Decision-Making in the Age of AI – Toolkits for Improving Decisions

Making decisions is an essential part of our daily lives, and it is no different when it comes to running a small to mid-size business (SME). As a business leader, you are faced with a wide range of decisions, some of which carry significant weight and can have long-term consequences for your organization’s success.

Challenging Decisions Faced by Leaders of SMEs

Here are some examples of challenging decisions that small to mid-size business leaders face:

  1. Hiring and firing employees,
  2. Financial decisions, such as investments, budgets, and pricing strategies,
  3. Growth strategies, including expansion and acquisition,
  4. Product development and launching,
  5. Customer service strategies,
  6. Marketing and advertising decisions, including social media and traditional marketing, and
  7. Legal and regulatory compliance, especially in industries with complex regulations.

It is essential to take the time to analyze the nature of these decisions and categorize them accordingly. However, most of us may not have the time to do this exercise. A straightforward way to sort decisions is by categorizing them into easy and tough decisions, which is an excellent starting point to understand the types of decisions we face regularly.

Current Decision-Making Tools/Processes Recommended by MBA Schools

There are various methods of making decisions, ranging from impulsive and intuitive to well-planned and orchestrated.

MBA schools recommend a range of tools to assist with decision-making. Here are some examples:

Tools to Analyze the Past

  1. Buffett’s Law: Bad economics usually overwhelm good management.
    • When a management with a reputation for brilliance takes on a business with a reputation for bad economics, it is usually the reputation of the business which remains intact.
  2. Momentum analysis: Learn from history… is there evidence of LTSCDA (Long Term, Sustainable, Competitive Differentiated Advantage)?
  3. Core competence: What differentiates you?  A core competence…
    • Provides access to a wide variety of markets.
      • Flexibility and extensibility
    • Should make a significant contribution to the perceived customer benefits of the end-product.
      • Manage expectations
    • Should be difficult for competitors to imitate.
      • Barrier to entry or compete

Tools to Assess the Present

  1. Porter’s 5 Forces: Study the competitive landscape closely
    • Established industry rivals
    • Power of buyers (customers)
    • Power of suppliers
    • Threat of new entrants
    • Threat of substitute products
  2. VRIO: Checklist for LTSCDA
    • Value: Does a resource enable a firm to exploit an environmental opportunity, and/or neutralize an environmental threat?
    • Rarity: Is a resource currently controlled by only a small number of competing firms?
      • Are the resources used to make the products/services or the products/services themselves rare?
    • Imitability: Do firms without a resource face a cost disadvantage in obtaining or developing it?
      • Is what a firm is doing difficult to imitate?
    • Organization: Are a firm’s other policies and procedures organized to support the exploitation of its valuable, rare, and costly-to-imitate resources?
  3. GE/McKinsey 9 Box Matrix: Sort out your businesses  Grow? Hold? Harvest?
    • (x, y) = (industry attractiveness, competitive strength of business unit)
    • (x, y) = (Potential, Performance)

Tools to Design the Future

  1. Core Adjacencies: Grow from your strengths
    • Identify the five following assets…
      • Your most potentially profitable franchise customers
      • Your most differentiated and strategic capabilities
      • Your most critical product offerings
      • Your most important channels
      • Any other strategic assets that contribute to the above (such as patents, brand name, position at a control point in a network)
    • Adjacency expansion…
      • A direct move into an immediate opportunity
      • An “option” purchased in a business related to the core: a “hedge” against future uncertainties
      • A series of sequential moves that expand the boundaries and capabilities of the core business
  2. 3 Horizons: Invest in a pipeline of opportunities
    • Horizon 1: Those core businesses most readily identified with the company name and those that provide the greatest profits and cash flow.
      • Focus on improving performance to maximize the remaining value.
    • Horizon 2: Encompasses emerging opportunities, including rising entrepreneurial ventures.
    • Horizon 3: Ideas for profitable growth down the road.
      • For instance, small ventures such as research projects, pilot programs, or minority stakes in new businesses.
    • Companies must manage businesses along all three horizons concurrently.
  3. Blue Ocean: The search for new space – value innovation
    • Eliminate factors that the industry takes for granted but adds no perceived value to customers.
    • Reduce factors well below the industry’s standard to avoid the mistake of over delivering to beat the competition.
    • Raise factors well above the industry’s standard so your customer will not have to make compromises.
    • Create new sources of value that the industry has never offered.
  4. 10X changes & Black Swans: Look out for game changing events – “What such a transition does to a business is profound, and how the business manages this transition determines its future.”
    • The event is no surprise to the observer
    • The event has a major impact
    • After its first recording, the event is rationalized by hindsight, as if it could have been expected; e.g., the relevant data was available but not accounted for

