Streetwise: Improve Your Decision Making Process and Increase Your Bottom Line
From our friends at Eure Consulting:
Did you know that 91% of business leaders are confident as ever in their ability to make good decisions? Did you also know that 60% of those decisions fail? By using a disciplined approach to making decisions, you and your team can improve your bottom line. Here are the four proven rules to clear thinking, effective problem solving and powerful decision making.
- Inquire with an open mind for more information
In general, when making any type of decision, our emotions take over within seconds after a question is raised. And before we know it, we’ve already made our decision subconsciously. The rest of the time that we spend “making” a decision, is really just spent rationalizing why our subconscious is right.
And no matter how aware of it you may think you are, this cycle will continue to play a part in your decision making. To reduce the impact that these gut instincts have, take the time to ask a series of WHY and HOW questions, such as:
- Why do we need or not need this?
- Why do I think this is the right or wrong solution?
- Why am I so certain?
- Why do I believe this?
- How will this affect the current way that we do business?
- How will we measure the outcome, good or bad?
- How will it work?
And then take the time to dig even deeper:
- Why is this the right time?
- Why not some other direction?
- Why are we considering this now?
- Why is this the best answer?
Asking these probing questions will help you better understand how you came to your decision and give you a chance to test out your theory. If your decisions can’t stand up to your own line of inquiry, then you haven’t thought them out very well to begin with.
2. Question your assumptions
We all know the downside of assuming, yet, we consistently make assumptions about key decisions. We make assumptions about what the issue is. We make assumptions about the best solution for that issue. We make assumptions about the quality of products based on the brand that made them. We make assumptions about everything.
The key is to take a step back in order to test those assumptions. Make sure to identify and examine any assumptions you may be using.
A good way to test assumptions is to lay out the problem for someone who is not directly affected by the decision and state just the facts. What is their take on the situation? Do they come to a similar conclusion? Do they offer a different perspective on things?
Turning to an outside source for advice will help you get out of your own head and your own assumptions.
3. Examine the impact of your decisions
In any business, there are four main areas of impact when making a decision: Resources, Processes, Stakeholders, and Cash. You need to stop and understand how your decision will impact each of these areas before you finalize it.
Let’s look at a hypothetical scenario to practice looking at these four impact areas. You own a company that makes and sells widgets. Sales have been a little slow lately and leads are down. A competitor has just reached out saying that they’ll be going out of business and would like to offer you the chance to buy their book of business from them.
How would buying their book of business affect your resources? Sure sales are slower right now, but do you have the capacity (sales capacity and production capacity) to take on a whole company’s worth of new business? Do you and/or your sales team have the time to onboard and service these new customers the way you would like?
How about when you think about Processes? How does adding all these new customers in such a rapid way impact your sales process? Your account management process? Your customer service process? Your production process? Your billing process?
What about the stakeholders? How do your shareholders feel about this influx of business? How about your leadership team? Your staff members? Your current customers?
And lastly, how will this impact your cash, profit, overall? Is this large of an expense worth the return? When will these orders really start turning into revenue? Do you have enough cash to float until then? Will you need to hire a new sales person to handle the volume? How does that affect your overall payroll?
There are an endless number of questions you can ask about these four different areas. The bottom line is that it is extremely rare for a decision to only affect one single area of a company. You need to make sure that you are acknowledging the impact that your decision will make across the board.
4. Alignment with company values
The last aspect of good decision making has to do with how that decision lines up with your company’s core values, its strategies, goals and initiatives. This aspect of good decision making should be the easiest to work with, but it’s amazing how often the overall values, even the strategies that the company is moving toward, get overlooked in the decision-making process. And it happens even more often if you haven’t taken the time to clearly define your values in the first place.
Core values are the backbone of every company (whether you’ve defined them or not, they’re there). And defining and living your core values is the easiest way to simplify your decision making process. Something either fits within your values or it doesn’t.
Your company’s core values should serve to help everyone in your company make decisions that are in line with your company’s true identity. You won’t have to worry that individuals are making poor decisions when you know that you are all starting from the same criteria.
Inquiry, Assumptions, Impact and Alignment — these are the four key components of making good decisions. Try it. Don’t continue to let bad decisions impact your ability to drive profits to your bottom line.