Secrets of Business Decision-Making: How to make the Right Call Every Time
Imagine you’re lost in the woods and find two paths ahead of you. Which would you take? My guess: You’ll examine for footprints, marks, or anything at all that tells you which one is most regularly plied. In your mind, the most plied one is probably the right route. This is a typical example of someone making a careful decision at a crucial point in their life. In business, you have to make such critical decisions almost every day. And your ability to make the best decisions determines how far your business goes. In this post, we’re going to be looking at what the term decision making truly entails, as well as some important tools that can help one’s decision-making process. Business Decision-Making: What does it entail? As defined in one of the papers published at the University of Massachusetts, decision making is making choices by gathering information and accessing alternative resolutions. Usually, businesses are brought to decision making points when there are multiple viable solutions, thoughts, or way forward to a situation. While everyday decision making can seem like cherry and cheese, business decision making can be much more technical and brain taxing. This is why we see many organizations bring workers together to brainstorm with flowchart makers and whiteboards when faced with complicated business decisions. I bet you’ve been a part of similar arrangements. Whether you’re a business manager or owner, you will need to make or join in making the right decisions in your organization from time to time. How will you perform when those days arrive? Find out tips below that can help you. 1. Problem identification The first step in any decision making process is problem identification. This may seem rather cliché considering you probably already know what problem you’re looking to make a decision on. However, it’s still important to state it (in fact, as #1) because of how regularly people fail to properly define their problem. A problem doesn’t necessarily have to imply a challenge. It can be a simple question to which the business authorities need answers, a situation where a choice has to be made, or a battle of interests where a unanimous decision is required. When confronted with a decision making process, you should first ask yourself, “what is the problem we’re trying to solve here?” Many people are guilty of under-simplifying their problem, which can cause a lot of confusion and delay in decision making, especially when multiple personnel are involved. You have to break down the scope of the problem in such a way that it’s evident even to the blind what the real problem is. Finally, it’s advisable to first write out the problem so that you have a clear idea of what you’re trying to decide on and how the decision will impact the problem. For example, if you have a business website that’s not generating traffic at all. The problem is nonexistent traffic rather than low traffic. You may know there are a couple of solutions to your problem like different marketing strategies that can be different depending on your business area, SEO tools, email marketing, Ads marketing, etc. But the traffic-generation potential of each one differs. Because you’ve clearly defined the problem (nonexistent traffic), you can make a decision on which traffic generating strategy to use that will best solve your problem. 2. Clear definition of goals It’s important to clearly define what you want to achieve with a decision. As you know, there can be one, two, three, or more variations of the same goal. A clear definition of what you want can help remove any confusion or ambiguity from the decision making process. For example, say you task your business executives to decide whether to let workers continue working from home or ask them to return to the office. This seems like a straightforward decision making process, where a decision between A and B has to be made. But it’s actually more complicated than that. There’s another option in play here – the hybrid work model where workers can work from home and come to the office. The people making this decision can be thrown into a state of utter confusion if someone on the team mentions the possibility of hybrid work. However, if the company has clearly stated what they’re trying to achieve with the decision – e.g., we want to save costs – this third option may not be on the table. 3. Information collection Decision making is a process that relies on information. Talk about your judgment, choices, suggestions, examinations, etc. Everything has to be information and data-backed. Information gathering can be an internal or an external exercise, depending on the nature of the decision that needs to be made. That said, below are some tips that can help with information collection during a decision making exercise. Use the concept of the five WHYs Get other people’s viewpoints on the subject matter Discuss the subject matter with other team members Check if there science, research, or survey-backings Conduct necessary interviews (e.g., questioning workers) Carry out articulate observations Questionnaires and surveys 4. Careful identification of alternatives Generally speaking, the whole point of a decision making process is usually because there are options to consider. When there’s only one way forward – a clear path to success – there’s no point in contemplating whether to follow it or not. At this stage of the process, you’re well-equipped to aggregate all the possible solutions to your problem. For example, say you and your team want to make a decision on the best web design software to use for building your business website. Your options could be Weebly, WordPress, Figma, Webflow, Adobe XD, etc. Bear in mind that the number of alternatives you find will depend on the scope of your problem, as well as the extent of your search. For some decision making process, there may be two or three possible alternatives only, whereas in some cases, you may locate as many alternatives as you find. You should understand the scope of the process to know what your expected number of alternatives should be. You don’t want to end up under-listing alternatives. 