Decision Making For Dummies
Overview
Discover the best approaches for making business decisions
Today's business leaders have to face the facts—you can't separate leadership from decision making. The importance of making decisions, no matter how big or small, cannot be overstated. Decision Making For Dummies is a candid resource that helps leaders understand the impact of their choices, not only on business, but also on their credibility and reputation. Designed for managers, business owners, and anyone else who makes tough decisions on a daily basis, this guide helps you figure out if the decisions you're making are the right ones.
In addition to helping you explore how to evaluate your choices, Decision Making For Dummies covers ways to receive support for decision making, delves into various decision-making styles, reviews the importance of sifting through data and information, and includes information
on ways to engage others and make decisions collectively. Being in charge can be challenging, but with this guide, you don't have to go it alone.
- Discusses the effects of decision making and outlines the considerations that must be made to gain trust and confidence
- Demonstrates ways to communicate particularly sensitive decisions, and offers approaches for making bold decisions that challenge the status quo
- Delves into the risks and benefits of certain decisions, and shows readers the best ways to evaluate choices
- Outlines smart strategies for engaging others and drawing them into the decision-making process
Crucial decisions need to be made every day in the business world, so there's no time to waste. Make Decision Making For Dummies your primary resource for learning to choose your actions wisely and confidently.
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About The Author
Dawna Jones generates imaginative insights and applies 25 years experience in helping businesses and organizations make bold decisions. She co-designs the future of organizations, transforming them from "business-as-usual" to inclusive cultures of prosperity.
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CHEAT SHEET
In a business environment of complexity and uncertainty, excellent decision-making skills are paramount. Employees, customers, and others touched by a company's actions respond to what they trust — ethical decision-making in business has become a strategic asset. Learn how to communicate decisions effectively, how to make faster and more informed decisions on the fly, and how to incorporate your core values into your decision-making.
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Developing a formal code of ethics is an obvious way to communicate clearly what’s acceptable and what’s not. Yet words are one thing, and actions are another! Management style, character, procedures, and processes all send messages about what will and won’t be tolerated. Here are ten subtle signals you can look for to determine whether the unspoken messages in your workplace are leading decision-makers toward ethical or unethical decisions.
In a complex decision-making world, you can have every matrix, software program, or technology tool at your disposal, yet the most powerful element in your decision-making is you. And the best way to improve your decision-making is to just do it. In fact, making decisions is a lot like riding a bicycle. You cruise along until you hit a rock and fall down — and then, like any good rider, you get back up, shake yourself off, and ride on!
General Business
Concrete thinkers in today’s world are under pressure. Viewing the world through a black-and-white lens is deceptive, and your decision-making suffers, especially in a world where market conditions change quickly and you have to navigate ambiguous situations. Here are ten tips to help you make the jump from black-and-white thinking and guide you in your decision-making.
You know what you want to achieve, yet the results aren’t showing. Why? Maybe you’re not getting the results you’re after because your decisions aren’t taking you to where you want to go. Here are ten suggestions that can help you make better decisions.
Find your inner calm
Emotional stress interferes with how you process the information in your surroundings; if you’re panicking or stressed, your intellectual and intuitive intelligences are impaired.
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When you're communicating a decision, you need to know that you have successfully communicated the basic message. You also want everyone on the team to share an understanding of what the target results are so that, in the event that something unexpected happens, everyone knows what to do. The worst time to find out that you and your team are not on the same page is after you've communicated a decision and tasked your team with implementing that decision.
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Your relationship with your ego is an essential part of your decision-making expertise. Everyone has an ego — composed of your self-esteem, self-worth, and personal sense of security — and it's the ego's job is to look after your safety and security in the big world. When your fundamental emotional need to feel safe isn't met, you'll fill in the gaps, sometimes in ways that undermine your ability to make sound decisions.
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Can you make decisions swiftly and confidently when vast amounts of data cross your desk and inbox every day? How do you prioritize and rapidly respond in the midst of changing conditions? Well, you use the skills you already possess but may not be tapping into.Here's an interesting correlation: The way you process information as you drive a vehicle works for making an informed decision, as well.
A question that is often asked in business is, "What is the difference between managers and leaders?" It's an important question because the role of the manager as an agent of change has never been more important to business performance and a company's ability to adapt.
Following are five factors that foster manager-leaders:
The company rewards leadership.
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Management styles are undergoing a total overhaul as the "tell, sell, and make-it-so" approach gives way to co-creating solutions horizontally across and vertically up levels of authority. The impetus for this change is high levels of employee disengagement. This crisis of disengagement is the opening you need to convert your workplace into a better climate for decision-making and creative innovation.
