Effective Decision-Making for Leaders: A Strategic Approach

Posted On: December 4

Strategy is about making decisions. You have limited resources. You must allocate them carefully. Deciding where to invest your money, time, and human capital is daunting. There are usually several options with varying degrees of urgency. Making sound strategic decisions in a timely manner is a vital skill for leaders.

Here are a few ideas to help you improve your decision-making skills.

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First, let’s look at probability and impact. Probability is about chances. Impact is about consequences.

1. Low Probability, Low Impact:

These decisions involve minimal risk. They’re unlikely to happen, and even if they do, the impact is negligible. Handle these quickly or pass them to someone else. They’re straightforward and not worth overthinking.

2. High Probability, Low Impact:

These are common but minor issues. They’re great for delegating, especially to less experienced team members. It’s a learning opportunity. If they make a mistake, it’s not a big deal. It’s a safe space for growth.

3. Low Probability, High Impact:

These are rare but potentially serious situations. They don’t come often, but when they do, they matter. Take your time here. Consult with your team or experts. Weigh the potential outcomes. These decisions need careful thought because of their potential to affect your business strategy significantly.

4. High Probability, High Impact:

These are the big ones. They’re likely to occur and could have significant consequences. Try to avoid these situations if possible. If you can’t, then approach with utmost caution. This is where strategic thinking and risk management are crucial. Consider all angles and potential outcomes before making a move. This is the perfect place for scenario planning.

Timing is also a key factor.

Rushing can lead to missing vital information, but dragging your feet can mean lost opportunities. Find a balance. Assess how urgent the decision is and set a realistic timeline for when you must decide. Take as much time as is appropriate, but not a minute longer.

Don’t forget the ripple effect.

Every decision you make can affect different parts of your organization. Think beyond the immediate outcome. Consider how your decision impacts employees, customers, and other stakeholders. Bring those people into the decision-making process if necessary. Plan to mitigate any adverse effects.

After making a significant strategic decision, reflect on it. Was it successful? Why or why not? Understanding your decision-making process helps you improve. Learn from both successes and mistakes. This reflection is crucial for growth and better future decisions.


Unlock the secrets to strategy. Learn to craft a winning strategic plan, set actionable goals, and execute with precision. To learn more about our course, Strategy Made Awesomely Simple, click the image below. I look forward to guiding you to create a strategy that will take your business to another level of success.

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