Better Decision Making Made Possible
Archive storage, as an outsourced process, is a growing option for companies burdened by government regulatory action and industry mandates. As more companies turn to external storage options, your ability to assess risk may mean the difference in winning business or remaining competitive. Understanding costs, in particular in a competitive marketplace, can direct which storage solution you should implement in your facility.
Are you considering opening or expanding an archive storage facility? Are you confident you have thought through the myriad of issues relating to the best storage solution that will maximize profitability? Confused? How can we make better decisions?
Who doesn’t want to make better decisions? Perhaps it’s not apparent, but all of us have developed a process or set of criteria we use to make decisions. Whether deciding on a lunch menu, the movie guide, or what clothes to wear we use varying methods to determine our next move. Although these examples are not critical to the success of our day, they illustrate how the decisions we make effect other elements of our lives.
According to the Society for Judgment and Decision Making there are 116 different decision-making or valuation methods used today. Reviewing their list reveals commonly known methods like “break even point” and “brainstorming”, but how many of us know about Game Theory and SWOT?
Game Theory
For those who saw the movie “A Beautiful Mind” John Nash was credited for developing a new theory of arbitration. This Nobel Prize winner also created Game Theory. His idea was to see business as a game, in the sense that a move by one player sparks moves by others. Game Theory can also be defined as the study of how people interact and make decisions.
Applying Game Theory to your storage solution decision can be as simple as answering the question what if?
Many factors affect the financial outcome of a particular storage solution. What if the assumptions change you used for each factor? For example what if the cost to construct your building changed? What if the size of the storage box you plan to use changes? What if the building height is lowered? These and other factors will drastically alter which box storage solution to use (catwalk versus high bay with an order picker). Game Theory suggests you set up a methodology to test different “what if” scenarios and view their outcomes. Wouldn’t this improve your chances of a making a better decision?
Think for a moment of how you may already be using this approach to develop competitive strategies that erect barriers to competitive pressures.
SWOT Analysis
Are you in the middle of a decision? Perhaps taking a SWOT at the decision will help guide you. A SWOT Analysis is used by companies to evaluate their ability to implement a strategy. Expressed as strengths, weaknesses, opportunities and threats, this tool is typically drawn with four quadrants. Within each quadrant an organization must list examples that illustrate that trait; thereby creating a fit with its external environment. The SWOT diagram is an excellent tool for analyzing the internal strengths and weaknesses or an organization and the external opportunities and threats.
Business Application
If you agree that business and government have a common trait, exposure to threat, then these two decision-making methods help to define and manage risk. Successful organizations have learned to understand and manage risk. This was the conclusion of a December 2001 task force report on decision making methods by the US Department of Energy. You can view their complete report at http://emi-web.inel.gov/Nissmg/Guidebook_2002.pdf
This post 9/11 report, Guidelines to Decision-Making Methods, espoused decision-making methods managers should use within the Department when assessing exposure to terrorism.