Strategic decisions, those that change the nature and direction of organisations are usually a response to the “environment” of the Business. As the “environment” changes there is often a need to revisit previous strategic decisions and tweak them or in some cases radically rethink them. This usually results, in a conventional business, in an annual planning cycle in which there are mini projects activated to review the “environment” of the business, revisit business strategy in light of any changes, and then plan the operations of the business in the light of any consequential strategy changes.

The one problem with this approach is that traditionally the strategic decisions of the past have not been documented in most organisations. If they have, only the final outcome is recorded and not the options that may been considered and rejected. Even when the options have been recorded there is often a further problem in that the criteria by which the original options were assessed and their assessment have often been lost, or in many cases never existed in organisational memory because they were held entirely privately in the brains or the computer of the person engaged in the task.

If that person moves on from the organisation the knowledge about the decision will be lost and this is highly likely as anyone with a “strategy” in their title is dispensable in most businesses. At best, as a new strategist, you might find an old presentation containing the decision recommendation and the rationale supporting the decision. But for most companies the result is a restart from scratch to review any previous strategic decision.

There is a better way. If you adopt a systematic formal approach to strategic decision making in which the decision model (criteria) are formally defined, their relative importance to the business clearly assessed and the options fully evaluated against the criteria and this information is maintained in a system as part of the companies formal decision making process, it will be possible for an organisation to return to the decision from time to time and review it in light of environmental changes, without having to reinvent the wheel. You will know exactly why the previous decision is as it is and what has changed.

Changes will inevitably happen overtime as new people join the organisation with new ideas and priorities, the business environment evolves and as the leaders of the company transform their vision. But all will be able to return to the original criteria, add new criteria to accommodate new circumstances and then reassess the decision using the collective new and acquired knowledge of the organisation.

Why is this important in the context of sourcing?

Have you ever outsourced any of your operations? If so where is the documentation supporting that decision? What benefits were predicted in the original decision? Have you achieved them, exactly as planned? How do you know? If you haven't achieved them exactly as planned - is it because your original decision was wrong or is it because the environmental conditions have changed or were there some bad assumptions made or bad data used? How do you know? If you were to return to that decision and consider bringing the operation back in house, how would you make that decision? Could you compare it with your previous decision? If you bring it back in house will you continue to review that strategic decision? Should you replicate this decision in another area of your business? Why?

Benefits of base-lining strategic sourcing decisions

• Reduce decision cycle times from months to days

• Ensure the efficient and optimum use of employee knowledge and time in decision making

• Makes strategies rigorous and defendable, demonstrating decision validity

• Deliver rational and auditable strategic decisions, with defined ownership and accountability

• Provides linkages between the decisions, the criteria and management / mitigation of consequential risks

• Enhances the likelihood that the strategic decision will be implemented correctly, linking strategy with longer term performance