Improve Your Decision-Making Process and Increase Your Bottom Line
Did you know that 91% of business leaders are confident as ever in their ability to make good decisions? Did you also know that 60% of those decisions fail? By using a disciplined approach to making decisions, you and your team can improve your bottom line. Here are the four proven rules to clear thinking, effective problem solving and robust decision making.
1) Inquire with an open mind for more information
In general, when making any decision, whether that’s a decision to go out to eat or buy a house, we don’t ask enough questions. Our emotions take over within seconds after a question is raised, ‘How much does it cost?’ and before we know it, we’ve already rationalized how we can afford something because ‘we want it so bad.’
In business, emotions continue to play a part in our decisions. To reduce the impact emotions have on your decision, take the time to ask a series of “WHY and HOW” questions. This method of Inquiry works like this:
Step 1: Forget opinions
Step 2: Forget solutions
Step 3: Ask why
Why do we need this?
Why will this work?
Why are you so sure?
Why is this true?
How will we measure?
How will it work?
Step 4: Dig deeper
Why is this the right time?
Why not some other direction?
Why are we considering this now?
Why is this the best answer?
So, if the decision you were grappling with was whether to buy a client database from an out-of-business competitor, first, forget your opinion of the client, forget how buying it will solve a problem and ask the questions.
2) Question your assumptions
We all know the downside of assuming. Yet, we consistently make assumptions about critical decisions. For instance, you think the database you want to buy is good. Why make that assumption? Ask some questions to “TEST YOUR ASSUMPTIONS” and see if the answers leave you feeling certain or uncertain, or if you get a sense that the answer is More Important or Less Important.
Will the lead list improve sales? You can’t be CERTAIN of that, but it’s a critical aspect of any lead list you buy so this is MORE IMPORTANT. Build yourself a grid with these four categories in each quadrant of the grid and test your assumptions.
3) Examine the IMPACT of your decisions
In any business, there are four areas of IMPACT when making any decision: How will your decision impact your resources, how will it affect your processes, how will it impact your stakeholders and how will it impact your cash?
Your impact list under Resources might look like this:
Time
Energy
People
Equipment
In the decision-making process, ask yourself if in buying this database, will the impact on People be positive or negative? Will the effects on the Energy to install the database be positive or negative?
If you buy this database, will the impact be positive or negative on cash? Will it generate more revenue or improve cash flow? How about process impact? Will it have a positive effect on your existing processes or negative?
4) Alignment with company values
The last aspect of good decision making has to do with how that decision lines up with your company’s core values, its strategies, goals, and initiatives. Believe it or not, this aspect of effective decision making should be the easiest to work with, but it’s amazing how often the overall values, even the strategies that the company is moving toward, get overlooked in the decision-making process.
If one of your values is Integrity, does buying a competitors list compromise that value in any way? The fact that the competitor is out-of-business probably says no. Imagine the impact on your entire company if you set up a process whereby all decisions have to be in alignment with your core values. This alone is a powerful tool to help empower your team to make good choices.
Inquiry, Assumptions, Impact, and Alignment -- these are the four key components of making good decisions. Try it. For one client, deploying this process immediately saved him $250,000. Don’t continue to let bad decisions impact your ability to drive profits to your bottom line.
Shohreh R Aftahi, PhD