How to make great business decisions so you can sleep like a baby.
Its 2.36 am and you are blinking at the bedside clock, beyond tired but unable to sleep because a decision that you need to make is running through your mind on a constant loop - sound familiar?
Running your own business involves a seemingly endless flow of decisions; some small and routine others more complex and significant with several choices.
So how do you make good decisions?
Whilst the detail of each problem will vary greatly using a step by step process will enable you to confidently tackle any decision.
Step 1: Identify the problem or the required result. This sounds obvious but being clear on what you are trying to achieve is critical to avoid getting distracted by irrelevant information or unimportant issues.
Step 2: Consider the important criteria that the solution should be measured against, such as cost, time, risk, acceptability to everyone involved, you may then find it useful to allocate a weighting to each criteria, i.e. if cost is by far the most important factor then weigh the score for example, x3 compared to the other criteria
Step 3: Develop alternatives – time for big, open thinking here – what are all the possible options don’t rule anything out at this stage, brain storming, or mind mapping are all good ways to create as many options as possible.
Step 4: Analyse the alternatives – my favourite technique here is a matrix, the great thing about the using a grid is the ability to compare all the options on one sheet and it’s an effective way to share the information with others.
In their book ‘Be your own strategy consultant’ Tony Grundy & Laura Brown set out the following criteria which form a good basis to consider any key business decision.
Criteria (Score 1 = low, 2 = medium, 3 = high)
Option 1 Option 2 Option 3
(How well does this option fit in with current
business strategy/plan/existing capabilities etc) 1 2 3
(How much value does this option create or How cost effective is it?) 2 1 3
How easy is this option to implement? 2 3 2
How uncertain and/or risky is this option? 1 2 3
How acceptable is this option to all stakeholders involved? 1 3 3
Total 7 11 14
Step 5: Select the best alternative – if you have used robust criteria here for analysing the options this should be relatively easy, the option that best meets your criteria should stand out among the rest, and if there are compromises to make you can be clear on the factors you are happy to compromise on i.e. ease of implementation vs cost.
Step 6: Implement – decision made, crack on and implement.
Step 7: Evaluate – Did the solution achieve the desired result? Its also worth reviewing how the decision process went, as decision making is a skill that definitely gets easier the more you do it as your confidence in making good decisions grows.
Some pitfalls to watch out for when faced with making decisions
Procrastination – the enemy of decision making (and sleep) simply putting off making the decision at all, whilst there can sometime be a good case for this i.e. waiting for more information, not making a decision can be harmful to your business.
“Procrastination is the bad habit of putting off, until the day after tomorrow what should have been done the day before yesterday.”– Napoleon Hill
Ignoring your gut instinct – Your gut feeling, or intuition is a combination of your knowledge, experience and accumulated judgement – don’t simply dismiss it – if you are thinking of going one way but your gut is telling you it’s wrong – I would proceed with caution!
Personal bias – You like bananas right, but not ones with black bits on – there is nothing wrong with the black bits on bananas, but you just don’t like them, this is a personal bias or preference. The same applies when you consider different options, you may simply prefer one option, be aware of this and ensure that it doesn’t override the logical best option. This is where getting a second opinion can be useful to sense check your decision.
So, in summary if you have a key decision to make; be clear on your objective, take some time to work through a decision-making process, balance information and your gut feeling to analyse the options then make a choice and go with it, the final step – sleep like a baby, confident you have made a great decision.
SOURCE: The Positive Pen