Three Keys to Making Better Business Decisions

Decision-making. It’s the one thing you and I are called on to do every day. When we do it right, we’re heroes. But when we do it wrong, well all kinds of bad things happen. Yet, how often have you really sat back and contemplated how you could make better decisions? Or how often have you received any training in how to make better decisions?

If you’re like most owners and CEOs that I know, chances are your answers are in the single digits. Which is pretty remarkable considering that our ability to make good decisions has such a huge impact on the businesses we lead, the people we employ, and the customers we serve (or could serve).

So, to help you become a more intentional and better decision-maker, here are three keys that I think will serve you well for the rest of your life.

1. Go to the Source.

One of the unfortunate realities of leadership is that information gets filtered as it makes its way up the chain in any business (or organization). Even worse, each person who is passing that information along has a perceptual bias (which is further colored by their self-protective bias which causes them to not share the whole truth in order to protect the guilty).

In other words, as a leader, you can’t fully trust that you’re getting the right information. Your financial team has a bias. Your marketing team has a bias. Your HR team has a bias. Moreover, very few people ever really speak the truth into leadership.

So, what’s the solution? Go to the source. If it’s a customer issue, talk with your customers. If it’s a call center issue, talk with the people in the call center. Talk with those who are affected. Hey, why not make a mystery call to your call center yourself. And if it’s an employee issue, talk directly with the people involved.

Filtered information is exactly that … filtered. So, whenever you can (especially if it’s a big issue) go to the source. Talk with the people involved. You’ll often be surprised at how different the information is when you’ve removed the filters.

2. Make Sure You Have All of the Facts

Do you like crime procedurals? Or Whodunnits? Or suspense thrillers? If you’ve ever watched one of these you know that what seems so obvious at the beginning isn’t at the end. At first, you take in the “facts” and everyone seems convinced that so-and-so is the murderer or bad-guy. But as the show moves along, and new facts emerge, all of a sudden what seemed so obvious (i.e. a slam dunk) isn’t.

Well, the same thing happens at work, doesn’t it? I’m sure you’ve found yourself often in a place where what seemed like the right decision wasn’t. Why? Sometimes because of point one. But often, because we rush making a decision.

If we’re honest, too many of us like making decisions fast—based on our gut. We get a little bit of data and bam, we make a decision. However, if most of us are honest, we’d have to admit that if we had waited just a little bit longer and gotten a few more facts, we would have made a better decision (and avoided a lot of negative outcomes :-).

So, if you want to make better decisions, make sure you slow down long enough to ensure that you have all the facts needed to make a good decision. Why? Because as the old saying goes, “Once you have all the facts, the decision becomes clear.”

3. Calculate the Risk/Reward

This is one of those practices most of us know we ought to do but don’t. Why? Because most of us lean toward one side or the other—which means that we prefer not to calculate the other side.

In other words, some of us are risk-takers which means that our natural inclination is to live on the edge and take the riskiest option with the greatest chance of reward. Why take time to calculate the risk/reward? Go for the gusto!!!

On the other hand, some of us are risk averse which means that our natural inclination is to take the safest option with the most predictable outcome. Why take the time to calculate the risk/reward? Go for safety!!!

The problem, of course, is that both are right and both are wrong. Every decision you or I make has some risk and some reward built in. In other words, we need something that can help us move past our own natural inclination in order that we might make better decisions on a more consistent bases.

Therefore my recommendation is that before you make a decision that has significant implications, you always take the time to ask yourself four questions.

  • What do I think the best scenario for this option is?
  • What’s the worst scenario?
  • What’s the probability that the best might happen?
  • What’s the probability that the worst might happen?

Now, those four questions probably won’t stop you fully from your natural tendency, but they will help you to make better decisions more frequently because at a minimum you’ll be making a more informed decision.

So, there you have it. Three keys to making better business decisions.

1. Go to the Source
2. Make Sure You Have All of The Facts
3. Calculate the Risk/Reward.

Which one of these do you need to use more frequently?

To your accelerated success!

P.S. If you have a few more keys you like to use to make better decisions, please enter them below in the comments section (or click here if you’re reading this in your RSS feeder or email).