When it comes to making decisions associated with a given opportunity, one mistaken assumption people frequently make is to think that they need immediate resolution on every decision—right now! Very rarely is this assumption true. We need a way to identify where our attention should be focused, however, and where we can defer our attention to avoid the inefficiency of that way of thinking.

Solving a problem usually involves breaking that problem down into useful categories of information. I call this process partitioning . Before we use the strategy table, we are going to partition some information so that we can identify actionable information and reduce the overall amount of information we have to deal with. The first tool we can use for this exercise is a decision hierarchy.

The first step is to conduct a brainstorming-like meeting with fellow members of the decision team. Tell the participants some time in advance (about a week) the purpose of the meeting and what type of information they should bring (i.e., ideas about decisions that need to be made in the course of addressing the problem under consideration). Emphasize that the meeting is not to decide what to do; rather, it is simply to consider what actions possibly need to be exercised without working the problem to an immature solution.

In the meeting, ask each participant to contribute one suggested decision issue. Record their decisions in the Decision Issues column in the Decision Hierarchy worksheet of the template.¹ Move to the next participant until everyone has had a chance to offer a suggestion. For now, do not allow any judgment about the applicability of a suggested decision to the current problem. Keep repeating this process until everyone has exhausted their suggestions. Letting each person offer just one suggestion at a time serves to prevent one person from dominating the meeting, and it allows people to strike off their redundant suggestions. The cyclic process might also spark new thoughts that people would not have had if they had just dumped their information at one time or in an isolated manner.

As your team considers the list of decisions, think about which ones might have already been decided for you as a matter of policy, legal, or regulatory constraint. Select Policy in the drop-down list to the right of the issue. These are decisions that you should consider foregone and won’t need to actively consider as a value contributor. You will, however, need to consider them as you construct alternative combinations that we address in the next section. The policy decisions might function to require or preclude certain decision alternatives in strategic combination.

Once policy decisions are identified, discuss which of the remaining decisions really do need immediate attention or can be addressed after a commitment to a pathway is selected. Those decisions that need immediate attention should be classified as Strategic from the list of alternatives, and the remainder with the Tactical list alternative. This latter set, the Tactical decisions, are the deferred decisions that do not need any attention until later. If an active contention persists about whether a given decision should be considered strategic or tactical, go ahead and place it in the Strategic list. You can test the validity of that assignment as you go through the process of creating alternative combinations and, later, financial evaluation (see Figure 6-1).

Once you classify your decision issues to your satisfaction, sort the Decision Issues and Type array using Type as the sort column. Copy the Policy issues to the red policy cells, the Strategic issues to the green cells, and the Tactical issues to the yellow cells (see Figure 6-2). You might want to distill the issues into more succinct phrases.

Once Strategic decisions have been settled on, begin to identify an exhaustive set of mutually exclusive alternatives that each decision set could represent to your organization. By exhaustive, I don’t mean that you should include every possible alternative that anyone could exercise for a given decision category; rather, I mean only those choices that are meaningful to your organization in the context of the given opportunity.

Mutual exclusion can be a little more difficult to understand. In some cases, the alternatives might simply be yes and no. Choosing one would naturally exclude the other. In other cases, the decision alternatives might exist along a continuum. For example, suppose you are considering the acquisition of new combustion generators and you want to place that capital within the guidance of a green policy that exceeds the current regulatory requirements for the presence of a certain particulate in the generators’ exhaust. You might define the alternatives as nonoverlapping bins within the considered range of particulate concentration, each bin corresponding to a level of capital commitment. Finally, some alternatives might represent combinations of alternatives. For example, the geographic scope alternatives for the delivery of a new product might originally include the United States, Europe, Asia, and the Middle East. Of course, there is no intrinsically logical reason you have to pick one over the others. You might, in fact, consider combined alternatives such as United States and Europe and Asia, or Middle East and Asia.

If you created a list of Strategic decisions in the decision hierarchy worksheet, you will notice that there are cells to the right of each decision with names that correspond to the decision name and an alternative number. Fill in the alternatives for each decision, writing over the existing formula in the template that generated the placeholder name, so that it looks like the worksheet in Figure 6-3. Although the template provides the space to have as many as 15 alternatives per decision, 15 is an exceedingly large number of alternatives for most strategic decisions.

Note from Figure 6-3 above, which addresses my friend’s business expansion question, he identified nine “Web Services” alternatives, and three business “Size” alternatives. Given all his identified alternatives, he faced 9 × 7 × 5 × 4 × 6 × 6 × 3 = 136,080 possible strategic combinations. The next section will show you how to tame this complexity into a much more manageable set of decision strategies.

Once you have appropriately categorized the decision types and assigned the Strategic decision alternatives, you can consider the decision hierarchy to be effectively complete. That does not mean, though, that the decision hierarchy cannot be amended. Executive decision making should be an open-ended, exploratory process that incorporates and synthesizes new and compelling information as it becomes available. If the hierarchy needs to be expanded or pruned as new information becomes available, then make sure you do so.

When you are finished with this step, you will again have reduced the decision complexity by effectively partitioning the potential decisions under consideration into tractable types with an understanding of their hierarchical relationship to each other.