For the average Fortune 500 company, the opportunity cost of timely and effective decision-making is unnerving: more than 500,000 days, equating to over $250 million in earnings. Organization dynamics, slow and bloated company processes, and digital dysfunction all contribute to halting productive decision-making in businesses of all sizes.
There is no silver bullet, no shortcut secret to success. The road to confident and effective decisions as a business owner is an iterative process that requires trial and error. What works for you may not work for the next business. However, for most CEOs, fixing the most common issues will lead to noticeable improvements almost instantly.
- Systematically Gather Information
When the time to make a decision comes, you do not want to be in a position where you have insufficient data to inform your choices. Successful CEOs tend to focus on systematic data-gathering processes, ensuring decisions are made based on facts, not hunches or an incomplete picture.
Gathering this information can be time and resource intensive. Do not be afraid to delegate these tasks, ensuring your employees are aware not only of the type of data you require, but why you need it. This will give them agency and insight, giving you more accurate data sources.
- Leverage Experts
As a business owner, you not only have to manage the ins and outs of your industry deliverables, but you must also manage the firm. Where possible, leverage the services of third-party experts to help make informed decisions.
For example, whether you are the owner of a startup or managing an enterprise-level company, there will be legal implications that you may not be aware of, nor should you be.
Instead of reading the small print yourself, and potentially making an expensive error, utilise the services of a professional law firm to help you stay business compliant. This not only ensures you are covered on the legal side, but will also save you time, internal resources, and ultimately, money.
- The Hard-Easy Effect
For most business owners, the hard-easy effect can have a devastating effect on productivity and the ability to make correct decisions when planning projects and timelines. It’s also known as the difficult or discriminability effect.
In short, it’s this: we tend to be far too confident when it comes to difficult tasks, yet conversely underestimate our abilities when it comes to simple ones. This can be lethal when quoting projects, establishing timelines, and delivering success to your clients.
When it comes to decision-making, you may start doubting your abilities to effectively run your company as a result of the hard-easy effect bias. You can manage the effects of this bias by recording past projects accurately, and comparing initial estimates to actual delivery timelines. Do not make quick decisions when outlining projects, instead take your time to carefully assess the deliverables.
- Categorize Decisions
Not every decision is created equal, with some more critical to your business than others. In general, senior leaders can split decisions into three different sorts:
- Big bet decisions, which do not occur often, but usually involve high risk. These require the full attention of the top team in the company, as well as the board.
- Cross-cutting decisions can certainly be high risk, but occur relatively frequently. Decisions should generally be made in a collaborative process that involves the most important members of all moving parts.
- Delegated decisions involve day-to-day processes that happen frequently and are relatively low risk. These are generally handled by a management individual or specific team.
Ask yourself whether you are getting involved in far too many delegated decisions. Generally speaking, this not only wastes your time but may also frustrate your employees. Do not become a micromanager.
- Be Aware of the Dunning-Kruger Effect
The Dunning-Kruger effect causes even the most capable individuals to doubt their own competence. Conversely, it’s also the reason people will overestimate their ability seemingly without any sense of self-awareness.
The Dunning-Kruger effect can perhaps best be encapsulated by Aristotle’s purported phrase: “The more you know, the more you realize you don’t know”. For those who are no experts, ignorance is bliss.
As a business owner, this can become a true hindrance when it comes to decision-making. You may be an expert in your field, but these ‘blind spots’, if you will, prevent you from confidently asserting yourself in the industry.
Mitigate the effects of Dunning-Kruger by taking a step back. Do not be overconfident about your expertise, always be willing to learn more to grow and develop, and do not let others who clearly know little take over meetings.
- Involve Others
Our final tip may also be the most helpful: do not be afraid to involve others in the decision-making process. Whilst you are ultimately responsible for the final decision, you do not have to make it on your own. Taking this step does not translate to shirking responsibility or seeming incapable, which is what many leaders often worry about.
In most cases, involving others, including third-party professionals, can enhance your wide-picture view, help you consider new angles, and provide richer and more accurate data that adds up to success. In addition, it will give further experience to those on your team, and improve morale. As long as you are able to facilitate productive debate, having more people involved will generally lead to improved decisions.