In today's world, characterized by its sheer uncertainty, complexity, and rapid transformations, the formula for success boils down to just two fundamental factors: luck and the decisions you make. This stark reality underscores the unparalleled significance of decision-making as the most impactful business process for organizations across every industry. In fact, it's not an exaggeration to claim that decision-making serves as the most reliable predictor, accounting for approximately 95% of an organization's success. Because, in the end, the performance of your business is fundamentally the sum total of the decisions you make and, crucially, the manner in which you execute them. The average manager spends 37% or around 650 working hours every year on decision-making.
In the bustling world of modern organizations, decision-making often remains an enigmatic and elusive facet, seen by many as a kind of managerial magic that unfolds behind closed doors. However, this perspective has led to significant oversight in many organizational structures, where decision-making processes are not given the attention they deserve. The repercussions of this neglect are far-reaching and profound.
Inefficiency and Productivity Loss: Studies have shown that the lack of structured decision-making processes leads to inefficiency, with a staggering 58 percent of working time spent inefficiently on decision-making. Considering the average management salary of €107,000 per year and the numerous managers in a typical DAX company, this translates into a staggering €289 million in annual productivity losses (McKinsey, 2019).
Incomplete Information and High Uncertainty: Incomplete information compounds the challenge, particularly in strategic initiatives where failure risk looms large. Whether it's in research and development (R&D) with a 34 percent failure rate, business transformation with a daunting 70 percent risk, or the complex realm of mergers and acquisitions (M&A) where the odds stand at a staggering 82 percent, the average failure rate hovers around 58 percent (Dellermann, 2020; McKinsey, 2018).
Lost Opportunities and Time Wasted: Slow, manual, and error-prone data analysis further exacerbates the problem, leading to a colossal loss of opportunities. For instance, assuming 220 annual working days, a DAX30 company loses a staggering 600,000 working days due to these inefficiencies alone.
Costly Mistakes and Risk Exposure: Perhaps most alarmingly, subjective decisions, particularly in areas like R&D expenditure, capital expenditures (CapEx), and M&A transactions, have significant financial consequences. These decisions, when scrutinized from the 2022 annual reports of the average DAX30, point to a jaw-dropping €2.2 billion in Value at Risk (VaR) every single year.
In the grand scheme of things, while optimizing operational processes is important, the most significant untapped potential and the most substantial lever for organizational success lies not in operational procedures but in the optimization of decision-making. This chapter illuminates the hidden costs and consequences of overlooking this critical facet of business, emphasizing the urgent need for organizations to prioritize and enhance their decision-making processes to unlock their full potential and secure a competitive advantage in today's dynamic business landscape.
Hence, we introduce DeOS - The Decision Optimization System. Just as ERP revolutionized operations and CRM transformed sales, DeOS ushers in a new software category entirely focused on decision-making. DeOS serves as a unified platform designed to convert information into enhanced business outcomes by infusing AI into management decisions and optimizing the entire decision-making process, spanning from data to actionable steps across various organizational use cases.
The decision optimization process within DeOS comprises four crucial steps:
In essence, DeOS is the catalyst that propels organizations towards data-driven, AI-enhanced decision-making excellence. By leveraging its capabilities, businesses can transform their decision processes, mitigate risks, and seize opportunities with the assurance that every choice is backed by the latest insights and technology, ultimately setting the stage for sustainable success in today's dynamic business arena.
DeOS offers a rich repository of decision templates that facilitate standardization. These reusable decision assets empower you to kickstart your decision-making with a single click. By standardizing comparable decisions, DeOS fosters a culture of learning and ensures consistency across your organization.
Managing decision workflows has never been more efficient. DeOS provides comprehensive guidance and assigns clear responsibilities at every step of the process. This meticulous oversight ensures that you obtain the insights you need. You can monitor the status of pending decisions and gauge the impact of completed ones, creating a seamless and well-structured decision-making environment.
