In this article, I talk about how to make good business decisions. Here you will read about 8 major steps that help you be a better decision maker in your business.
Common Mistakes
Before I describe the steps to effective business decision making, first I want you to focus on common mistakes that many managers do when trying to find the best solution for a problem. Those mistakes are as follows:
- Solving the symptoms instead of the real problem
- Missing opportunities of conducting an in-depth analysis of the problem
- Focusing on only one solution while neglecting alternatives
- Failing to have a clear idea of what outcome to reach
- Setting decision criteria that are not aligned with the overall objectives of the business
- Following enacted decisions blindfold, without prior evaluation
Sadly, these decision making faults exist within all levels of organizations. So the first thing you need to realize and accept is that mistakes happen. Then it is time for you to get over it, move on and establish a process that ensures effective business decision making in your company. And the following below steps will help you with it. Also I suggest you read this business decision making checklist written by Eric McConnell.
The 8 Steps
Step #1. Explore the Problem
First of all, you need to define the business problem that you need to solve, by identifying and analyzing the symptoms and gathering input from all stakeholders involved.
You can hold meetings with the stakeholders to discuss the problem and identify its reasons and consequences. Upon completion of your meetings, you need to state the problem clearly in business terms, without using any technical jargon and unusual words.
Step #2. Ensure Strategic Alignment
As a good decision maker, you must be sure that the problem stated aligns with the strategic agenda of your company. In case the problem does not relate to the business strategy you decision making process will not be effective.
Step #3. Identify the Desired Outcome
This step means that you need to have a clear picture of what you want to see happened after the problem is successfully solved. When you know your desired outcome, you can start planning your actions at the strategic, tactical and operational levels of the business.
There are two things you need to do to identify the desired outcome:
- The goals and objectives to be accomplished
- The rules and constraints that determine how to get there
Step #4. Define Possible Solutions
In order to be a better business decision maker, you need to identify and explore possible solutions to the problem. Each solution should be aligned with the desired outcome. It also should work fine within the current rules and constraints of your organization.
Step #5. Identify Alternatives
Now you can brainstorm your solutions in order to determine alternative approaches to solving the problem. Open sessions with your stakeholders will help you generate many ideas, and no matter whether some of them seem to be preposterous and irrelevant.
The key to success is through refraining from implementation thinking and then focusing on all possible ways of solving a given problem. After your brainstorm sessions finish, you must have at least 3 alternative solutions per problem.
Step #6. Establish Evaluation Criteria
Being a better business decision making means having a list of evaluation criteria to choose between solutions and alternatives and to find the most suitable solution. In this context, you must become clear of what criteria (e.g. implementation time, cost, business impact, strategic alignment, others) to use in evaluating solutions and alternatives.
Step #7. Decide on Right Solution
Choosing between solutions and alternatives by using your evaluation criteria will help you hit the target and get the right solution to your problem. Actually this step is the most important as you decide on a solution that should ensure the desired outcome and be aligned with the strategic goals of your business.
The right solution will be a solution that meets all or most of your evaluation criteria (I suggest you read my another post about the method “Solve My Own Problem” to learn more).
Step #8. Evaluate Your Decision
When the solution is chosen your decision is to be made and then evaluated. At this step of being a better business decision maker, you need to keep track of the results achieved and to compare them against your desire outcome.
If the results are not satisfactory, you must revisit and rethink your solution, then make necessary adjustments and repeat the decision making process.