Make the Decision Right
Taking decisions is hard at the best of times. Even apparently simple questions can quickly descend into a myriad of competing factors which you try to take into account, whether consciously or unconsciously. It can be hard to disentangle the rational from the irrational, analysis from feelings, facts from supposition. The problem multiplies when you’re running a business. Different members of your team can hold wildly different views on the most innocuous of topics. There is often an agenda or two to push. Personalities come into play. Your own biases and prejudices – and we all have them – can be hard to recognise, never mind discount.
And you do need to take decisions. Business thrives on action. You can’t stand still, because the external environment is constantly changing. Customers’ needs and expectations move on. New technology comes along. Competitors come up with new products and services. Regulators change their minds. The business that thinks it’s standing still is really going backwards. Like sharks, we all need to keep swimming forwards.
Moreover, the internal environment is changing too. People are recruited and leave. Opinions shift. Alliances are formed and crumble. Views shimmer and morph, often in surprising directions.
So, how to take good decisions, decisions which prove robust in the heat of battle and stand the test of time, decisions which enable your business to thrive and beat your competition, while taking the ‘dressing room’ with you?
In practice, decisions are taken with both head and heart. It’s important to understand how you feel about a course of action. It’s also important to ask yourself why you feel that way. Your emotions can seduce you and take you up all sorts of dead ends. Your previous experiences will shape a lot of your emotions – are those experiences pushing you in a certain direction, whether for good or for ill? Above all, how can you inform your emotions so that you’re able to use them well?
The answer is to make sure you have a solid, rational basis for the decisions you take. Start with the Facts. All too often people use phrases like “I guess” or “I bet”, when what you really want to hear is “I know”. Many, many facts are discoverable, at least to a rough degree. What is our market share in Asia? Does our biggest competitor’s new product have more features than our best offering? Are our prices higher or lower than the competition’s? It’s worth investing a little time and effort in getting the facts.
The next step is Analysis. What do the facts tell us? Why are sales dropping in the Midlands? What would an investment in a better operational system do to our costs? Can we realistically expect to cross-sell more than two products to our mid-market customers?
Once you have the analysis, the key is to flag up Options. For any important decision there is always more than one alternative. You want to understand the three-four main options, their pluses and minuses – and the team’s recommendation. This may well be aided by financial calculations such as Net Present Value, Internal Rate of Return, etc.
Finally, you’ll be in a position to take an informed Decision, using both head and heart. Having gone through this process of Facts–Analysis–Options–Decision, or FAOD, the team will (hopefully) buy into the decision. Everyone’s on the same page, giving you the best chance of success.
The focus now switches to execution. Having made the right decision, it’s time to make the decision right.
© Patrick Macdonald 2017