The PDCA Decision Making Process for Business

Using Management Tools Can Improve Corporate Business Efficiency

Aug 17, 2009 Jeremy Small

The Plan, Do, Check, Act (PDCA) technique is comprised of the four steps inherent in its name: Planning, Doing, Checking and Acting.

When working in a business environment, making decisions is a constant process that involves critical thinking, use of analytical tools and creation of a clear plan for success. Problems that force decisions can come in two different forms: processes and outcomes. Processes involve “how” things are done such as communication, conflict resolution, and management techniques. Outcomes involve results of some form that do not meet expectations. For example, an outcome that requires a decision could be a faulty product or service, employee performance or insufficient profit margins.

The PDCA Decision Making Technique

Although there are many different methods and techniques available, the focus is on the technique brought forth by Dr. Walter A. Shewhart and introduced by W. Edwards Denning, a highly recognized guru of quality management techniques. The technique in question is called the Plan, Do, Check, Act (PDCA) technique and is comprised of the four steps inherent in its name.

The first step in the PDCA system involves planning. Planning is a critical step in the decision making process as it essentially helps to deconstruct a problem by methodical analysis of the problem’s components. Defining what the problem is (and is not) helps to establish the problem’s boundaries and which assets are best used in its solution. Planning involves defining the problem in the context in which it has manifested itself, collecting relevant data, analyzing that data, generation of possible alternatives, development of criteria for evaluating alternatives, evaluation and prioritization. The ultimate purpose of planning is to develop a plan of action.

There are many ways to define a problem. For instance, one could observe or interview those who are involved in the process, analyze available data (E.g. defect rates or customer satisfaction) or hire consultants.

Collecting Data and Disregarding Irrelevant Information

Data collection follows the definition phase as all relevant data available is gathered. Collected data should include anything and everything that fits within the context of the problem. Irrelevant data can lead to confusion and should be eliminated from consideration just as diligently as relevant data should be included.

Once the data has been collected, it should be presented for analysis. Brainstorming is a helpful tool used to capture creative thoughts and ideas. Whether using a team of people, a computer or just one person, all assets should seek trends or patterns in the data that suggest a possible link to the problem at hand.

Analyzing Trends and Patterns in the Data

After the data has been collected and analyzed, the trends and patterns that link it to the problem should be used in generating alternatives. Each alternative should be considered at this point, as long as it is relevant to the problem and not outside the scope of reasonable possibility. Even though an alternative may not be ideal at first face, it may lead to ideal solutions at a later time and should not be too quickly discarded. Creativity is also important at this stage and looking back at the data can help to confirm intuitions about possible solutions.

Once the group of alternatives has been collected, criteria for evaluating those alternatives should be developed. Those criteria should be directly related to the problem and should also be open enough to incorporate unconventional ideas. Each potential alternative is then evaluated using the developed criteria and measured against one another. Each alternative should be ranked and prioritized so that they can be easily incorporated into a plan of action. Alternatives should be judged on strengths and weaknesses until one alternative is chosen for implementation.

Action Based on Data and Tree Diagrams

Depending on the type of alternative chosen, the plan of action can be either simple or complex. Simple plans can be written as a checklist or a collection of basic procedures. Complex plans require more advanced steps that include contingencies in cases of error or failure. Tree diagrams can be a useful tool to outline complicated processes by visually detailing each step with a set of possible outcomes. Contingencies are included so that a given plan accounts for all possible outcomes, even if it results in an infinite cycle.

Although many examples can show a successful case of the PDCA model, it is not appropriate in every case. Certain situations require that decisions be made quickly. There is not always time to research possibilities or evaluate a particular set of data. Sometimes a delay in a decision can cause the decision to be made unwillingly. Although the PDCA model is ideal for most decision making endeavors, the luxury of using such a system is not always practical as quick decisions can also be beneficial.

Sources:

De Janasz, Suzanne. Dowd, Karen O. Schneider, Beth. Interpersonal Skills in Organizations. McGraw-Hill, 2002. New York, NY.

Hopewell, Lynn. Decision Making Under Conditions of Uncertainty: A Wakeup Call for the Financial Planning Profession. Retrieved on June 17, 2009.

The copyright of the article The PDCA Decision Making Process for Business in Business Management is owned by Jeremy Small. Permission to republish The PDCA Decision Making Process for Business in print or online must be granted by the author in writing.

Decision Making Processes Can Increase Efficiency

What do you think about this article?

---

NOTE: Because you are not a Suite101 member, your comment will be moderated before it is viewable.

post your comment

What is 8+5?