Your business will be as good as your decisions

The one thing everyone on the planet has in common is the undeniable fact we've all made our fair share of regrettable decisions. Making sound decisions is a skill that needs to be developed like any other.

Leaders are not created equal when it comes to the competency of their decision-making skills. Nothing will test your leadership more than your ability to make decisions. Why do leaders fail? Because they make poor choices that lead to bad decisions.

And in some cases they compound bad decision upon bad decision. The outcome of a leader's choices and decisions can, and usually will, make or break a business.

Fall

What most fail to realise is while it may take years of solid decision-making to reach the boardroom, it often takes only one bad decision to fall from the ivory tower. As much as you may wish it wasn't so, when it comes to being a leader you're really only as good as your last decision.

Every day, executives take tough decisions with incomplete information and limited resources under tight deadlines, with millions of rupees at stake, unmindful of the lives and careers of their employees.

Yet too often these decisions are made not by analysing relevant and reliable data, but through organisational politics, formal authority or persuasive champions.

The loudest voice or the highest-ranking participant makes a call based on gut feeling. Or the organisation slowly grinds to a too-late, too-compromised solution that no one really supports but no one can quite kill, either.

Gut instincts can only take you so far in life and anyone who operates outside of a sound decision-making framework will eventually fall prey to an act of oversight, misinformation, misunderstanding, manipulation, impulsivity or some other negative influencing factor.

The complexity of the present business landscape, combined with ever increasing expectations of performance, and the speed at which decisions must be made, are a potential recipe for disaster for today's executive unless a defined methodology for decision-making is put into place.

Mindset

Moving the emphasis away from personalities and organisational hierarchy, fact-based decision-making focuses on the facts.

The decision to develop and launch a new product, for instance, relies on knowing who will buy the product and how much they will be willing to pay.

The decision to invest in or acquire a technology start-up relies on knowing whether or not the technology in question works as advertised and whether it is well positioned against competing solutions.

Pricing decisions need in-depth knowledge of demand elasticity, costs and customer economics.

But it seems the information is never at your fingertips. Sometimes, it isn't even clear which facts are important and which aren't.

There's a hope that someone, in some department, may have this information. In situations like this, executives mentally chase each other around the conference room table, unable to reach agreement because they have incompatible but hidden mental models, different incomplete sets of information, and competing theories about what to do.

Questions

Behind every tough decision is a set of critical unanswered questions. The first order of business is deciding what those questions are and what facts would provide the answers to move forward in a positive, unambiguous manner.

The first and hardest step is to let go of opinions, assertions and anecdotes and embrace the facts. Sometimes the facts are uncomfortable, and it takes a little work to get the facts you need.

But in an environment where 'facts are friendly', people can de-personalise the decision and believe in the process.

To create such an environment, what is the decision you are trying to make? This may seem like the most obvious thing in the world, but it is surprising how often different people on the same team or in the same organisation are actually trying to solve different problems and don't even realise it.

A fact-based decision-making approach is critical and successful in today's business environment.

It is critical because large organisations often have trouble making decisions and moving forward.

A fact-based approach is successful because such an approach makes it easier to take a decision by getting people on the same page and it improves the odds of making a good decision that will lead to a successful outcome because the decision is based on hard data and an understanding of what will drive value - not on organisational politics or intuition.