I'm doing some research on strategic decision-making. I took the following notes from a brief (30 minute) video of Peter Cohan on strategic decision-making. He has a web site at http://petercohan.com/ .

He starts by recalling working with an MIT professor who invented the idea of decision support systems. "The idea that decision support systems were a fantastic concept for certain kinds of decisions, for example portfolio management.. this notion of being able to have all the information you need to make a decision and then making the best possible decision.. "

He provides examples of a few kinds of strategic decisions: "how can we increase our market share and do it in a way that is profitable? How can we motivate our organisation to create value for its constituents? How can we distinguish between competitor strategies that we should really be focussing on?"

He notes that uncertainty is a key factor in real-world decision making. Changes in customer needs, technology, market conditions, new competitors.. all these things are somewhat unpredictable.

In looking at how decisions are made, he describes the impact of confirmation bias, the tendency for people to favor information that confirms their preconceptions. To address this it is important to objectively assess your organization's capability before entering a new market.

Another point is that shareholder value and financial performance do not necessarily move together. He provides examples of Microsoft, Martha Stewart's company, and Wal-Mart. In assessing a company's performance is not sufficient only to look at financial performance. Consumer sentiment and other factors are also relevant.

He points out the importance of expecting the unexpected. There will be new scenarios and uncertainty. He later ties this to the notion that success breeds failure, so paranoia and scepticism must be maintained. "In order to keep your organization from becoming unable to adapt, it is extremely important that you recognize the risks of complacency."

He stresses the fact that competitors have their own strategies. He argues that customers are the real force behind strategy and that customer need has to be the main focus, not copying the strategy of other organizations. He provides the example of Wal-Mart, which he argues "does a tremendous job of knowing what's selling and what's not selling, and can create an environment where it will always be meeting the demand and will always be cutting back on what's not selling."

He then discusses incentives. "When you are trying to implement a strategy if you do not understand the incentives of the people who will be implementing the strategy and make sure therei s a match between those incentives and the strategy that you are trying to implement then you are going to fail." He recommends analysing the incentives of employees and customers and check that incentives are consistent with the considered strategy.

On the whole I found the presentation interesting. The emotional / psychological aspects of markets are an important consideration in making strategic decisions.