Businesses make decisions every day whether they are large or small, significant, or insignificant. When there is a problem, a decision is made as to how it can be solved and there is intense pressure to make the right decision because wrong ones can lead to financial and competitive consequences.
A recent survey by McKinsey among business managers discovered that less than half of respondents claimed their business decision making to be timely, and 61% felt the time spent making decisions was ineffective, with uneven quality outcomes.
Decision making should not just be about speed, it’s vital to make smart decisions too, but unfortunately, it’s common for these to conflict each other. Let’s explore some key things to look at when making decisions that are both timely and smart:
Firstly, you must identify the problem you need to solve. What is it? Who will it affect? What are your goals? The more stakeholders you involve in decision making, the more likely your end goals will become misaligned. Try to keep your decision-making team streamlined for simplicity.
Knowing your business, customers, competitors, and environment is crucial to making informed decisions so you can consider the impact of any decisions you make. For example, do you have good customer satisfaction levels and will the decision impact those? Will a decision affect staff morale? Avoid using your emotions when making decisions surrounding employees or customers as this will often lead to bad decisions, and always remember your company mission and stay aligned to your core values.
If you made a mistake in the past, don’t let it put you off making future decisions, instead learn from that mistake and think about what you could do differently next time. Keep the results from past decisions so you can consider which elements need to be changed and what went wrong.
Use the data in your reporting software to provide actionable insights into your business, and don’t just stop there; compare data sets to raise even more questions about your performance. This can help you make decisions based on what is happening in your business, what your customers are buying and how much they’re spending, what your employees are thinking and what is occurring in your supply chain, and using real-time data can help you make the decisions based on what is occurring right now, not last week!
As touched upon earlier, it is important to keep your decision-making team streamlined to avoid confusing your end goals, however, don’t be afraid to ask for feedback or seek advice along the way. It can be useful to gain feedback from different departments and ask them to conduct a SWOT analysis to help make an informed decision and ask employees for their feedback. Other advice could be sought from business mentors and close associates who are familiar with your business.
Where possible try to experiment with different scenarios, such as rapid testing of interest in a new product or trial different pricing strategies, so you can make even better data-informed decisions.
Avoiding tough decisions because it affects the status quo of the company and challenges a different approach, won’t grow your business. Sometimes it is important to take risks and push your boundaries a little further than you may have previously done to enter new markets or try new strategies.
“The biggest risk is not taking any risk… in a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks” Mark Zuckerberg.
How will you know if you have made a good or bad decision and what will the outcomes of these scenarios be? This exercise will help you evaluate your decisions to see the pros and cons to decide whether the decision is worth making or not. For example, if you decide to switch to a different supplier to save money – the worst outcome of this decision would be customer complaints or loss due to a drop in quality, slower delivery times and no cost savings. Fully evaluating your decisions can help you make an informed choice. You should also conduct a cost-benefit analysis to evaluate the cost and financial impact of each option to determine whether a particular decision has a greater or weaker financial gain.
Once a decision has been made you should regularly monitor the results to ensure you are seeing a positive outcome to your decision. If not, you can quickly intervene and make tweaks where necessary.
Making decisions is certainly no mean feat for businesses in these increasingly challenging market conditions with greater financial pressures than ever before. However, it is vital to remember that any decisions made should be both timely and smart, a combination that can be difficult for businesses to achieve. Making sure to clarify the problem, understanding your business and market, and evaluating your decisions are vital steps, along with the other tips mentioned in this blog post.
For more information on how our Opera 3 business intelligence software can improve your decision making, get in touch today.