Basic Decision Making Tips
Without question, entrepreneurs that inhabit the business world can all agree on one thing, we have all made regrettable decisions. People that claim they have never made a bad decision are simply not being honest.
Have you ever wondered about implementing an idea? Have you ever worried about whether you made the right call? Have you ever second guessed yourself and waited until it's too late? Of course we all have. Making good decisions is the key to achieving success and being prosperous in the business world.
How do we avoid situations where we feel confused, lost, bewildered, and uncertain? Solid decision making requires a skill set that must be developed.
Small business owners by definition wear multiple hats and are constantly bombarded with, what can seem like, an overwhelming amount of information to ingest and process. The key is learning how to methodically discern and filter the sources from where your input is coming and make the best decision possible within a reasonable time frame. Fortunately, or not, leaders are only as good as their last decision. Leadership and decision making go hand in hand....they cannot be separated.
Understanding that a basic blueprint of knowledge exists is very important when trying to make prudent decisions and not all sources of input weigh equally in one's decision making process. Recognizing the difference between the quality and quantity of information that needs filtering is very helpful.
Four Filters to Produce Great Choices:
- Gut Instincts: This is an emotional filter that may often times have no current logical or hard analytical support. With that being said it can sometimes be the only filter available for a person to rely on when making a decision. We have all heard people say "Go with your gut instinct". The take away here is to listen to your gut instinct and your intuition. Refine how you use your instincts. Discernment is so important. One can never stop improving in this area.
- Data: Raw data is comprised of related facts, statistics, or random inputs that, on their own, offer little value. Making conclusions based on data in its raw form will often lead to flawed decisions based on information that is incomplete. The outcome to an experiment is never known beforehand. It is never wise to make a decision base on incomplete and inconclusive independently raw data.
- Information: Information is a more complete data set. Information is therefore derived from a collection of processed data where amplified results and meaning have been added to distinguish what is actually fact and theory thus promoting the desire for further analysis.
- Knowledge: Knowledge is information that separates theory and opinion from factual results. It leads one to validated conclusions. Knowledge provides one a high level of security in the thought process that produces decisions based on testing, assimilation and validation. Knowledge proves concepts.
What is the Source of Your Input?
Two things to consider when evaluating your source of input are:
- Credibility: What is the track record of your source? Where did your source come to you from? How reliable has your source been? Is your source tainted? Get references. Do you feel the source may be manipulating you for personal gain? Are they telling you just what you want to hear? Trust but always verify the cold hard truth.
- Bias: Could your source have any hidden and/or competing agendas? Are the facts being withheld? Intentionally withholding information that would be critical to making a decision is nothing short of being dishonest.
A Great Methodology
Today's business leaders need a defined methodology for decision making. Let's face it....the complexity of the current economic landscape, combined with performance expectations, production goals, sales quotas, product development, etc. all while turning concepts into reality on a limited timeline, are a recipe for disaster for the decision maker. Incorporating the following into your decision making routing may minimize the chances for making bad choices:
- Conduct a Situation Analysis: What is motivating the need for a decision? What would happen if no decision is made? Who will the decision mostly impact (both directly and indirectly)? What data, analytics, research, or supporting information do you have to validate the inclinations driving your decision?
- Subject your Decision to Public Scrutiny: The more eyes on a project the better....there are no private decisions. Sooner or later the details surrounding any decision will likely come out. Remember, solid character plays a big role in the process. How will the choice affect your employees, shareholders, family members, etc? Did you give your legal counsel the chance to weigh in before making the final decision?
- Perform a Cost/Benefit Analysis: Does the cost justify the means? Do the benefits outweigh the potential costs? What is the back up plan if the costs exceed projections and the benefits fall short of projections?
- Look at Risk versus Reward: Can you live with the outcome under a "worse case" scenario? If your anticipated probable outcome does not occur will the odds be in your favor?
- Do the Right Thing: At the end of the day, your word and your reputation can be all that matters. Moral and Ethical standards are very meaningful. Put yourself on the other end of your decision. Who is benefiting most? Honesty is always the best policy and there are absolutely right and wrong ways to do things. Standing behind a decision that is controversial but is the "right thing to do" is the stuff great leaders are made of. Making decisions based on appeasement usually creates strife so avoid that. Your value system, your character, and your integrity should never be compromised.
- Now is the Time to Decide: So many times we worry "too much", wonder "what if" and wait "too long" to act on making the decision. Leaders must be proactive and always strive toward making the decision. Don't "over think" the problem and allow yourself to get bogged down. Too much analysis can be paralyzing. Sometimes decisions need to be made before all the data is collected. Use the methods described above to make the best possible decision with the resources available at the moment. Opportunities come and go. The longer you wait to make a decision, typically, the smaller the return often becomes. Live for the moment and let the moment live in you. Seize the opportunity as it presents itself.
- What is the Backup Plan: Sometimes the outcome falls beyond the border of logic and reason. When this happens a good leader always relies on the backup plan. There are always constants and variables which both may, at times, work against you. A plan without a backup plan is really no plan at all.