Understanding the Interaction of Forces

Understanding the effective interaction of forces is also essential for good decision-making. Interactions lead to dynamics that you should incorporate into the decision-making process. Always imagine what will happen elsewhere if you change something in this place. By dynamically linking all operational functions, you may solve a local problem but cause problems elsewhere in your organisation or at another time. Always remember that the ultimate goal of an enterprise is its viability. It is viable if it can always achieve a sustainably good operating result. And this operating result is determined precisely by three influencing factors, namely (1) a sustainably good order intake, which (2) sustainably provides sufficient contribution margins, and (3) effective and efficient order execution that does well with the contribution margins.

That is all. Unfortunately, it is not as simple as it seems, because each of these three criteria is influenced by all operational functions simultaneously and together within the framework of the environmental conditions. So make your decisions in such a way that each decision contributes to the improvement of the three relevant criteria. When making your decisions, consider not only the mutual reinforcing or stabilising influence between the operational functions, but also the expected time of the onset of the effect, the function (sinusoidal, sudden, steadily incremental) with which the effect of your decision occurs, the decay rate of the effect of a decision. Grasping these relationships is not trivial. Experience helps, of course. Above all, the open exchange about correlations helps.

Decisions also have to be made in negotiating situations and in cooperative relationships. In such cases, each participant tries to optimise his or her situation. Often, however, this is not possible without an influence on the overall result. Game theory provides recommendations for such situations.

In the meantime, there are also very good modelling and simulation applications that can help you to grasp the interrelationships and visualise them as a basis for discussion.

In the decision-making process, physiological aspects are also effective, which you should know and consider.


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