A Customized SME Tool for Categorizing Decisions

Sorting decisions by nature and method can be simplified by using tools and processes customized for businesses that do not have the staffing or resources to perform in-depth MBA-style decision-making.

When decision-making tools and processes are understood prior to decision-making, they reduce conflicts and increase decision buy-in. It is a good idea to have a set of these customized tools in your decision-making toolkit to set your personal decision-making rules and communicate effectively with your team.

An Illustration: One Process for Categorizing Decisions

To create a picture of how you sort decisions by nature and method, here’s a starter tool you and your team can use:

  1. Create a chart with two columns defining the “Nature of Decision” and rows defining the “Method of Decision.”
  2. In the “Nature of Decision” column, list the diverse types of decisions you typically make, such as easy decisions, tough decisions, emotional decisions, and trade-off decisions.
  3. In the “Method of Decision” column, list the different decision-making methods you use, such as individual (i.e., command) decisions, consultative decisions, and consensus decisions, as presented by Brian Tracy.

Here’s the picture –

By using this sorting approach, you can identify patterns in your decision-making process and make adjustments as needed. You can also use this chart to communicate with your team and ensure that everyone is on the same page regarding the nature and method of the decisions you are making.

AI-Assisted Decision-Making

The Current State of AI-Assisted Decision-Making

Artificial intelligence (AI) has already begun to revolutionize the way we make decisions, and this is especially true in the business world. AI-assisted decision-making can help SME leaders to make more informed decisions, faster and more efficiently. AI algorithms can analyze vast amounts of data and provide insights that humans might miss, saving time and resources in the decision-making process.

AI-powered tools like predictive analytics, machine learning, and natural language processing can help business leaders to identify patterns, predict outcomes, and automate routine tasks. AI can also help in areas like risk assessment, fraud detection, and supply chain optimization, to name a few.

Future Possibilities for AI-Assisted Decision-Making

As AI technology continues to evolve, we can expect even more exciting possibilities for AI-assisted decision-making in the future. Here are some potential future applications:

  1. Collaborative Decision-Making: AI can help teams collaborate on decisions, integrating data and feedback from various sources.
  2. Cognitive Computing: AI systems will be able to mimic human thought processes and make decisions based on ethical and moral considerations.
  3. Emotional Analysis: AI can help to identify and analyze emotional cues, helping business leaders to make decisions that align with their employees’ needs and emotions.
  4. Augmented Reality: AR technology can help business leaders visualize data and insights, making it easier to understand complex information.
  5. Sentiment Analysis: AI can analyze social media and other sources to understand customer sentiment, helping businesses make informed decisions about marketing and product development.
  6. Real-Time Decision-Making: AI can provide real-time data and insights, allowing business leaders to make decisions quickly and efficiently.
  7. Personalized Decision-Making: AI can help businesses to personalize their decision-making, using data and insights to tailor decisions to individual customers or employees.

AI-assisted decision-making has the potential to transform the way SME leaders make decisions. By leveraging the power of AI tools, including customized AI tools, business leaders can make more informed decisions, faster and more efficiently. As AI technology continues to evolve, we can expect even more exciting possibilities for AI-assisted decision-making in the future. It is up to us to embrace these modern technologies and use them to improve our decision-making processes for the betterment of our businesses and our customers.


In summary, anticipating situations and sorting out your decisions before you make them are essential steps in the decision-making process. By categorizing decisions by their nature and method and using customized tools designed to assist SME business people, you can simplify the decision-making experiences, reduce conflicts, and increase decision buy-in. With the use of simple tools like the starter tool provided, you can create a more effective decision-making process for yourself and your team. 

Together our conversations can expand solutions and value

We look forward to helping you bring your ideas and solutions to life.
Share the Post:

Leave a Reply

Your email address will not be published. Required fields are marked *