Companies think in different ways. How they think is a reflection of their cultures, combined with their leadership awareness and their commitment to learning. Generally companies fall roughly into one of three categories:
High-performance companies: These companies anchor decisions to values centered on caring about employees and customers and preserving or enhancing social and environmental value.
A company is a community of people, each having unlimited potential, who agree to work with others. The quality of the interactions and relationships within the workplace dictates what gets done and how well. So when the workplace isn’t healthy, neither is the company. An unhealthy company is not an environment conducive to sound decision-making.
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Do you see risk as something to fear? Do you use it as a lens for assessing potential health and safety issues? Does being on the risky edge inspire you to dive deeply into bold innovation? The traditional definition of risk focuses on loss, injury, and destruction.
No wonder being risk averse sounds like a solid plan .
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Over-controlling cultures block innovation, which is a product of flexible thinking and a company’s mindset, as well as the ability to spot insights. An unexpected event or a disruption to the routine can be an opportunity to take a serious look at processes that stymie progress, to reinvent how things get done, and to open the door to creative solutions.
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Whether your company uses a command-and-control or consensus-building style of decision-making, you may be working with a team. Making decisions as a working group or team strengthens the commitment to implementation and helps bring all the issues to the table for consideration. In deciding who you’ll involve in decision-making, consider factors such as the following:
Who has experience or expertise that could bring value to the team?
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The need to make a decision starts when a problem needs to be solved, when an opportunity to improve a current practice presents itself, or when a need exists to radically change how things get done. Action is required. What you want to accomplish — your endpoint (essentially the goal or result) — is defined by how the change serves the company and customer.
Being clear on why you are taking action guides implementation. Establishing purpose (the why) is a must-do, front-end task because, when you know why you’re doing something, you reduce the risk of mistakes and misunderstandings when circumstances change. Purpose provides the focus for thinking, action, and all the micro-decisions that lead to the result.
When conflicts surface, fear and doubt can commandeer any kind of rational thought, and before you know it, you’ve said something you regret or done something you wish you hadn’t. The classic fear-based response is the fight or flight response — neither of which uses the moment wisely.
Common responses to conflict
To better handle tense situations, you need to understand what conflict-resolution strategy you rely on in any given situation.
You can have the best team in the world working collaboratively, but if you or your colleagues are not committed to turning the decision into a reality, you may just as well go to your favorite coffee shop, order copious amounts of caffeine, and buzz out. Commitment can be undermined by the following:
Poorly thought-out plans or decisions: Plenty of half-baked ideas end up being implemented without being thought through.
Consensus is a group decision-making process in which the final outcome requires agreement by all parties involved. To gain consensus, you invite diverse perspectives so that the groups can explore the issue from different angles. Consensus adds value by building support and commitment for implementation of a decision and action plan.
After you gather information, the next step is to make sense of it. In short, it’s time to analyze the data. Factors that determine how you’ll proceed include how much time is available and whether you need to justify your decision to investors, customers, employees, or shareholders.
Follow these steps to sort and analyze the information you’ve gathered:
Identify the facts, data, and raw numbers relevant to the decision and determine how you’ll crunch the numbers so they can inform the decision or selection of options.
Where order and structure are important to a company, employees are expected to follow established procedures. Such a “flight plan” clarifies who does what so that each team member knows his or her role and what to expect. These various factors — management style, working environment, authority structures, and so on — influence the dynamics of decision-making.
In a business environment of complexity and uncertainty, excellent decision-making skills are paramount. Employees, customers, and others touched by a company's actions respond to what they trust — ethical decision-making in business has become a strategic asset. Learn how to communicate decisions effectively, how to make faster and more informed decisions on the fly, and how to incorporate your core values into your decision-making.
General Business
Most decisions happen instantly (the whole decision-making process may be over in milliseconds) and are made entirely without your conscious knowledge. When you don’t have time to consciously work through the decision-making process, what do you do — take a wild guess? No, you use your intuition.
Intuition is the ability to know or identify a solution without conscious thought.
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If you look back on the best and worst decisions you’ve ever made, you’ll probably discover that you don’t make the best decisions in stressful circumstances. But stressful conditions happen all the time, you say.
There’s a difference between a stressful event that must be addressed or resolved (equipment breakdown on your production line is jeopardizing your being able to complete or ship a big order to an important customer, for example) and the stress caused by being in a work environment — often characterized by unreasonable workloads, unsupportive managers, excessively long work days, and so on — that puts employees on high alert 24/7 with no end in sight.
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Today, the lines between private and public life and between work and personal time are blurred, and it’s easy to lose touch with what is important to you and to what you want from life. Beliefs you’re unaware of also get in the way of your changing course, even when you want to.
They can also prevent you from recognizing changes that are going on around you, putting you and your company in a vulnerable position.
