Decision-making in business
Decision-making in business is not about making many decisions: It’s about concentrating on the most significant decisions. Decision-making isn’t about speed or being right, clever or sneaky – it’s about gathering all of the information, modeling all of the possible impacts and choosing the most viable action for the company.
According to Forbes, 98% of managers fail to apply best practices when making tough decisions. But the importance of decision-making in business is too great to continue neglecting it. In the end, decision-making models in business are formulas – and while their specific steps may vary, they all follow five similar principles.
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Principle one: Write it down
In business, you track your sales. You track your growth. You track your retention rates, margins and customer satisfaction. Business is all about numbers. So why don’t executives track decision-making in business?
Keeping track of your decisions forces you to apply best practices and record which ones work the best, making your choices better down the road. It prevents you from backtracking or rationalizing bad decisions down the road. Finally, it allows you to track – and prove – your impact on the company’s bottom line, which could benefit you in the future.
Decision-making models in business are all about learning from your choices. You won’t be able to do this – and therefore, you won’t be able to grow as a leader – if you don’t write them down. Any decision must start with the following items:
- Identify the problem. What is the root of the decision? What is the key to solving it?
- Classify the problem. Is this a one-time extraordinary event, or part of a larger pattern?
- Define the objectives. What do you want to achieve? What are your minimum goals?
- Define the benchmarks. How will you know when the problem is solved?
Principle two: Seek out new information
This is a vital principle for decision-making in business: Don’t make hasty decisions. It’s also one of the most difficult to learn. Human beings like to think we have all the answers. We might not trust those around us. We may feel we need to make a quick, intuitive decision on the spot. But even under pressure, it’s essential to gather all the information you can.
Dig into the latest primary data. Get opinions that are different from your own. Invite at least two – no more than five – other stakeholders to join you in a brainstorm about the decision. Purposely choose those with opinions that may be different than your own. You’ll reduce personal bias and make a better decision.
As you gather data, ensure you’re able to categorize it into opinions and facts. Both are valuable – but you must be able to tell the difference. Ask yourself, “Is the data being used to tell me a story or give me the facts?” Stories – experiences from mentors, friends and significant others – will give you insight into the intuitive aspects of a decision. Facts will allow you to be objective. You need both to succeed at decision-making in business.
Principle three: Make sure you have options
Have you ever been given an ultimatum? Then you know that choosing between two things isn’t a real choice. When you have three options, you have a real choice – and more than that is even better. The importance of decision-making in business means that you need to start with as many options as possible to ensure you’re seeing the full picture.
Seeking out different perspectives is the first step. Then it’s time to turn all that information into options. Sit with your team and create more choices:
- Write down the two or three choices that you started with.
- Add at least four more options to the list, based on discussions with your team.
- Use the OOC-EMR model (Outcomes, Options, Consequences – Evaluate, Mitigate, Resolve) to make your decision.
Principle four: Take action
One of the most enduring principles of decision-making in business is that no decision is a bad decision. Many people become paralyzed by big decisions and avoid them. Others put the responsibility on someone else. Great leaders are confident and decisive. They make tough decisions when no one else wants to. They know that if they are wrong, they can learn from their mistakes.
Tony says, “A real decision is measured by the fact that you’ve taken a new action. If there’s no action, you haven’t truly decided.” It’s important to gather information, review all the evidence and work through every alternative – but you have to take action.
The best decision-making models in business – like OOC-EMR – will not only prompt you to take action, they will also include follow-up. You must track the outcome of your decisions in order to be able to make better ones in the future. And you must learn from your experiences in order to develop inner strength and join the ranks of the world’s most successful people.
Principle five: Practice makes perfect
We all know someone who is always confident under pressure. Unflappable. Cool, calm and collected. You might think that’s just their natural state. It’s more likely that they have practiced decision-making in business and in life for years. They know how to master their emotions, take a step back and look at any situation rationally.
People weren’t born with this skill. Decision-making in business is a muscle that you can work out just like any other muscle. The more you practice, the better you get at it. Instead of going to the gym, you must go to places outside your comfort zone – where you’ll be asked tough questions and have to give your opinion to those who may disagree with you.
As a business leader, you must be ready to make fearless decisions at all times. Following decision-making models in business like Tony’s OOC-EMR method can help. Many successful leaders also have coaches or mentors to help them master this priceless skill.
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