Digital decision-making: The impact of technology on business strategies

The 6th US President Benjamin Franklin once famously said: “If you fail to plan, you're planning to fail”. Suffice it to say, this still rings true today. Strategy plays a vital role in our private and professional lives, but its impact is felt most in business.

What has changed is how we approach creating and executing strategies. The continuous evolution of digital solutions across the past few decades has given us numerous new tools to gather, analyze, and interpret data to streamline the decision-making process.

And if you want to keep ahead of your competition, you need to learn how to use them. Today, we'll explore how businesses develop new strategies in the digital age, what tools they use, and get you started improving your decision-making.

What are the 7 steps of digital decision-making?

However, we must discuss how companies make decisions before our deep digital dive. Most businesses base their action plan on a 7-step framework many of us use daily without knowing, so it should be easy to follow.

7 steps to effective decision making

The 7 steps of decision-making include:

  1. Identify the problem:
    As psychologists often say, the first step is realizing you have a problem. This can be anything from low performance and falling revenue to frequent breakdowns in business. Once you notice an issue, try to isolate its source.

    Example: Your assembly lines malfunction far more often than they should, causing delays and requiring costly repairs. The possible causes include employee error, faulty equipment, a poor maintenance plan, and several other options.
  2. Gather information:
    Unfortunately, often, you won't be able to identify the cause of your issues at first glance. Instead, you'll need to leverage internal (reports, tools, employees) and external resources (case studies, professional literature, experts).

    Combining this information should reveal a probable cause (possibly several) and, with some luck, even the best course of action. Thanks to that, you can start developing a plan to solve your problem.

    Example: Internal tools reveal that most issues occur in a specific part of your assembly line. Employees mention repeatedly tightening a belt to make the machine run right, and external resources identify it as particularly prone to failure.
  3. Develop alternatives:
    When you have a better idea of what the problem might be, you can start thinking about how to solve it. Ideally, you'll want to come up with several alternatives. Make sure to account for the necessary resources and timeframe of each.

    Example: To fix your assembly line problem, you could report the issue to the manufacturer and ask for a replacement, ask for a refund and switch to different equipment, tweak your preventive maintenance plan, or do nothing.
  4. Consider the best approach:
    After weighing the pros and cons of each alternative, you should identify the best solution for your unique situation. Then, you can develop a plan to implement the strategy to present to the decision-making board.

    Example: You conclude that the cheapest and most time-effective solution for now is to change your maintenance schedule for that particular machine and submit a report to its manufacturer, hoping they fix it in the long term.
  5. Choose your action plan:
    Decision-making in companies is a team effort. Ideally, you'll want to consult C-level colleagues when you have a step-by-step plan for implementing your solution and a list of KPIs (productivity, revenue, breakdowns, etc.).

    Example: You decide the best way to tackle your issue will be to implement daily checks by employees, carry out weekly maintenance, create a troubleshooting guide, and submit an error report as soon as possible.
  6. Execute the Plan:
    Assuming the other decision-makers are on board and no changes to your plan are made, you can implement it. This should include assigning tasks to responsible employees, setting deadlines, and tracking performance.

    Example: Gather your floor employees for a meeting and introduce them to the new practice, assign a manager to oversee the progress, task a capable employee with drafting the guide, create a new maintenance schedule, and submit a report.
  7. Review Your Strategy and Outcomes:
    Effective business strategy is a continuous effort. So, don't rest on your laurels. Circle back regularly (monthly, quarterly, or annually) to evaluate the effectiveness of your plan and your efficiency in putting it into practice.

    Example: Wait a few weeks and go back to your strategy. Consult employees and ask them if they notice any difference. Contrast pre and post-implementation data – are the breakdowns less frequent? Try to look for learnings and future improvements.

What digital tools do businesses use in decision-making?

In the past, many companies relied too heavily on hard-to-navigate and harder-to-understand Excel sheets. Thankfully, that all changed with the proliferation of artificial intelligence (AI), machine learning (ML), and other tools.

Some of the most popular decision-making tools include:

  1. AI and ML:
    Gartner suggests that companies that enroll AI and machine learning in their decision-making processes showcase a 37% reduction in errors. That's largely because AI, unlike humans, is uniquely poised to tackle big data.

    Artificial intelligence can glean insights from large datasets and even predict market trends and internal performance based on several variables. Combined with ML, its efficiency can continuously improve.

    This information can then be used to make better decisions, automate processes, streamline workflows, improve efficiency, and reduce costs.

    Examples: IBM Watson, Google Cloud AI, Microsoft Azure AI, etc.
  2. Smart sensors:
    Connecting our real world with the digital, smart sensors are devices that can be positioned strategically (on equipment, on the production floor, etc.) to monitor the machinery’s and employees’ performance.