Depending on the issue you’re confronting or the reason you’re taking action, you may have to conduct extensive research, consult with colleagues who have already successfully faced a similar question, and consult with employees and customers. When doing so, your intention must be to learn rather than to confirm that your own ideas are right.
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Whole books have been written on the myriad topics related to company finances. Here are a few things to consider so that you are prepared when the time comes to make strategic and operational financial decisions.
Securing financing
Financing is a top issue for all companies, but the good news is that the methods for finding funding expanded after banks became more risk averse, and innovative lending and funding approaches emerged to meet the needs that the banks weren’t prepared to address.
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Sometimes a crystal ball would come in really handy for forecasting the results of a decision. In the absence of a crystal ball, the next best thing is to expand your thinking and broaden your perspective. The ability to see the entire landscape of possible outcomes and consequences — even ones that obscure possibilities — after a decision is implemented is a real skill and an advantage.
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Humans are complex beings, and that complicates decision-making. Welcome to the world of bias and prejudice, where, even when you think you’re relying on rational thinking, there’s a good chance you’re not. Ingrained bias and prejudices override rational thinking. The table shows examples of hidden biases and how they sneak into thinking.
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Many people fool themselves that their perception of things is the only right way to see the situation. For decision-making, this mindset creates a blind spot. As a result, you can’t see what’s obvious to others. How you perceive reality depends on your mindset and the tools you use to perceive reality, which include the following:
Vision: Vision is the capacity to see the world holistically, as an interconnected and interrelated web of relationships linked in patterns.
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Many people confuse intuition with fear and impulse, but the three are very different. Yes, all three can spur action, but the actions spurred by fear and impulse don’t lead you in the right direction as reliably as intuition does. That’s why being able to distinguish among the three is an important part of honing your intuitive abilities.
In years past, just about any self-respecting scientist stayed well away from any sort of study of intuition because it was seen as some New Age-y pseudoscience. And for years, this neglect resulted in the perception that intuition is mystical, relied on by people who 1) make decisions using emotion instead of rational logic, and 2) seek the advice of mediums.
You make decisions constantly. You probably don’t think much about what makes one decision effective and another ineffective until things don’t go according to plan. So how do you make all these small and large decisions every moment of every day?
Every person — and every company — uses each of these approaches.
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Beliefs can limit or expand thinking. As Henry Ford said, “Whether you think you can or can’t, you’re right.” In other words, your beliefs can limit your view of what is and is not possible.
Check out limiting beliefs
The table lists examples of limiting beliefs. In the left column are personal limiting beliefs; in the right, are the usual business limiting beliefs.
An organization that delays making a decision for too long is most likely stuck in the analysis stage. If you were to ask why a decision hadn’t been made, you’d hear reasons like, “There isn’t enough information,”; “Conditions are changing too quickly,”; or “We have too many options to choose from.” The result?
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If you attended business school, chances are you were taught only about rational decision-making processes. Traditional business schools emphasize the use of the rational approach, assuming that the business world is predictable. Unfortunately, it isn’t.
Rational approaches have their application, but in unpredictable, fast-moving, complex, and high-stakes environments, you get faster and more accurate decisions when you use intuition.
Transparency of information creates trust, which is important in business environments and vital when change is being made. Decisions made behind closed doors are always suspect. Therefore, after the decision is made, you need to communicate it. How you communicate the decision is everything.
Basically, you want your message to summarize the decision you’ve made, why you’ve made it, and what it means for the audience you’re addressing.
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In decision-making, the term options refers to the different alternatives or solutions under consideration. Whether you are buying a computer, upgrading office space, or hiring an accountant, for example, you must decide which alternative offers the best solution. Some decisions, like purchasing equipment, must result in the selection of only one out of several alternatives.
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To increase your ability to access and interpret inner guidance when you need it most, you can develop your intuition muscles. Here are some suggestions:
Make decisions. Don’t wait to be perfect. The more experience you have making decisions, the better. Whether your decision proves to be right or wrong helps you know what works under specific circumstances.
Companies, like people, have addictions that make it hard to see alternative and better ways of doing things. As a result, decision-makers and company cultures repeat the same old responses, even when those responses don’t yield the results that were hoped for. Here are some addictions to watch out for in your company:
Addiction to perfection: Perfection doesn’t allow any mistake, any exposure to risk, or any kind of vulnerability.
Conflict happens. What makes it valuable (or not) is how you use it. Conflict can be used to either accentuate differences or deepen understanding of what makes a person tick. The difference lies in asking the question, “What can you learn from this that adds to shaping a solution, achieving the goal, improving understanding, or promoting growth?
