Can good decisions have bad outcomes?

There was an interesting discussion on LinkedIn recently – A good decision is the same as a good outcome. True, False, or “I don’t know? This illustrates one of the key challenges in Decision Management Systems – because good decisions can have bad outcomes.

This can seem counter-intuitive. After all if a company makes a strategic decision, to buy another company say, then a good decision will be widely regarded as one that has a good outcome. When we consider repeatable decisions, however, it is less clear. In this case a good decision should probably be defined as “a decision made using a good decision-making approach” – the right rules, the right analytics. Many such decisions will be made and it is almost inconceivable that all will have good outcomes. For instance a well designed and thoughtful cross-sell decision might result in a positive result (a successful cross-sell) 5% of the time – the other 95% will fail. Nevertheless this should be considered a good decision if 5% is a good result overall. In other words the fact that you have many bad outcomes does not mean you have a bad decision, only that a good decision has a low probability of success. Similarly a good risk decision will not result in no loans that go had, only in an expected number that is considered acceptable for that price and so on.