The ultimate goal of all of the analysis in analytics is to enable people to make better decisions. In an article in the current issue of Harvard Business Review, Tom Davenport takes on the topic of decision making. Here’s an executive summary of this important article:

In recent years decision makers in both the public and private sectors have made an astounding number of poor calls. For example, the decisions to invade Iraq, not to comply with global warming treaties, to ignore Darfur, are all likely to be recorded as injudicious in history books. And how about the decisions to invest in and securitize subprime mortgage loans, or to hedge risk with credit default swaps? Those were spread across a number of companies, but single organizations, too, made bad decisions. Tenneco, once a large conglomerate, chose poorly when buying businesses and now consists of only one auto parts business. General Motors made terrible decisions about which cars to bring to market. Time Warner erred in buying AOL, and Yahoo in deciding not to sell itself to Microsoft.

Why this decision-making disorder? First, because decisions have generally been viewed as the prerogative of individuals—usually senior executives. The process employed, the information used, the logic relied on, have been left up to them, in something of a black box. Information goes in, decisions come out—and who knows what happens in between? Second, unlike other business processes, decision making has rarely been the focus of systematic analysis inside the firm. Very few organizations have “reengineered” their decisions. Yet there are just as many opportunities to improve decision making as to improve any other process.

Useful insights have been available for a long time. For example, academics defined “groupthink,” the forced manufacture of consent, more than half a century ago—yet it still bedevils decision makers from the White House to company boardrooms. In the sixteenth century the Catholic Church established the devil’s advocate to criticize canonization decisions—yet few organizations today formalize the advocacy of decision alternatives.

The full article is offered for sale at www.harvardbusiness.org. Tom Davenport’s forthcoming book, Analytics at Work: Smarter Decisions, Better Results, also addresses the topic of decision making.