Decision making is an important part of everyday life, but the stakes are far higher when your decisions impact your business. Young and fast-growing companies are especially vulnerable, as the decisions made by leadership can often mean life or death for the company.
As decisions pile up, it sometimes becomes more about making a decision rather than making the right decision. It’s impossible to always make the perfect move, but delayed decisions will cause your business to suffer, so remember that even wrong decisions can lead to valuable lessons learned.
To set you on the right path and help you become the best decision-maker you can be, we’ve summarized some key strategies and steps based on research from the University of Dartmouth.
7 Steps to Effective Decision Making
Step 1 - Identify the Decision: Good decision making starts with an ability to clearly define the problem.
Step 2 - Gather Relevant Information: This refers to a combination of internal information (found through self-assessment), and external information (found in research, books, and people).
Step 3 - Identify the Alternatives: It’s important to recognize other paths and to try and think of every possible alternative.
Step 4 - Weigh the Evidence: Imagine what would unfold were you to pursue each of these alternatives. Would these alternatives fulfill the need? Make note of the possible solutions with the most potential and order them by priority.
Step 5 - Choose The Best Solution: Repeat Step 4 until you have just one solution left.
Step 6 - Plan and Execute: Make your decision and then put it into action.
Step 7 - Follow Up: Check in with your decision and ask yourself whether it’s working as you’d desired. If not, don’t be afraid to evaluate and change the course of action accordingly.
While this step-by-step process can help you organize key information and give you a roadmap for making more deliberate and thoughtful decisions, it's just a starting point.
Don't Be Afraid to Lean on Others
As a business owner, you’re likely used to Command Decision-Making, where you make a decision without consulting others. While this style can be useful in a time-crunch or in cases of financial/crisis situations, most of the time it is more productive to apply Collaborative Decision-Making to your business problems.
This method is simple: gather some trusted advisors, team members, and subject matter experts and get their feedback. You will still be the one making the final call, but you’ll be doing so with better information. Good decision makers are independent, but great decision makers are collaboratively independent.
Of course, make sure that you aren’t surrounding yourself solely with like-minded people. Opposing arguments will add great value to your decision making and can prevent you from operating in an echo chamber.
This round-table type of decision making can also help you to isolate a few key people you trust to eventually delegate certain decisions. The delegation of big responsibilities will ultimately strengthen your team and save you a few big headaches down the line.
As the decision maker of your company, it’s up to you to ensure that your decisions are driven by reason and not emotion. Taking a step back and reframing the issue is a simple way of broadening your perspectives.
This is where evidence-based management (EBM) comes in. This method is all about using evidence over instinct.
For instance, if one of your team members suggests a solution to a frequent problem, take the time to find out what it’s based on. Is there data to back it up? Has such a course of action worked in the past for other businesses? Is your information coming from credible sources? While trusting your gut does hold some value, it’s the data that will help you save face in front of your investors if things don’t go as planned.
If you’re gathering data for one of your own solutions, ask yourself whether the evidence you’re finding is objective. Are you not just looking for data that confirms your solution, and avoiding the facts that oppose it?
At the end of the day, being able to back up your decision is far more valuable than making a rushed decision.
As a business owner, there will be times when you simply don’t have the time to go through a lengthy decision-making process. Gathering teams, collecting data, and weighing options is both tedious and time-consuming, and while it may yield the most consistently successful results, it isn’t always feasible.
In 1956, economist Herbert Simon coined the term “satisficing.” This decision-making approach prioritizes adequate solutions over optimal solutions, making it a great alternative when you’re pressed for time.
Someone that is a ‘Satisficer’ will decide on qualities that need to be met, and once they find an option that meets this criteria, their decision is made and they are satisfied.
The opposite of a Satisficer is a ‘Maximizer,’ which is someone who won’t make a decision until every option has been examined so that the best possible choice is made. Maximizers spend far more time and energy on each decision because they want to make the optimal choice.
When your decisions are piling up, remind yourself that it’s okay to be a Satisficer from time to time.
Better, Faster, Stronger
As a bonus, here’s a checklist Harvard made for making better, faster decisions (we summarized it for you here too, because your time is valuable to us too):
1. Write down five business goals that the decision will be impacted.
2. Write down four or more alternatives.
3. Write down the most important missing information. What don’t you know?
4. Write down the likely outcome, both good and bad.
5. Involve at least two (but no more than six) other voices. More perspectives = less bias.
6. Write down your choice, it’s reasoning, and whether you have team support.
7. Schedule a follow-up in a couple months. Don’t miss the opportunity to correct a mistake.
And finally, a friendly reminder that a good night’s sleep makes everything easier. Good decisions mean good business so if you’re feeling stuck, sleep on it, and make the decision in the morning once you’re feeling rested and fresh.