What are the 5 steps in decision-making?

Reading time: about 4 min

Robert Frost wrote, “Two roads diverged in a wood, and I—I took the one less traveled by, and that has made all the difference.” But unfortunately, not every decision is as simple as “Let’s just take this path and see where it goes,” especially when you’re making a decision related to your business.

Whether you manage a small team or are at the head of a large corporation, your success and the success of your company depend on you making the right decisions—and learning from the wrong decisions.

Use these decision-making process steps to help you make more profitable decisions. You'll be able to better prevent hasty decision-making and make more educated decisions.

The business decision-making process is a step-by-step process allowing professionals to solve problems by weighing evidence, examining alternatives, and choosing a path from there. This defined process also provides an opportunity, at the end, to review whether the decision was the right one.

7 decision-making process steps

Though there are many slight variations of the decision-making framework floating around on the Internet, in business textbooks, and in leadership presentations, professionals most commonly use these seven steps.

1. Identify the decision

To make a decision, you must first identify the problem you need to solve or the question you need to answer. Clearly define your decision. If you misidentify the problem to solve, or if the problem you’ve chosen is too broad, you’ll knock the decision train off the track before it even leaves the station.

If you need to achieve a specific goal from your decision, make it measurable and timely.

2. Gather relevant information

Once you have identified your decision, it’s time to gather the information relevant to that choice. Do an internal assessment, seeing where your organization has succeeded and failed in areas related to your decision. Also, seek information from external sources, including studies, market research, and, in some cases, evaluation from paid consultants.

Keep in mind, you can become bogged down by too much information and that might only complicate the process.

3. Identify the alternatives

With relevant information now at your fingertips, identify possible solutions to your problem. There is usually more than one option to consider when trying to meet a goal. For example, if your company is trying to gain more engagement on social media, your alternatives could include paid social advertisements, a change in your organic social media strategy, or a combination of the two.

4. Weigh the evidence

Once you have identified multiple alternatives, weigh the evidence for or against said alternatives. See what companies have done in the past to succeed in these areas, and take a good look at your organization’s own wins and losses. Identify potential pitfalls for each of your alternatives, and weigh those against the possible rewards.

5. Choose among alternatives

Here is the part of the decision-making process where you actually make the decision. Hopefully, you’ve identified and clarified what decision needs to be made, gathered all relevant information, and developed and considered the potential paths to take. You should be prepared to choose.

6. Take action

Once you’ve made your decision, act on it! Develop a plan to make your decision tangible and achievable. Develop a project plan related to your decision, and then assign tasks to your team. 

7. Review your decision

After a predetermined amount of time—which you defined in step one of the decision-making process—take an honest look back at your decision. Did you solve the problem? Did you answer the question? Did you meet your goals?

If so, take note of what worked for future reference. If not, learn from your mistakes as you begin the decision-making process again.

Tools for better decision-making

Depending on the decision, you might want to weigh evidence using a decision tree. The example below shows a company trying to determine whether to perform market testing before a product launch. The different branches record the probability of success and estimated payout so the company can see which option will bring in more revenue.

A decision matrix is another tool that can help you evaluate your options and make better decisions. Learn how to make a decision matrix and get started quickly with the template below. 

You can also create a classic pros-and-cons list, and clearly highlight whether your options meet necessary criteria or whether they pose too high of a risk.

With these 7 steps we've outlined, plus some tools to get you started, you will be able to make more informed decisions faster. 

Explore additional strategies to help with your decision-making process.

In order to continue enjoying our site, we ask that you confirm your identity as a human. Thank you very much for your cooperation.

Today we’re going to think together a little bit about the decision-making process. Usually, most people don’t break down how they make decisions, they just decide. “I wanted it. I liked it. It seemed good at the time.”

But that’s one thing for an individual, but for someone who’s in charge of a group, someone who has to help make decisions for a larger body, it doesn’t help for them just to sort of shoot from the hip. “Well, I thought it sounded best. I’m sorry they didn’t like it. I’m sorry it didn’t work. I’m sorry I’ve wasted the resources of the group.”

All of this would be very negative. When you’re thinking in terms of someone who’s in charge of a group needing to make a decision, knowing the following steps can be very helpful. When you make a decision, you take the information that’s provided and the opinions of others, you evaluate all of it, and then decide.

That’s just sort of a basic overview, but we broke it down into steps here which I want to go over briefly. In the decision-making process the very first thing you need to do is define. Define means to fully investigate and gain an understanding of the problem.What is the issue at hand? What is the problem? What needs to be solved?

