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Why, When, and How Do We Make Decisions?
We make numerous decisions daily that range from basic to major (what to eat to strategy and investment decisions). We even make decisions when we choose to defer or avoid making them. What we often neglect is to spend time reflecting at how and why we make decisions. We need to learn how to make better decisions .
For example: How important is the decision? What information do we have to make the decision? How well can we assess the outcomes and what style do we use? Gut vs. analytics, or both?
Some guidelines to better understand the process to make better decisions are as follows:
1. Understand your goals
Understand your goals, resources, and risk. In particular, really understand your market analysis, competition, how and why your company is different, and why customers should care.
What is your focus? Are you focused on long term growth or quick profits? Keep in mind, many companies continue to keep growing, when they should be pivoting to focus on profit.
Tools: Marketing programs vary in cost and impact. In general, paid search can have immediate results, while social media is more long term and branding-orientated. While testing alternatives is a great strategy, ensure that you are focused on priorities that you can execute and that will have the most potential.
2. Understand your needs and the various options process for decision making
The main forms of decision-making are described as:
Mathematical models allow the use of selected data categories to determine the best solutions under varying circumstances. Select or customize appropriately any form of data collection specific to your business needs.
Experience models most frequently use experience and historical trends to predict the future. This can be very useful when used in retail, fashion and beauty and other predictable categories.
Instinctive models rely on expertise to evaluate alternatives. Utilizing your hands-on life experience and expertise in your field. Apply your personality and true “feelings/experience” to the decision process.
Tools: Each of these has different strengths and weaknesses that can greatly affect the outcome of the decision. In particular “been there done that” is not always wrong and you must ensure the information behind the data is relevant, current and hasn’t changed.
3. Beware of confirmation bias
Don’t we always believe our ideas are terrific, and, thus, focus more on their wonderfulness and potential for success? Of course, we do. The challenges are sometimes given a smaller amount of our attention, and downplayed. It’s just human nature. We bias our analysis towards successes and positives and tend to ignore negatives.
Tools: No Competition! An example of an unbalanced concept of expectations is when a business owner says, “We have no competition.” Believing that there is no one else out there doing what you do is doomed thinking. After all, how were they getting it done before your business entered the market? Similarly, do you encourage exploring alternatives, and outcomes.
4. Develop, test, measure and adapt
Many plans, forecasts, and proposals are done in a static format, with one dimensional analysis and results. The goal is to understand that we live in a more dynamic and interactive world. Thus, the company’s branding, marketing, pricing, and operations all must be viewed as an integrated program, rather than separate and isolated activities.
Tools: Have A Back Up Plan – To the Back Up Plan! Similarly, businesses need to have alternatives at the ready, and the process in place to adapt to on-going changes from production to marketing.
5. When and how will you be profitable?
Only about 10% of startups and small businesses succeed and survive to their fifth year. The ones who have survived developed flexible models to measure, and then compare, alternatives. Similarly, you must consider what is working and what is not, and adjust.
Tools: Startup Connection has developed a very simple model that lets you evaluate alternatives in less than 48 hours. Click here .
6. Yes –You are Unique – But There Are Many in Your Field (More Market Research)
Each small business is a unique entity that can truly stand out in the “Me, too” mass world in many categories. But, that same uniqueness doesn’t eradicate the fact that there are probably hundreds of different service choice providers for your category, if not more. So, the style is unique, but the category isn’t.
Tools: More market research – Developing a strong market research analysis of your field (with regular updates) adds a greater understanding of the different influencers and consumer needs. Understand and take advantage of the changes in demographics, the economy, and your environment.
Related: How to Handle Business Risk Like Steve Jobs
7. Hire good resources and continue to test, measure, and adapt
Make certain the people you hire have real expertise and will do what you require. Hiring with the goal of saving money usually results in mediocre outcomes at best. You get what you pay for.
Tools: Be sure to get proposals, references, and examine alternative solutions when selecting staff and outside resources.
8. Have fun and get things done!
In today’s culture, people seek work atmospheres that are based to meet not only their financial needs, but also their emotional, mental, and physical needs. We can’t keep pretending to ourselves and one another that the forecast and the budget and the policy make a job worth going to or a company worth working with or buying from. It’s the energy, always, that brings people into an organization, and keeps them there. The energy comes from the people who are already there. It multiples. It transcends from the internal team to the customers’ user experience and brand relationship.
MAKE YOUR COMPANY A FUN PLACE TO WORK – MAKE SURE YOUR CUSTOMERS ENJOY DOING BUSINESS YOU!
Tools: Create employee programs and establish a work culture that acknowledges the importance of everyone’s contribution to company success. Organize staff lunches and family friendly after-hour activities. Include part-time staff in all activities; encourage and promote efforts to showcase new employees; provide cozy spaces for lunch and coffee breaks; and offer opportunities for staff to attend cultural events in the community.
In summary, keep a strong habit of making everyone aware of the “decision-making process.” Challenge assumptions, review alternatives, and evaluate progress. In particular, don’t be a damn martyr, and make sure to encourage different perspectives, outside resources and constant assessment.