Decision analysis: The most underrated tool in the business analyst toolbox
Business analysis includes a wide range of activities in an organization, occurring at various levels, from choosing what problems to solve and opportunities to pursue, down to the modeling of process flows, functional requirements, and data elements.
While many BAs complain that their role is too limited and tactical, others experience less difficulty getting involved in strategic, high-level activities. Whether those activities comprise evaluating business alternatives, identifying the corporate vision and strategy, or defining the business capabilities required to align strategy to execution, high-impact BAs are there making their contributions.
What explains this difference in levels of influence and impact business analysts have in their organization?
More and more I’m convinced that what distinguishes high-impact BAs from the rest is the ability to leverage decision analysis to address important decisions in a formal manner.
What do I mean by decision analysis? Decision analysis (DA) is a systematic approach to making important decisions, including management, operations, marketing, capital investments, or strategic choices. Ronald A. Howard, a professor of Management Science and Engineering at Stanford University, is credited with originating the term in 1964.
Contrary to popular belief, decision analysis doesn’t necessarily require quantitative methods: many decisions (including strategic ones) may be optimally taken using framing methods that combine qualitative and quantitative methods, or even just the former.
Here’s an example that most of us can relate to. Imagine that you are about to change jobs. You have interviewed with a couple of companies and are waiting for two offers. Do you know the framework you’ll use to decide which (if any) offer to take?
I was in this position a few years ago, and to ensure I achieved the best outcome, while I waited for the offers I considered the type of data, analysis and behavioral understanding that could help the stakeholder (in this case, myself) make that specific decision.
After I received the offers, I told my husband about them, and he asked whether the job located in downtown Austin would pay for parking. I told him I didn’t know, but wasn’t going to ask either. I had a list of disqualifiers for the offers I got, which included the following:
- The job presents few opportunities for me to develop valuable skills or make important contributions.
- The job focuses on something I can’t feel excited about, or is actively bad for the world.
- The job doesn’t pay a salary commensurable with what my current skills are worth in the market.
The list didn’t stop there, but “the job doesn’t pay parking” wasn’t part of my disqualifiers or tie-breakers. I knew the cost of parking downtown, and if the best job required me to pay for it myself, I’d do it without regret.
That list helped me separate the “signal” (will this job help me develop valuable skills?) from the “noise” (do I get free parking?), and ensured I was able to quickly collect the right data to support my decision.
The same approach can be used to elevate the BA role in organizations. Rather than receiving an assignment (“specify an executive dashboard”) and rushing to collect requirements and design the solution, a strategic analyst will ask the right questions to uncover the real need behind the request. Through decision analysis, s/he might conclude that creating an executive dashboard would not optimally solve the business problem, and from there assist the executives in making a different decision they wouldn’t regret.
Different kinds of decisions will require different tools for decision analysis. In some cases, a decision tree may be a good option; in others, a weighted criteria matrix may be a better choice, and so forth.
Example of a decision tree (in this case generated via machine learning) used to decide whether a customer should be classified as VIP or regular.
A rational decision-making framework provides many benefits, two of which are particularly relevant for the process of elevating a BA’s role in their organization:
- It helps the business deal with the increasing levels of complexity and uncertainty the world faces, making it easier to separate signal from noise as in my example of the two job offers.
- It is a powerful tool to fight confirmation bias. When we make our decision criteria explicit before we start to gather objective facts to support the decision, we minimize the risk of collecting or interpreting information selectively in a way that supports our entrenched beliefs.
Convinced that decision analysis can make you a better business analyst? This resources page can help you start learning more about its various approaches.
