Top tips for decision-making in business (Part 1)

Introduction

In these two articles we consider, in part 1, the types of decisions that business owners face from day to day whether strategic, tactical, or operational. In part 2, we provide some tools you may find useful in the decision-making process. 

The key message is that decisions must be made, as avoiding them can make situations far worse.

Where to now? 

We’ve all heard the quip “I used to be indecisive, but now I’m not so sure!” Unfortunately, far too often it is a statement of fact!

Many small business owners seem to find it a struggle to make a decision and stick to it.

Stuck in a quagmire of indecision can be commercially fatal in the fast-moving environment we find ourselves in today. Delay making a decision and the opportunity may have gone. The window of opportunity is closed.

How often have you anguished over whether to buy something in a shop? You go away, think about it, and decide you will buy it after all. Then go back and find it was the only one they had, and it’s gone - someone else has bought it! All that anguish, all that effort, for nothing! You left it too late! You lost out!

Transfer that to your business and that failure could end up being costly. It may make a significant difference to your sales figures, your customers, your bottom line. It can mean the difference between success and failure!

OK, hopefully I’ve got your attention now and we can think about some strategies to help you not just make decisions but make good ones. 

What is Decision-Making?

So that we are clear upon what we perceive decision-making to be, we will assume it involves the selection of a course of action from among two or more possible alternatives.

This is to arrive at a solution to a given problem.

The Oxford Advanced Learner’s Dictionary also refers to it being “the process of deciding about something important, especially in a group of people or in an organisation.”

You get where I am coming from. We are making decisions all day, every day. But generally, we are making decisions on the basis of gut instinct and probably on relatively minor issues.

That may get you some way in business, but when there is so much at stake, you may want a decision-making process that’s a little more concrete!

Some of what we cover relates not just to decision-making but to problem solving too. They are very similar situations.

Let’s face it. To solve a problem, you need to make a decision. I guess we’ve all worked for a boss at some point in our careers who has said, “Don’t bring me problems. Bring me solutions!”

Sometimes easier said than done, but at least coming up with an ill-thought-out solution provides a start point. It shows you have at least made an attempt at providing a solution!

Nothing Worse than Doing Nothing!

As U.S. President Theodore Roosevelt said about decision-making, “in any moment of decision, the best you can do is the right thing, the next best is the wrong thing, and the worst thing you can do is nothing.”

In everything we cover here the important point about making decisions is that the process does not end there! Having made a decision, you must then act upon it.

I’ve always looked back at decisions I’ve made in my life, whether they turned out right or not, with the mind-set that they were the right decisions at the time. I’ve never regretted decisions (OK, perhaps the odd one or two!). Because I made them, having considered everything I knew at the time. 20:20 hindsight is great, but it doesn’t help in the now!

It’s strange in business how decision- making can change over time, and, more so, our attitude to making decisions.

I’ll give you an example here. 

This is sometimes an issue that is ignored by businesses when faced with a decision. 

You arrive at a junction and need to decide whether to turn left or right. Your time is then taken up trying to decide between the two options.

But there is always the other option of deciding to do nothing. In this instance, not to turn right or left.

OK, you may be at a T-junction and the only options are to turn left, turn right, or stand still. In the instance in question, standing still is not really a viable option (I guess there is one other option and that is to turn around and go back to where you came from—but that is simply giving up).

But, in most cases, you’ll find you are at a crossroads. In addition to the options of turning left or right, you can also choose to carry straight on as you are.

It is very important in any decision- making process that you consider all the options available to you. 

As Sherlock Holmes said in “The Sign of Four” (1890):

How often have I said to you that when you have eliminated the impossible, whatever remains, however improbable, must be the truth?”

Three types of Decision 

Strategic Decisions

Strategic decisions fall into several types. Policy decisions sit here, as do long-term, complex, and nonroutine decisions. They are normally made by senior executives, though in smaller businesses and start-ups, that’s you!

Because these decisions are at “corporate” level, they may well affect the entire direction of the business. An example may be deciding whether to buy another company.

These decisions are also among the hardest as they may have a significant impact not only upon the business itself but also those directly, or indirectly, involved with it.

Tactical Decisions

These are more middle-management-level decisions. These may include decisions on how to achieve the policies already set at strategic level. They will also tend to be medium-term, less complex decisions.

At strategic level, for example, a policy decision may be made to break into a new market, say, another country.

It will therefore be a tactical decision to decide just how that policy will be achieved. 

Examples include remote sales, online sales, establishing a sales office in that country, upskilling sales staff language skills, or recruiting multilingual sales staff.

Operational Decisions

These are the day-to-day decisions made by lower-level managers. They are generally short-term, simple, and routine decisions. This could be planning delivery routes for the day or managing the sales team.

Even though these decisions are made at a lower level, they are nevertheless very important as they could have a direct customer-facing impact on the business.

In the smaller organisation or start-up, most of these decisions may be made by the same few individuals—your core team. The smaller the business structure, the more decisions need to be made and the greater the breadth of importance.

Within a matter of hours, you may be forced to make decisions at strategic, tactical, and operational levels.

Decisions at each level have a bearing on each of the others, so it is important to keep on top of outcomes.

Defining the issue to be decided upon

In defining the issue upon which you need to decide, you may wish to consider the following steps:

1. Defining the problem

This is quite a critical phase because the actual problem may not be what you, at first, perceive. As an example, I had drivers running a regular route, but one driver was always late to the first call. The initial assumption was that he was starting late each day. In fact, he was taking a different route because none of the other regular drivers had told him about a short cut they took!

2. Gathering information 

As in the above example, it is important to gather all the information you will need to arrive at a considered solution. I mentioned elsewhere the boss that demands solutions and not problems. In the delivery driver example above, I collected time sheets, delivery notes, and vehicle tracking data to assist in arriving at a solution.

3. Develop options

Look at all workable solutions. Don’t discount any at this stage as you are not ready to make decisions. In any case, the solution may indeed be a mixture of several options. Just consider every alternative (I’ll provide some tools for this a little later) and don’t rule something out because it seems impracticable. It may be a solution you aspire for some time in the future.

4. Choosing the best

This is the stage where the real decision- making takes place. In addition to ensuring you have the right information, you also need to ensure you have the right people in the room.

It’s no good deciding upon a certain course of action if the people critical to its success are not part of the process. You need their “buy-in,” their support to ensure success. They may “push back” at something imposed upon them or their department. Your solution will be doomed for failure. You must gain stakeholder support and commitment for any chosen solution to have any chance of success.

You must be able to communicate the decision successfully.

5. Plan and execute

As a natural next step, you must plan how you are going to implement the decision and make it a reality. 

As I said before, everyone needs to commit to this. You cannot have “loose cannons”! 

They should all fully understand how they fit, what is required of them, and what the expected outcomes are. Everyone needs to comprehend how critical this is to the business.

6. Review

As I mention elsewhere, decision-making is a continuous and dynamic process in every business.

Having decided on a plan of action and then implemented it, you should regularly review progress. 

Each decision will inevitably throw up some other issues. You may have considered these in the original decision-making process, or they may be totally new things you’d never thought of. 

Review them and, if necessary, run them through the entire decision-making process. 

---

Author Bio | Keith Grinsted MBA FRSA

---

December 2023