Companies need to be sure about most of their decisions. Even the smallest choices they make can significantly impact their ability to compete. Making the wrong decisions can lead to precipitations, from financial difficulties to losing a significant portion of their workforce.
Difficult decisions can be tough to make – and there’s probably no tougher decision than choosing the right business strategy. But before you start worrying, take a deep breath.
By following these tips, you’ll be better equipped to make the best choice for your business.
Define Your Objectives
When making a business decision, start by defining your objective. What do you hope to achieve?
Once you know what you’re trying to accomplish, you can begin weighing your options and considering how each can help you reach your goal.
Consider the Risks
A business decision can never be made without considering potential risks and rewards.
One risk you might consider when deciding whether to develop a new product is that it won’t sell as well as expected, and you’ll lose money.
On the other hand, a reward could be an increase in sales and profits for your business.
Weighing these factors will help you make an informed decision about whether or not to proceed with a particular course of action.
Make a Pros and Cons List
When weighing the pros and cons of an important decision, it can be helpful to list all possible outcomes. Maybe one option gives you more sales but less profit, while another gives you fewer sales but more profit. By thinking through each scenario, you can decide what’s best for your business.
Learn from Your Mistakes
Every venture has a learning curve, but it’s called a “decision-making process” because you’re constantly learning and growing, incorporating experience and information into future goals and decisions.
Be Clear and Simplify
Ensure you understand the problem you’re trying to solve, who it will impact, and how. Your decision-making ability will be enhanced if you have clarity about the trade-offs involved in your choice and how you plan to manage them. In a world of uncertainties, a good decision is better than the best decision.
Don’t Let Emotions Rule
When making a decision, it’s essential to remain objective. One way to do this is by sharing the financial projections of the investment with your partner and collaborating on a business case. Include projected benefits (backed by case studies and analyst validation) and all aspects of the investment.
How to Improve Your Decision-Making Process
Plan to evaluate your process at critical points along the way, especially when you’re choosing the first option. Keep your stakeholders informed about what you’re doing and ask for their feedback. Keep a record of metrics that show how you’re progressing toward your goals and research what others have done in similar situations.
Why Delegating Decision-Making Matters
Delegated decisions, often made by lower-level managers, tend to have a much narrower scope than those made by top executives.
While they are frequent and routine elements of day-to-day management, much is at stake here: Given their multiplier effect, wrong approaches can be costly.
With responsibility for decisions delegated to those closest to the work, results are typically quicker, better, and more efficient – and accountability is reinforced.
The ability to delegate is a challenging skill. Leaders must establish the boundaries of delegation (including what is off-limits and how and where to escalate what is beyond an individual’s competence), ensure those to whom they entrust decision authority have the relevant skills and knowledge to act (and if not, allow them to acquire those capabilities), and explicitly hold people accountable for their areas of decision responsibility (including spelling out consequences for those who fail to rise to the challenge).
Insights from this Blog
Team members are an invaluable resource for leaders. Tapping into others’ knowledge, talent, and experience can help mitigate wrong decisions with severe consequences. Encourage your team to share opinions, ideas, and data.
A devil’s advocate approach is an excellent way to get everyone’s perspective on a situation. Collaboration is a perfect tool when used correctly!
When making decisions, take note of the successes and failures of past ones. List the positive outcomes received from certain choices and the negatives to identify areas that can be improved. Keep these results available for future reference when making other business decisions. When building plans for future business decisions, locate the lessons learned to inform your path forward.