If we’re pushed to a point of making a decision, it means that something has come up. There is an issue at hand. In this stage we’re going to fully investigate it. We’re going to gather all the information we can so that we can clearly define the problem, or clearly define the issues at hand.

You begin with investigation gathering data defining the problem or the issue at hand. Next, you need to identify -after you’ve defined- identify all the alternatives. What are all the alternatives in terms of solution to the problem, or ways of meeting or handling the issue? All of the alternatives.

In here what you need to avoid, as the leader of the group, is either, or thinking. Meaning there’s only two choices either this or that. When we think in terms of alternatives, you need to take in all alternatives. Invite all the opinions. Here we have defined our problem or issue.

What are all of the different ways that we can solve this problem or meet this issue? All the alternatives, because it’s very easy to fall into the polarizing idea of either this or that. When you think outside the box, we find that there are lots of alternatives.

Define the problem, identify all the alternatives, avoid turning it into only two options, unless of course there really are only two options, on the whole usually there are more than two options to solve anything. More than one way to skin a cat, we say.

Anyway -and I have never skinned a cat, and I hope you haven’t either, but it’s way of saying that there’s different ways of going about things, find all the alternatives. Three, assess all of those alternatives. Now, we’ve identified our problem. We’ve identified our issue.

We’ve listed -we haven’t evaluated yet- we’ve just listed every last possible alternative for meeting the issue or solving the problem. Now we’re going to go through the evaluation process of each and every one of those alternatives. Someone may have proposed, or you may have thought of an alternative that’s utterly infeasible, ludicrous.

We don’t have the ability to do that we don’t have the resources to do that. That’s not possible. For example, and this is really -we’re getting out of this is a ridiculous example. One solution to our problem is aliens land here get off and they have advanced technology which fixes this problem.

All right, it’s an alternative but it’s not very likely. If that’s been listed, fine it’s been listed, but you evaluate it and say, “probably not going to happen therefore, we’ll exclude that is the one that we’re going to decide on.” You assess all the alternatives, and as you’re assessing those alternatives number four is critical here.

You’re considering all of those alternatives in terms of resources available to you, power and ability to do it, and what would be the outcome of that. How would it be received? You may find an awesome solution to a problem or a great way of handling an issue, but it would be so unpopular the outcome would be so bad that you have to say, “Well we can’t do that.”

You would absolutely destroy the organization, even though the problem would be solved. You’ve assessed them, you’ve considered the assessment of the alternatives in terms of, “Do we have the wherewithal the resources to do this particular alternative? Do we have the power the ability to execute it? What would be the outcome? How would it be received?

Consideration is huge before you ever get to making the decision. Once you’ve gone through defining the problem or issue, identifying all the alternatives, assessing them and considering them as to resources, power, ability, outcome, reception. Then you implement the decision. The decision has been made based on Step 4. It’s time to carry it out.

It does no good to make that decision and not follow through. You’ve wasted all this time and energy. Once a decision has been made it’s time to execute it, implement it, go forward with the plan. You’ve done all these other steps you could feel confident stepping into it.

You’ve weighed all of the different pros and cons of one person talk about it this way, if you’re going to build a tower sit down first and figure out how much it costs, make sure you got enough to complete it. Or if you’re going to go to war, can my army of 10,000 meet his army of 20,000 and hope for success? If not another alternative.

Let’s send a peace delegation and come to terms before it comes to blows. You’ve considered everything, weighed it all, time to implement. Once it’s been implemented though you’re not done. You may think, “Whew, decision has been made, it’s being put into motion, I’m done.” Absolutely not. It is critical that you remember the last step and that is to evaluate.

Always evaluate, because you can always do things better next time you can always identify deficiencies, or perhaps unforeseen things come out.

In the evaluation then you look back over everything because you’ve gone through the whole decision-making process and you’ve gone through the implementation and the evaluation you can say, “Here is a weak point. We should’ve changed this. That should have been done.” Or on the other hand, “This was brilliant. This was really good. This was helpful.”

You can reward the people appropriately. Evaluation is critical in the decision-making process to help you for the future to identifying and rewarding good behavior and those that have done well, and also avoiding pitfalls that perhaps you fall into unforeseen consequences and things like that.

All right well, let’s just get a basic overview of the decision-making process. Once again you take the information and opinions and you evaluate it, you decide to implement it and evaluate it. This is helpful on an individual basis, but it’s absolutely critical if you’re in charge of a larger group.

It may be easier to just by fiat say, “Make it so.” But if you’re going to run this group for long, and you haven’t built the rapport and all that necessary to just fiat command things, it’s much better to go through this process with the group. Bring them in and help them decide, you’ll get much better implementation at the end product. It’ll help you in evaluation knowing those to command and reward appropriately.