The future of decision making

What’s the issue?

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Making the right decision is hard. Companies have to frame the questions properly, find the right data to support the analysis, and do all this in a way that is transparent and repeatable.

As consumer products companies enter new, highly competitive markets, decision-making becomes more complex.

Management needed to make faster, more informed decisions on a global basis to prioritize growth initiatives.

In 2012, EY commissioned a survey of 285 senior executives globally from across the consumer products sector. 81% of participants indicated that they needed to improve their decision-making speed and level of insight.

Survey respondents suggested that their people spent too much time making decisions based on intuition, working on mechanical tasks and focusing on unnecessary detail. Instead, they wanted their people to be adding more value through better use of leading indicators, conducting root cause analysis of issues, and linking strategy with resource allocation, planning and reporting.

Many companies understand the forces that drive value. But they often underestimate the level of effort required to consistently correlate the impact of the most significant drivers across a variety of dimensions (including product, channel, geography, market, segment or business unit).

To improve their performance management capabilities and drive profitable growth, companies need to take a more encompassing approach that not only implements driver analytics, but also uses the analytics to mathematically link business strategies with the market, competitor, operational and financial forces that drive value and, by extension, good decision-making.

A fully developed performance management approach that uses driver analytics as its engine enables companies to identify a changed driver, such as a shift in consumer demand. More importantly, the approach gives companies the tools to determine root causes and conduct “what-if” scenarios to assess the impact across every element of the planning and management cycle — from forecast to capital allocation to operational planning and performance reporting.