Business

Making Better Business Decisions : It’s A Science

Making Better Business Decisions : It's A Science

As you go through your business career, you’ll inevitably make some bad decisions. It’s all part of the learning process, and an artifact of the reality that nobody can perfectly predict the world and all its outcomes. 

However, that doesn’t mean that you shouldn’t try. There are undoubtedly business leaders out there who do a better job than others when it comes to making the right decisions. These individuals seem to have an instinctive knack for knowing just what to do in any given situation. 

In this post, we take a look at some of the ways that you can make better decisions in your business. While some of these ideas might seem a little obvious, you’d be surprised how few leaders implement them religiously. 

Over the years, organizations have become better at making decisions. They’ve developed so-called “meta strategies” that allow them to make better choices, on average, compared to the past. They’re creating helpful frameworks that let them examine all aspects of various policies before implementing them. In so doing, they’re improving organization structure, marketing strategies, information flow, technology use and personnel hiring. 

So what do you need to do to become a better decision-maker? 

Identify The Most Important Decisions

The first step is to identify the most important decisions that your organization needs to make. Unfortunately, no computer or software program can do this for you. You’re very much on your own because only you know all the idiosyncrasies of your business

Some of the decisions you need to make will be highly strategic. For instance, you might ask yourself how much you should reasonably pay your suppliers so that, in the event of a supply crunch, they’ll preferentially send goods to you, not your rivals. 

Other decisions will be more mundane, such as “how often should we post content online?” 

Prioritization allows you to determine which decisions are the most important, and which you can afford to hold in limbo for a while. 

Identify The Factors That Contribute To Making Decisions

The next step is to think about the people actually making the decisions on the ground. Who has the final say and what resources are they using to come to their decisions? How well do these individuals normally make decisions? And are all stakeholders using a common language? 

Design Decision-Making Processes

Once you’ve got the basics in place, you then need to design your decision-making processes. For example, what systems can you implement to ensure that you generate better outcomes for your enterprise?

Don’t rely on intellectual capital alone. Often, it is too analytical and can’t see the bigger picture. Instead, rely more on technology. Use simulation for business to create a digital twin of your business and see how decisions could pan out in the real world. Factor in all the necessary variables and watch what happens when they collide with each other in a dynamic setting. Remember the wisdom of Lao Tzu, the ancient doaist sage: “the craftier the plan, the stranger the outcome.” 

Make It A Part Of Your Organization

Once you’ve discovered a decision-making strategy that works, make it a part of your organization. Give managers the necessary tools so that they can decide for themselves whether they are making the right decisions or not. 

Also, structure your decision-making. Make it so that managers understand whether it is a decision that they can make unilaterally (by themselves) or as part of a group. Structure decisions into consultative and executive categories. Make sure that consultative decisions are made at meetings, and establish methods you’ll use to determine who is responsible for having the final say on the matter. 

Companies that make a lot of decisions every day can benefit tremendously from improving their decision-making processes. Large firms, for instance, can often make thousands of choices in the course of a single week. Improving decision-making in just 10 percent of the total number of decisions can have a massive impact on profitability and other outcomes of interest. 

The Difference Between Old And New-Style Decision-Making

There’s a big difference between old and new-style decision-making. Older decision-making traditionally involves scrutinizing multiple aspects of a business opportunity and then figuring out what matters most to clients and customers. Companies, for instance, make decisions in siloed teams, often one at a time, without thinking through the impact that their choices might have on other departments or the rest of the supply chain. 

The decision might appear to work well in isolation, but in the context of the larger firm, it’s a disaster. 

Newer decision-making does away with this old method of doing things. It is: 

  • Contextual
  • Continuous
  • Connected

Contextual decision-making recognizes that companies can’t make any decisions entirely on their own. Whatever button they push on one side of their business will alter how the machine functions in another area.

Decision-makers also need to recognize that their choices aren’t just hierarchical. While tactical decisions can impact operations, realities on the ground can also affect tactical decisions. What’s more, grass roots company culture can also have an impact on how employees work and behave – and that can have a tremendous impact on outcomes. 

Contextual means that decisions need to be evaluated against alternatives in a context-sensitive manner. For instance, it might seem prudent from a business perspective to approve a client transaction. However, long-term, working with a difficult client may actually harm the business. 

Lastly, companies need to be continuous in their decision-making. That means being responsive to possible disruptions and opportunities. Decisions shouldn’t be the final “be all and end all.” Corporate leaders shouldn’t smash down Zeus’ hammer and declare that a decision has been made. Instead, everything should be provisional. Leaders shouldn’t commit to anything and should always keep one eye out for changes in the market. 

Once you understand how to make better decisions, the company as a whole will begin to thrive. You’ll start noticing the effects within a few weeks. After a year or so, you will barely recognize your enterprise. You’ll have greater transparency, scalability and speed of execution in everything you do.

About the author

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Steven Ly

Steven Ly is the Startup Program and Events Manager at TheNextHint Inc. She recruits rockstar startups for all TC events including Disrupt, meetups, Sessions, and more both domestically and internationally. Previously, she helped produce Dreamforce with Salesforce and Next '17 with Google. Prior to that, she was on the advertising teams at both Facebook and AdRoll, helping support advertisers in North America and helped grow those brands globally. Outside of work, Priya enjoys Flywheel, tacos, the 49ers, and adventuring around the globe.

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