FOR BUSINESS LEADERS, STRONG DECISION MAKING IS TOO OFTEN A MATTER OF INSTINCT. WE LOOK AT SOME DECISION-MAKING THEORIES, TO SEE HOW WE CAN UNDERSTAND THE PROCESS, AVOID OVER-THINKING AND MAKE BETTER DECISIONS.
"In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing." – Theodore Roosevelt (1854-1919), 26th President of the United States
Some products have to be faultless at launch. For instance, if you’re in the medical equipment business, or aviation safety, your margin for error needs to be statistically non-existent. However, for most sectors, timing is more important than perfection – the need to get to market before our competitors may outweigh the significance of details buried deep in our offering. For instance, if we’re in a service industry with a high degree of human resource and personal interaction, we can (and should) improve as we go along.
Many managers rely on decisions based on instinct, backed up by experience, to avoid the operational paralysis that comes from indecisiveness, or overthinking.
This article can’t help you make perfect decisions every time. What it can do is highlight some of the ways we make decisions, to see how we can make better ones. Let’s start the process with a little reflection:
To move towards better decision-making, start by paying more attention to the way you think. We may keep receipts for all the coffee we buy, but we don’t usually record or analyze the thought processes that lead up to our big decisions. So write things down. Be honest. Take enough time to think about how you arrived at each choice.
Also, if you find yourself over-thinking, recognize it. Most businesses are not striving for absolute perfection, but we often find ourselves behaving as if lives depend on our decisions. Sometimes it’s better to follow Roosevelt and make a decision, even if it has flaws.
Online learning resource Study.com distills the entire decision-making discipline into four basic areas. It may be helpful to ask which category your decision falls into:
Directive – this form of decision-making relies on a rational and autocratic style where leaders use their own knowledge, experience and judgment to choose the best solution. This type of business leader is very rational, but thinks mostly about the short-term.
Conceptual – more concerned with long-term results and brainstorming the alternatives, and approaches problem-solving creatively, often producing approaches that take greater risks.
Analytical – this form of decision-making uses facts and data to determine the best outcome.
Cost/benefit analysis – this is limited to financial decisions or can provide the data for evaluation of financial criteria in other decision-making areas.
US business consultancy Kepner-Tregoe came up with a Matrix approach to help organizations make unbiased, risk-assessed decisions. It covers four basic steps:
1. Situation appraisal – identify concerns and outline the priorities.
2. Problem analysis – describe the exact problem or issue by identifying and evaluating the causes.
3. Decision analysis – identify and evaluate alternatives by performing a risk analysis for each, then make a final decision.
4. Potential problem analysis – evaluate the final decision for risk and identify the contingencies and preventive actions necessary to minimize that risk.
Going through each stage of this process will help you come to the best possible choice, given your knowledge and understanding of all the issues.
Developed by military strategist US Air Force Colonel John Boyd, the OODA loop is a decision cycle following the observe, orient, decide and act processes. Here, your business relies on being one step ahead of your competition and, at the same time, being prepared to react to their new ideas.
Popular with organizations looking to take advantage of a situation, it favors agility over raw power.
We can sometimes get to better, faster decision-making by using best practices and technologies based on behavioral economics. Reassess how your business has presented a new product. Is it better to focus on the gain of using the product, or the loss of not using it? Is there a different way that you can say the same thing, while emphasizing alternative results? Are you trying to find a rational solution when its success will not be rationally appraised?
Brainstorming works on the belief that the more ideas are on the table, the greater your chance of finding a good one.
A brainstorm is a session where new ideas and solutions are generated in a non-judgmental space. By removing all elements of judgment from the early stages of the process, contributors are free to generate unexpected ideas without fear of negative impact.
Advertising executive Alex F Osborn developed this method of problem-solving and decision-making in 1939 as a response to occasional creative blocks within his agency. The brainstorming group generates ideas, which are then analyzed – with action points coming from the most popular ideas.
Read more about the times perfection would have been a disaster here.