Better Decision Making in Business

Decision making is a vital skill for business owners, managers and workplace leaders, all of who have dozens of choices to make every single day. Many important decisions are complex and multi-faceted, and so there is no single solution. Rather, each decision needs to be approached as a unique challenge with its own set of factors and circumstances. This requires a logical approach which uses relevant information and expertise to guide your actions towards the most positive expected outcome.

Decision Making In The Workplace

Every manager will know that business decisions come in all shapes and sizes. Many are financial. Successful businesses depend on their ability to secure funding, balance their cash flow, protect and expand assets, and set budgets. Managers may also face decisions around company structure and partnerships, business strategy, product releases, employment, operations, and resource management.

Just as there are many different issues to deal with in business, there are also many different types of decision making. The appropriate approach will depend on factors such as the nature of the problem, your position of expertise, and the amount of information available to solve the issue.

For example, when you have all of the information available, you can make a purely analytical decision based on the facts. If you are negotiating a deal on the spot, you may not have all of the information, but may rely on a more heuristic method, or make your choice based on expertise alone if the situation calls for it.

What’s important is that you don’t make these choices blind. Decisions are only stressful when you can’t get a grasp of how to make the correct choice.

Making Logical Business Decisions

Whatever the problem you are faced with, you can take the following steps to make sure you are making the most logical and positive choice possible given the factors at play.

Recognise the problem – You can’t find a solution until you’ve recognised the problem. This step may seem simple, but it can be a process in itself. Issues can be complex and need to be picked for you to identify the main challenges involved. Be absolutely sure you are aware of actionable problems before moving forward, as this will save you time and resources later on.

Gather Information – Next, you should gather all of the information and data necessary to understand the challenge and its possible solutions. This step is all about sourcing the right amount of info from reliable sources. Keep it relevant to the problem, and don’t overload yourself. Ask yourself, “What do you need to know?” and “Who do you need to speak to?” to fill the gaps in your knowledge. Solid data will lead to more analytical decisions.

Identify Possible Solutions – Every business problem you face will have multiple possible solutions, or there wouldn’t be any need to make a decision! This step involves mapping out every reasonable solution. For example, if you are lacking the money to launch a product, possible alternatives may include seeking funding, investment, reducing costs, or a combination.

Weigh Up Options – Next, weigh up all of the data against the possible solutions to see which one has the most positive expected outcome. Even if you don’t have all of the information needed, or there are factors outside of your control, it’s important to quantify your decision making. This type of approach is emphasised by poker player Liv Boeree in her latest TED talk. When assessing your options, try to understand the risk involved with each, and consider the extent to which each is feasible, and is likely to lead to a desirable outcome.

Take Action – Once you have considered each of your options, you can come to a conclusion that is based on evidence. It will be logical and, based on the data you have available at the time, it will be the most likely to lead to a positive outcome. Now you can finally take action. Gather the resources that you need, negotiate with partners, and get your teams on board with your decision.

Review the Outcome – Effective decision making is a process of continual review and readjustment. After you make every major decision, ask yourself whether it was as effective as you expected. What worked and what didn’t? Is there anything you would do differently next time? This is all valuable data that should form part of a feedback loop that in turn leads to stronger decision making in the future.

Decision making is a learnable skill which you can develop with time. Come back to the basic rules outlined above and there will be no business dilemma which you can’t overcome.