DeOS introduces contextual and semantic data management that vividly represents the mechanics of your business. Business users can effortlessly navigate this landscape, visually creating a digital twin of your organization. This is achieved by bridging tacit organizational expertise with operational data, customer experience insights, and ecosystem data, encompassing macroeconomic trends and technological shifts.
DeOS comes equipped with AI engines that are out of the box and pretrained, specifically tailored for business users. These AI engines seamlessly integrate into your business workflows with a single click. DeOS is at the cutting edge of AI, empowering you to uncover unique insights effortlessly.
DeOS ensures that decision insights are crystal clear. It provides recommendations that guide you toward actionable steps. It also offers answers to critical business questions and constructs decision graphs that illustrate cause-and-effect relationships. These insights are not only transparent and explainable but also allow you to drill down to the depth you desire, providing a comprehensive understanding of your decision landscape.
With DeOS, you gain access to a suite of capabilities that revolutionize decision-making within your organization. From standardizing decisions to streamlining workflows, harnessing the power of data, leveraging AI effortlessly, and gaining profound decision insights, DeOS empowers you to make informed, strategic choices at every turn.
Existing research, as well as our own findings, unequivocally underscore the transformative potential of decision optimization.
Translating this into practical terms, envision a scenario where increased efficiency and productivity reverberate across your entire organization, realizing that impressive 37% improvement potential. In monetary terms, this equates to a staggering €107 million in annual savings.
Yet, the benefits of decision optimization extend far beyond efficiency gains. It also ushers in higher decision quality while concurrently reducing risks, offering a substantial risk reduction potential of 36%.
Furthermore, consider the agility gained through faster decisions and the avoidance of missed opportunities. Decision optimization has the potential to unlock a remarkable 222,000 full-time equivalent (FTE) days, representing invaluable time that can be channeled toward strategic pursuits.
Perhaps most compelling of all, embracing decision optimization positions your organization to gain a competitive edge rooted in decision intelligence, with the potential to reap an impressive €801.7 million in risk reduction benefits.
In totality, the annual opportunity presented by decision optimization for a DAX30 company stands at an eye-catching €908,720,000. Even embarking on small-scale initiatives that leverage merely 1% of this potential can yield substantial rewards.
Therefore, if decision optimization is not already a priority on your organizational agenda, it's time to reevaluate. The evidence speaks for itself—by harnessing the power of decision optimization, your organization can unlock a world of opportunities, enhance efficiency, reduce risks, and ultimately position itself for long-term success in today's dynamic business landscape.
Are you ready to embark on a journey that promises to transform your organization's decision-making capabilities? We offer two compelling avenues to help you realize the full potential of decision optimization:
1. Value Calculator: Our Value Calculator is your gateway to quantifying the substantial benefits that decision optimization can bring to your organization. By inputting your specific parameters, you can gain a precise understanding of the efficiency gains, risk reduction, and potential cost savings that await you. It's a straightforward tool that empowers you to visualize the tangible advantages before taking the plunge.
2. Custom Use Case Scoping Workshop: For those seeking a deeper dive and a tailored approach, our Custom Use Case Scoping Workshop is the ideal solution. In just half a day, our experts will collaborate with your team to understand your unique business landscape, challenges, and objectives. Together, we'll identify and outline customized decision optimization use cases that align with your strategic goals. This workshop is your roadmap to unlocking the full potential of decision intelligence within your organization.
3. Get Started in 40 Days: We understand that time is of the essence. That's why our implementation process is streamlined to get you started in just 40 days. We prioritize swift action without compromising on quality. Our goal is to enable faster and better decision-making for your organization, ensuring that you reap the benefits as soon as possible.
With our customized solutions tailored to your specific needs, you can embark on a journey toward success by making smarter decisions at every stage of the process. Whether you're starting from scratch or looking to enhance your existing decision-making framework, our approach minimizes risk, delivers value at every stage, and accelerates your path to success.
The decision to embrace decision optimization is an investment in your organization's future. It's an investment that promises minimal risk, maximum value, and rapid returns. Are you ready to seize the opportunity and propel your organization into a future of smarter, more informed decision-making? The choice is yours, and we're here to guide you every step of the way.