Making good decisions can drastically improve your chances of success in business. It can help you make the best use of the financial resources at your disposal, motivate your workforce, reduce risk and seize opportunities before your competitors.
Research by Bain has shown a 95% correlation between effectiveness at decision making and financial performance, but according to a survey of 500 managers and executives by Cloverpop, almost all respondents (98%) failed to apply best practices when making decisions.
According to Erik Larson, founder and CEO of Cloverpop, this ineffectiveness in decision making is the result of the fact that "we're lying to ourselves".
If this is true, there's a lot of scope for managers to make improvements in their decision making that will deliver big benefits for businesses. Here are some of the practices that could help you make better decisions:
1. Involve others in the decision making process
There are various benefits to be gained from getting other stakeholders involved in the decision making process, such as removing individual cognitive biases that could affect the decision and introducing new ways of thinking.
Incorporating people from various departments will also help to increase buy-in across the business; the decisions you make are more likely to yield positive results if they’re well-supported.
According to Larson, the optimum number of people to involve in decision making is between two and six. Asking for ideas and input from too many stakeholders can lead to confusion and muddled thinking.
2. Have clear goals in mind
It's vital to go into every business decision, big or small, with a clear focus on the goals you are hoping to achieve.
Whether it's an updated sales or marketing strategy, expansion into a new territory or a product launch, every major step the organization takes should be goal-driven. Without defined objectives, your plans for the future could become vague and directionless.
One approach is to identify five different company goals that will be impacted in some way by the decision you're making. This can help you avoid the pitfall of making decisions with unintended consequences.
3. Consider alternatives and future scenarios
You can put yourself in a strong position to make good decisions by considering a number of realistic alternative options.
A wide range of possible choices improves your decision making because it gives you a broad view of all your available options, which makes it easier to compare the various benefits and drawbacks of each route.
It can also be useful to consider the future scenarios - whether good or bad - that are likely to result from your decisions. As well as informing the decision making process, this will help you prepare for those situations when they arise.
4. Have confidence in your own decisions
Having gone through the decision making process in a rigorous, methodical way, you can feel confident that, when the time comes to actually commit to the decision, you have taken the right steps to maximize the chances of success.
It's important to maintain this assurance throughout the process of implementing your decision. Teams and individuals at every level of the organization, from senior executives to new starters, should be able to see that the organization’s decision makers have confidence in their own judgment.
5. Remember to follow up
Decisions shouldn't be made and then forgotten about. It's vital to follow up to ensure you're measuring its impact, making changes where necessary and learning from your experiences.
One practice that can prove particularly useful is scheduling a dedicated session two or three months after the decision has been made to see if it had the desired impact, achieved its goals and whether anything could have been done to make it more successful.
You might find that, even if all the data suggests you made the right call, there are fresh insights you can gain to make better decisions in the future.