In the business world, being decisive is a critical component of success. Sometimes you’ll get it right and sometimes you won’t, but not making a decision can be just as bad as making the wrong one. Here are a ffew methods for practical decision-making.
Everyone has their own way of making decisions. It’s very common to agonize over important decisions that have long-term impacts. In the business world, being decisive is a critical component of success. Sometimes you’ll get it right and sometimes you won’t, but not making a decision can be just as bad as making the wrong one.
While it’s tempting to ignore and defer problems while hoping they’ll go away, they almost never do. Here are a few practical methods of attacking decisions in both structured and non-structured environments.
Reject Informative Overload
It’s reasonable to want as much information as possible before making any decision. The more data you have, the theory goes, the better the decision will be. While it may sound counterintuitive, too much information can be a bad thing. When you have too much data, you start to focus on what may be missing rather than what’s in front of you. The tendency is to place more importance on things we don’t know, rather than the things we do know.
Spending time researching missing data validates its necessity and usefulness, and justifies delaying a decision until we have all the answers. We don’t like uncertainty when making critical decisions, but more information often creates more uncertainty. Great leaders sense the threshold where additional information becomes a liability instead of an asset. They have the ability to focus on the key facts and bottom line impacts of doing one thing versus another. Limit the information to what you absolutely need to make an informed decision.
Use a Sounding Board
Simply put, don’t surround yourself with "yes-men," or people who will agree with you all the time. If you work alone, seek the advice of a friend who tells it like it is and share’s advice openly and honestly. Bounce ideas off them and ask them to play devil’s advocate even when they might agree with you. The value of this interaction can’t be overstated because it will expose issues and angles that you hadn't considered.
Embrace Your Contrarian
This approach is akin to an inner sounding board. If you have a history of making decisions in a repeated way, it’s time to challenge yourself and your default approach. Get out of that rut by using your imagination and escaping the comfort zone that normally constrains your thought process. Confirmation of your wisdom by acting in a predisposed way only blinds you from outside-the-box solutions.
If you’re about to make a decision and considering several possibilities, upset the mix by inserting a new option that contradicts what you’d habitually do under similar circumstances. Pretend that you selected the new option and imagine what the aftermath would look like. This forces you to reevaluate all the assumptions that normally would have steered you away from this decision. By reversing your assumptions, you may discover flaws resulting from your personal biases and past routines. Isolate what really matters in the grand scheme of things and reassess your available options.
It’s hard to separate emotional involvement from making sound business decisions. One way to help get around this is to approach decision-making as though you’re advising someone else about what they should do. When advising a friend, your judgment is likely to be less clouded and more objective.
Go through the same process with an imaginary person who’s in the exact spot you’re in. Unlike the sounding board approach previously discussed, you’re not looking for feedback. You’re only focused on providing the best advice possible based on all the facts as you understand them.
Pros and Cons
Listing the pluses and minuses of any decision comes naturally. Whether you write them down or not, the reasons why you choose one path over another are at the front of your mind. Some people find it useful to set up a spreadsheet that identifies a decision tree they can use to walk through their evaluation process. It might contain some or all of the following elements:
- Positive and negative impacts of each decision option
- Cost and schedule associated with each option
- Qualitative ranking of all options
- Expected reaction outside your company (customers, suppliers, etc.)
- Charts or graphs of applicable data that are key to your decision
If you create a spreadsheet, keep it simple. If it gets too complicated, you’ll fall into the trap of over-analyzing it to death and defeat its original purpose. The idea is to display your choices in a logical format that enables you to review each option and consistently compare it to the others.
Effective decision-making is a process of analysis without paralysis. If you aren’t comfortable relying on your instincts and experience, here are some steps that may help:
- Frame the decision to be made in simple terms
- Assemble only the relevant data and facts that will be a basis for your decision
- Set a deadline for making the decision
- If possible, brainstorm options with people you trust
- Evaluate options based on pros and cons, cost, and overall impacts to your company
- Challenge your assumptions, even if you believe they’re rock solid
- Once you’ve reviewed the options bottom-up, look at them from top-down
- Avoid compromise as this rarely leads to the best answer
- Sleep on it and let it simmer; then select the optimal option
Explain your decision to those who will be impacted, and closely manage its implementation. Perform follow-up as needed to monitor the results, and learn from your mistakes.
One element of decision-making involves minimizing risk and maximizing reward. Small business owners are constantly bombarded with scenarios where they must make hard choices that could have huge consequences. The more experience you have doing this, the more confident you’ll become. You’ll develop your own style and methods that work best for you.
When making important decisions, there’s no substitute for common sense, logic, and good instincts. Don’t overburden yourself with statistics and extraneous information that may cloud your better judgment. Don’t delay making the tough calls. Make the best-informed decision you can and move on.