Running a business and making decisions are intrinsically linked. No successful business can exist without making decisions, no matter how big or small. From which product or service to go to market with, to whom to market to and how to market to them. From how much to charge, to how to reinvest your profits. Questions and the information required to answer them flood each day of running a business. The urgency and scope of decision making may vary between small start-ups and large multi nationals but getting to grips with the best way to make business decisions is essential for the success of all, no matter what size of organisation.
Short, Medium, and Long Term
Decision making can be broken down into several types, from the every day quick fire to the big strategic decisions. Every day decisions that can be made quickly and are required frequently, are often referred to as ‘Tactical Decisions’. These are short term, quick fix decisions that relate to specific tasks at hand. The next level are the ‘Operational Decisions’ which generally refer to more medium term problems and incorporate issues that affect the day to day running of the business. Lastly are the ‘Strategic Decisions’ which are long term, big picture decisions normally involving major business change. Each type of decision requires a different process of decision making.
After you’ve established that process for your decision making, you’ll be better equipped to identify, analyse, prioritise and implement potential solutions.
Decision Making Models
If you dip into business articles and advice, you might be familiar with some of the more widely recognised ‘decision making models’. From Rational Choice Theory to Systems Dynamics or the Intuitive Model, there are many. Each varies slightly in how it advises the user to work through their problems and roll out a relevant and appropriate solution. Some lead with data, some lead with intuition, some draw from personal experience. Most cover a some shared touch points on their journey to make better decisions.
7 Steps for Making Better Business Decisions
Work through these 7 steps to start making smarter, more efficient business decisions:
I. Identify the problem or opportunity at hand
It’s important to understand exactly what you’re deciding on. What is the issue at hand? Start specifically with what you need to examine. What is the size and scope of the problem you’re dealing with? Be careful not to conflate more than one issue. Good decisions come from clarity and a clear understanding of the problem.
II. Be clear on what your goals are
Once you’ve established what you’re dealing with, map out what your goals are around this. What would success look like to you and the business? What are the sensitivities that you have to bear in mind to get there?
III. Gather relevant data and research
Arguably the most important piece of any decision making is the research. Gather up any data, statistics, analytics, and experiences you can to help inform you and guide you to the potential solutions. Consulting an expert can help in more complex situations, or in areas where you find you are less experienced. Be open minded. Ask questions and allow the intel you gather to help you flesh out potential options to move forward.
IV. Carefully and objectively compare
Once you have gathered your data and research, it’s time to be as objective and unemotional as possible. Put your own feelings to one side and deep dive into the information you have collated. What does it tell you? What can you learn? Which direction does it point you in? Be aware of any bias you may be carrying and try to ignore any personal attachment you have to previous business decisions or opportunities.
V. Decide and design a strategy to implement
You can now make an informed and strategic decision based on your research and your goals. Which path provides you with the best business outcome? Which can solve your problems, boost your company potential and move you towards the business goals? When you’ve decided, map out a strategy of implementation that allows you to properly roll out steps towards that outcome.
VI. Make the decision a reality
Work carefully through your implementation strategy. Be informed by the research you’ve gathered, keep your customer at the centre of all your priorities, and make sure you provide the right guidance for your team. If there are technological advancements that could assist you,
integrate them into your plans.
VII. Evaluate your experience, success and failures
Be honest with your decision making. After you’ve set the implementation ball rolling, keep evaluating the output. What went right and what went wrong? What can you learn and what changes might you need to make to fine tune to the output you’re looking for? Ultimately no solution is perfect so there should always be a degree of movement to allow for real time learning.
When you get to the stage of having established your own best decision making process, it’s worth reminding yourself why making these good decisions really does matter. Simply put, uninformed and reactionary decisions can cause immediate and long term problems for the success of any business. Don’t forget, evaluating and working through a considered decision making process that holds us accountable and produces more objectively sound decisions can yield benefits way beyond the problem at hand.
Each good decision can bring your customers closer. It can push your profit margins up. It can save money from your bottom line. Good decisions normally equate to good business and good businesses can encourage happier employees, strong customer relationships and better future prospects. Learning how to evaluate, strategise and roll out positive decision making should be front and centre for any business leader.