Media Release: Poor decision-making costing businesses profits and people.
Decision Design, Australia’s leading commercial behaviour change experts, has today released its white paper analysing the quality of decisions being made in Australia’s top businesses.
The survey of more than 1000 decision makers at Australian businesses found the quality of decisions being made in a business ultimately determine the success of the business. The data shows that poor decisions made by leaders have led to increased business costs (58%), a loss in profit (40%) and drop in sales (35%). Furthermore fixing these decisions through behavioural decision processes could increase economic output by 40%.
McKinsey research found executives spend between 40% and 70% of their time making decisions1. Eight-eight per-cent of respondents agreed that decisions impact everything that their organisation does while 93% said leaders must make good-quality decisions for their organisation to function effectively and 92% agreed that decision quality has a significant impact on their organisation’s success.
Decision Design Founder, Dr Johann Ponnampalam, said “In recent years, Australian businesses have faced significant challenges. From navigating a once-in-a-lifetime pandemic, to the highest Consumer Price Index in more than 30 years2 and the highest cash rate in more than 12 years3, there have been relatively fewer opportunities for growth.”
“With further challenges anticipated this year, the nation’s 2.5+ million businesses4 will need to focus on productivity and invest in the areas that drive business outcomes, as they strive to achieve more with less.”
“Our research has revealed that decision quality issues impact organisations in a myriad of ways, with decisions leading to loss of money (40%), loss of customers (39%), decline in employee engagement and retention (45%), increase in business costs (59%) and business processes becoming less effective (44%).”
“Economic conditions are putting pressure on businesses and the data shows the profound impact better quality decisions within the business can have on revenue, productivity and retaining top talent with 95% of respondents saying better decision quality will lead to better outcomes for their organisation.”
“The data shows over 4 in 5 believed that improving decision quality in their organisation would enable them to make more profit (84%), increase sales (84%), reduce costs (82%), improve employee engagement and retention (85%) and upskill their employees (84%).”
“The main factors causing poor decisions include leaders being negatively impacted by at least one common decision biases (84%), leaders being impacted by excessive optimism (62%) and leaders being impacted by overconfidence (62%).”
“During times of transition and recalibration, businesses often rely on familiar strategies for stimulating growth, like boosting sales, trimming expenses, streamlining operations and seeking funding. However it’s essential that organisations also explore non-traditional avenues to maintain agility and competitiveness.”
Brett Ward, GM Marketing at Brickworks Building Products, said “Partnering with Decision Design on several high profile marketing programs has given our team the tools and understanding of human behaviour, backed by science to make bold marketing and commercial decisions. Having the evidence to challenge assumptions and strongly held opinions, allows my team to make better quality decisions about what will make an impact and actually change behaviour.”
“Adopting a scientific approach to how decisions are made is critical to ensure they are informed, objective, aligned with organisational goals and debiased of hard wired decision-making errors. In today’s ever-evolving business landscape, investing in the organisation’s decision-making muscle is a must; alongside traditional tactics – to unlock new growth opportunities and foster long-term sustainability,” Dr Ponnampalam said.
ENDS
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About Decision Design
As the leading global commercial behaviour change consultancy, Decision Design helps ambitious brands unlock growth using behaviour change science. Given that all customer, commercial and social challenges are behavioural, Decision Design has pioneered behaviour change as a commercial capability — engaging from strategy through to nuanced execution, working hand in glove with executive, strategy, operations, people and culture, marketing and sales teams.
Combining PhD level science with decades of commercial experience, Decision Design is a unique team of specialist experts - spanning neuro, cognitive, psychological, organisational, data and marketing sciences. In other words, they didn’t just read the book, they did the science.
Decision Design has a proven track record of increasing the commercial effectiveness of many of the world’s most influential brands, including numerous ASX20 and Fortune 100 companies.
To learn more about how you can use behaviour change science to grow your business, visit www.decisiondesign.com.au and follow us https://www.linkedin.com/company/decision-design-behavioural-consultancy
About Decision Design White paper
To gain a deeper, behavioural science-led understanding of how Australian organisations prioritise, perform on and can improve decision quality, Decision Design conducted an anonymous, nationally representative market study among n=1,182 professional decision-makers. Data was collected between 15 January and 1 February 2024 using an unbranded, online measurement questionnaire. Study respondents needed to work full-time or part-time to qualify and the sample included a mix of sole traders and professional decision-makers from small (<20 employees), medium (20-199 employees) and large (200+ employees) organisations.