5. Careful examination of alternatives The next step is to weigh your alternatives. That is, pick out each of the options you listed in #4 above and then weigh them for their pros and cons. How they affect the business, what they offer, their pitfalls, how they compare to the rest, etc. You can create a table to this effect or use a flowchart to designate each alternative’s pitfalls and gains. Data and deductions will be easier to view in a table or a chart than when compiled in blocks of text. 6. Make your choice This is the part where you make the final decision. Suppose you’ve carefully identified your problem, defined your goals, and gathered the right information. In that case, it will be easier to select the right path for the business from the list of alternatives collected in tip #5 above. If you’re unable to make a decision at this point, there’s likely a glitch somewhere along the line. In that case, go over the process once more, starting from tip #1. In case you have the conundrum of choosing between a set of alternatives – e.g., choosing between options A and B from a possible alternative set of A, B, C, D, E. In this case, your best bet will be to compare the alternatives against one another. Like the rewards of one against the pitfalls of the other. 7. Action, Action, Action Once a decision is made, the next thing is to act on it. To do that, you will need to develop a project action plan. This usually features the step-by-step of how an action will be implemented – people who will be involved, how long it’s going to take, things that will be put in place for executing the action, etc. 8. Decision review In tip #2, we mentioned knowing what you want to achieve with a decision. After a pre-determined period has passed, you want to review your decision to find out whether you’ve been able to achieve the goal you set out. If you achieved your goal, take note of the things that worked and pen them down somewhere for future reference. However, if you didn’t, don’t feel bad. It’s not the end of the world. You just need to go over the eight-step process again. And hopefully, this time, you get it right. Tools for better decision making One of the areas you could mess up a decision making process is not weighing the alternatives properly. As we said in tip #5 above, you need to carefully examine alternatives – in terms of pros and cons – to know which one is most appropriate. In reality, though, this is actually easier said than done. You may compare and contrast alternatives in terms of pitfalls and gains and still not arrive at a reasonable deduction. That is why most people turn to decision making tools. Below are some popular decision making tools, you can incorporate into your business processes today. 1. Decision Tree A decision tree is a decision making tool that uses a tree-like model to help you see the possible outcomes from a series of alternatives. Instead of imagining pros and cons of decision alternatives in your head, a decision tree lets you put the perks, consequences, and chance outcomes offered by all alternatives side-by-side. That way, it’s easy to see which alternative is truly best for you. See a decision tree example below. SourceIn this example, the alternatives were to “Do Nothing” OR to “Expand.” With the aid of a decision tree, the business owner or manager can quickly see what they stand to gain and lose in both cases. If the decision-makers aren’t focusing on other parameters besides the profit/loss potential, this simple display is enough to help them make a decision. 2. Flowchart Flowcharts are quite close to decision trees in that they both work with lines and nodes. In fact, some people say a decision tree is a flowchart-like diagram. However, besides decision trees, we can also use regular flowcharts as decision making tools. Generally speaking, decision making steps are signified with diamond symbols in flowcharts. And they usually follow a series of other steps. You present your alternatives as node-entry points, then use the diamond shapes to indicate the junctions where important decisions need to be made. Subsequent consequences of decisions will appear on the other end of the diamond, allowing readers to quickly view the possible outcomes. 3. Decision matrix Decision matrix is another effective decision making tool. As defined by Wikipedia, a decision matrix is a list of values in rows and columns that allow an analyst to systematically identify, analyze, and rate the performance of relationships between sets of values and information. Technically speaking, decision matrixes bring a sense of quantitativeness to decision making. Here, you list the alternatives as rows on a table, and then list the factors you’re comparing them against as columns. After that, you score each alternative/factor combination and add the combo to get a total. The alternative/factor combination with the highest score is then given priority. See an example below. In this example, the decision makers can see that vendor 4 is their best alternative. 4. Old-fashioned checklist The last but not the least tool is a simple pro-and-con checklist. You can either do this as a rough hand-drawn table or use a classic pros and cons template. You simply draw out a table listing all the alternatives. Then you create another column for a list of criteria you expect your ideal alternative to check. All alternatives that don’t meet your standard criteria are quickly cut out from the table. For the ones that meet the criteria, you compare them based on the height of risks they present. Author Bio: Uday Tank is a serial entrepreneur and content marketing leader who serves the international community at Rankwisely. He enjoys writing, including marketing, productivity, business, health, diversity, and management.