    These sensors then feed data directly into the company's internal systems to aid decision-making in regard to the business' various aspects, including preventive maintenance, production-floor layout, shipping, etc.
  3. Business Intelligence (BI) tools:
    According to DataProt, 97% of data companies collect remains unused. BI tools can mitigate this waste of resources by collecting, storing, analyzing, and interpreting data from various sources.

    BI tools often leverage smart sensors and AI aspects to cultivate precise and actionable insights.

    Examples: SAS, SAP Business Objects, Oracle Business Intelligence, etc.
  4. Decision support systems:
    DSS can target nearly all aspects of a company, including marketing, product development, pricing, and more. Businesses use these solutions with additional information and analysis to aid their decision-making process.

    Examples: IBM Cognos, Microsoft DSS, Oracle Essbase, etc.
  5. Data visualization tools:
    Touching on the topic of Excel from before, it's often difficult to comprehend information. These tools help businesses make decisions by giving data a form that's easy to understand and identify trends, patterns, and outliers.

    Examples: Tableau, Qlik Sense, Power BI, etc.
  6. Project management tools:
    These tools help businesses to plan, execute, and track projects. Project management tools can help businesses to stay on track, avoid delays, and meet deadlines.

    Examples: Asana, Trello, Basecamp, etc.
  7. Collaboration tools:
    As discussed in the previous section, strategy isn't just theory and planning. It's also execution, and that's where these tools come in. They help businesses facilitate effective information sharing, communication, and collaboration.

    This can be particularly helpful for remote and field service teams, who need to be able to quickly and efficiently contact the central office for their daily tasks.

    Examples: Slack, Microsoft Teams, Google Workspace, etc.
  8. Customer Relationship Management (CRM) tools:
    Primarily designed to help companies manage customer relationships, CRM tools play a vital role in strategy by assisting businesses in tracking interactions, identifying sales opportunities, and providing better service.

    Examples: Resco CRM, Salesforce, Microsoft Dynamics 365, etc.
  9. Enterprise Resource Planning (ERP) Systems:
    Finally, as the name suggests, ERP tools allow businesses to manage their resources efficiently across finances, HR, supply chains, operations, etc. They can help improve efficiency, reduce costs, and make better cost-effective decisions.

    Examples: SAP, Oracle, Microsoft Dynamics AX, etc.

What are the benefits of digital tools in decision-making?

Benefits of digital tools in decision-making

Combining the digital tools outlined above can improve your company's long-term performance and trajectory. They provide the most benefits in the following aspects:

  • Improved data quality and consistency;
  • Faster processing of large data sets;
  • More accurate identification of trends and patterns;
  • Higher business efficiency;
  • Data visualization for general comprehension;
  • Improved collaboration and communication;
  • Greater information transparency and accountability;
  • Improved decision-making outcomes.

What are the challenges of digital tools in decision-making
& how to solve them?

However, implementing digital tools in your decision-making process also carries several challenges. More specifically, they include:

  • Skill shortages make it difficult to hire or train digitally-savvy employees;
  • Data management, including quality and security, is difficult to maintain;
  • Efficiently integrating digital tools with your tech stack is challenging.

So, the question is, how do you tackle these challenges to ensure you enjoy the benefits these tools offer without suffering its downsides? Experts recommend:

  • Invest in technical training and development programs for employees;
  • Establish data management policies and procedures;
  • Research tools ahead of time to ensure compatibility;
  • Establish clear objectives and KPIs to monitor tool efficiency.

How do businesses use digital tools in decision-making?

Looking for some inspiration before you get started? Here are a few examples of how companies across different industries leverage digital decision-making tools to get the most bang for their buck.

  1. Retail: Use big data analytic tools to track customer behavior and identify trends. Retailers then leverage this information to make decisions about product assortments, pricing, marketing campaigns, and even supply chains.
  2. Finance: Institutions use digital tools to assess credit risk, make lending decisions, detect fraud, and prevent financial crime to protect customers and their finances.
  3. Shipping: Exporters and importers use digital tools to track shipments and identify potential delays to lower costs and deliver better service.
  4. Healthcare: Clinics and hospitals can use digital tools to analyze patient data, improve treatment outcomes, and manage their overall operations to ensure everyone gets the necessary care when they need it most.
  5. Manufacturing: Production plants use digital tools to optimize production processes, track inventory, and manage supply chains to streamline operations and maintain a steady and cost-effective manufacturing cycle.
  6. Construction: Construction companies leverage digital tools to identify potential risks, track on-site progress, predict delays, and more. All in all, this helps them stay on schedule and budget.
  7. Governments: Officials can use digital tools to provide better citizen services, make better decisions regarding policies and resources and city infrastructure. This allows them to improve their cities and helps keep them in office


As you can see, our digital age offers many exciting opportunities for improving your company's decision-making process and overall business performance. Now, you should have a few ideas of what you can optimize and even the tools to help you do it.

However, we urge you not to underestimate the underlying strategy of it all. A mindful approach to implementing new tools and action plans is crucial, so always keep the 7 steps in mind and take it one step at a time