help. It is possible that a model exists to help you work through a problem that has you perplexed. In this case, we’ll talk about models that help you make good decisions. 

Decision making is a critical component of any organization, so these business decision models should be considered a great piece of your organizational tool chest. Read on to learn more about these business decision models.

What Are Business Decision Models? A Brief Guide

Business Decision Models

Business decision models are a way of categorizing and standardizing any decision that needs to be taken in order to assess and track performance reliably and transparently against clear business objectives.

Business decision modeling can allow an organization to evaluate and understand the conditions leading to a specific business decision. 

Provide a business-based image of each decision that is easy to understand and describe the rationale of that decision and a way to trace it back to a reasonable basis.

Two decision models that have served numerous organizations over the years are discussed below. Take a few moments to get to know each model and the next time you need to make a crucial decision, consider putting one or more of them into use.

The Vroom-Yetton-Jago Decision Model

The fact that not all decisions are made equal is at the core of the Vroom-Yetton-Jago Decision Model. Some decisions are highly significant and need input from different individuals, while other choices can be made easily as they would not have long-lasting effects on the business as a whole.

It is necessary to grasp this basic principle because you cannot use the same decision-making method with all the decisions you have to make. With the aid of this model, depending on the situation at hand, you can adapt your approach to decision making.

The Recognition-Primed Decision Model

The Recognition-Primed Decision Model is another great business decision model that you should consider using. This model has three steps, and these steps are experiencing the situation, analyzing the situation, and implementing the decision.

The OODA Loop

It is up to you, as an owner or manager, to make the difficult decisions that drive the organization to success. You may need to switch to methods, such as the OODA Loop to do so. This is a fairly simple and straightforward model, but it can be extremely effective.

When you think of your organization’s operations in the context of the OODA Loop, you will easily see that you will never finish making decisions. This paradigm is a loop for a reason; it lasts for the life of the company in question with no end in sight. 

The Four Stages

What Are Business Decision Models? A Brief Guide
Image Source: Insperity

The OODA Loop has four stages built into it. These steps are Observe, Orient, Decide, and Act. In order to make a good decision, the premise here is that you need to orient yourself correctly with the details at hand. 

You may not come away with the best decision by allowing your personal orientation to get in the way, such as past experiences that are really not important to this decision.

The nature of business operations is captured by business decisions. Business decisions are taken on a wide scale, such as adjusting price points, or pre-qualifying a potential client. 

Conclusion

It is important that a company has what we refer to as business decision model when it comes to making operational decisions. Make sure to consider this article if you are possibly interested in understanding how business decision models work.