The Decision Tool is the formal mechanism for defining and recording investment decisions for a project, whether it is a formal gate transition between stages within the methodology, or incremental rounds of investment within a stage. When investing in innovation or new business growth, it's wise to invest in traunches and only continue to or increase the investment if confidence in the potential return is improving. Formalizing the investment decision making process can also help make sure that the objectives for the investment are clearly defined and understood, that the appropriate stakeholders are involved, and the stakeholder roles and responsibilities in the decision are clearly defined and mutually understood.
Making good decisions is difficult in the best of circumstances, but even more difficult with the significant uncertainty and iterative nature of innovation and new business development. Having a formal process for how propose and make good decisions that is mutually understood by all parties can help accelerate decision making and reduce or eliminate disruptive surprises after the fact.
- Precise Decision Scope & Implications - In an iterative innovation methodology, framing the decision as different from tradition operational decisions can be helpful. Often, the decisions are not about a long-term commitment to a new product or business strategy, but narrowly focused on an incremental step validating critical assumptions to increase confidence toward that potential outcome. A clearly and concisely articulated proposal can result in more effective decision meetings where the discussion focuses on the supporting data, implications, and potential alternatives rather than trying to clarify or define the request in the meeting itself.
- Clear Roles & Responsibilities - Some additional challenges to effective decision making are ambiguity about who has the authority to make the decision and how other stakeholders should be included in the decision-making process. Identifying the key stakeholders and their role in the decision before the decision meeting is even scheduled is critically important. If you get to the decision meeting and the assumed decision maker doesn’t have the required authority, or some critical stakeholder hasn’t been involved, you’ll find yourself in “do-over” land.
- Historical Context & Record - If the parties involved come away from the meeting with different understandings about what the decision was, you can also end up back in “do-over” land. So clearly documenting and communicating the outcome is important. Documenting the rationale for the decision is also helpful to keep teams aligned on the right priorities or nuances. If the decision is to pivot or terminate the project, it’s also valuable to have a record of why. Sometimes similar ideas will come back around, but the circumstances may be different, and the historic rationale may no longer be valid.
