Decision Makingby Ian Moore
Complexity is the decadence of society; simplicity is the path of reality and salvation.
This technique helps to identify the effects and consequences of external factors on a decision. It looks at the following influences:
These are factors related to how much the government intervenes in the economy. Examples include taxation, employment law and international trade. You need to also consider political stability and the effects of a change of government.
These are factors related to the economy, including interest rates, inflation and employment levels.
This includes factors such as population growth, the age distribution of the population and socially acceptable and unacceptable behaviours.
Examples include technological trends, computerisation and automation.
Using the technique
The simplest way to use this is to draw four boxes on a piece of paper, label them and then populate the boxes with as many effects and consequences of the decision as you can think of. The resulting lists will help you to decide whether the decision is a good one or not.
Extending the model (PESTLE)
The model is commonly extended to include another two factors:
This includes factors related to legislation in a specific country of operations, such as the laws relating to discrimination, health and safety or employment.
These are factors such as climate, climate change and weather.
Extending the model further
The model can be extended even further to include Education and Demographics (the steepled model) or in fact in any other way that you might find useful. In most cases though, a relatively simple four- or six-factor model is all that is needed. Adding further factors tends to lead to some overlap between influences, which can cause some confusion about which box to put an individual factor in.
Making your decision
This technique can be used as a decision-making technique in its own right. The usual way is to look at the output of the technique and decide on the individual factors that most affect your decision. Considering these will usually make the correct decision more obvious.
This technique can also be used in conjunction with a SWOT analysis, helping you to populate the ‘opportunities’ and ‘threats’ boxes.