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The purpose identifies the reason(s) you’re taking action. It answers the big “Why are you doing this?” and “Why do you exist?” questions. Knowing the purpose confirms priority and focus for both short-term results and longer term direction. Being clear about purpose is important for when you’re making both immediate decisions (“What are you trying to achieve by taking action?
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Core values reflect what is important to your company. They serve as the unshakeable foundation for what your company stands for in good and bad times. When integrated into decision-making, core values are part of decision-makers' mindsets at every level in the company.
Consider core values the nonnegotiable part of your company's reputation, sustained by the commitment of executives and employees at every level to live those values in their decision-making and in their relationships with company personnel, customers, suppliers, and communities.
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In crowdfunding, customers or investors provide direct financing for a product or service. Crowdfunding uses the web to collaboratively fund projects, company growth, or expansion. Kickstarter and Indiegogo are two of the best known project-funding platforms in North America.
Crowdfunding is an off-shoot of crowdsourcing where many people collaborate (by contributing ideas, labor, testing) to help make or improve a product.
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Operational decisions target how things get done both efficiently (speed and best use of resources) and effectively (how well did it work?). Operational decisions occur on a daily basis and can be implemented quickly. The direction you set guides what gets done. The values of the company, conveyed through leadership and the workplace culture, guide how work gets done.
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Although some business decision-makers are unscrupulous, most don’t start out with the intention to make unethical decisions, but they make them nonetheless. So if the problem isn’t intent, what is it? Unethical decisions can be a consequence of skewed or narrow thinking, on-the-job pressures, and other factors that you probably don’t realize set the stage for ethical transgressions.
When you are limited by time, money, resources, or expertise, partnerships and joint ventures can be of tremendous value. In a joint venture, two companies agree to combine their resources to accomplish a specific task, and the venture exists for a specific time period. Joint ventures provide companies large and small with expanded capacity to reach new markets or to market products and services.
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Over time, business cultures become second nature. So does business decision-making. After you have the workplace culture or the decision-making dynamics firmly established, the business virtually steers itself. As helpful as this phenomenon is most of the time (it lets your brain concentrate on things that need your attention), there is a downside: Your busy mind stops paying attention to whether the habits you’ve formed are good ones or not.
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To be successful in business, you need to focus on both the short term and the long term. You give short-term focus to issues that are concrete, immediate, and predictable. Quarterly reports place focus on the short term, for example. Long-term focus relates to issues that are more vague, uncertain, and perhaps visionary.
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Demands and expectations — and how those things are communicated — affect everyone in a company: clients, customers, coworkers, employees, and so on. In very tense settings, the pressure and ensuing stress can put people at risk, both emotionally and physically. When you notice that working relationships aren’t heading in a positive direction, take action to reduce the pressure by lightening things up.
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When faced with a business problem — something is not going or performing the way you expect — you go into problem-solving mode, in which you try to uncover the cause of the problem and then remedy it. You can take one of two approaches when working with problems:
You can seek out the root of the problem — the thing that is impeding the desired outcome — and fix it.
Procedures are invaluable to someone new to the job. They define specific parameters so you know exactly what to do. However, as you gain more experience, procedures become so ingrained that you don’t need to refer to them anymore except under unusual conditions. Rather, you are able to spot cues and signals that tell you what is going on.
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The best organizational structure is one that offers clarity, flexibility, solid processes, and agreements about how decisions are made; clear communication regarding goals; and ways to monitor and provide feedback. Such structures create the stable framework upon which working relationships can function effectively.
Organizations are communities of people working together. When an organization is under pressure and/or stress and not doing well, the people in it are impacted. People under stress make poor decisions. It’s not their fault. Stress occurs when high demands are combined with low levels of personal control over those demands.
There are several ways to see whether the decisions you’re making will ultimately lead to the results you’d hoped for. Fortunately, you don’t necessarily have to crash and burn first (though crashing and burning tends to get some entrepreneurs’ attention for the first time). Instead, you can step back and reflect, learning from the past in order to make better decisions in the future.
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Decisions made at the top of the organization set direction and guide goal setting. These decisions tell staff and customers what is important to the business and what it means to them. As a result, the way decisions on direction and goals are communicated sets the tone for how the goal gets achieved and whether people do their part out of obligation or enthusiasm.
Successful companies are ones that recognize and deal effectively with risk. Whether risk works for or against effective decision-making depends on how you work with it. After all, risk is a matter of perception, and people perceive risk differently.
A great deal of how you perceive risk is based on factors outside your conscious awareness.
You can see a situation more clearly when you haven’t got your nose in it. For that reason, when you gather information, you want to maintain some distance. Doing so helps you objectively assess the information you receive. You’ll be better able to see which questions you need to ask and to recognize who needs to be involved.
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Strategic decisions are typically made at a higher level, have higher risk, and focus on a company’s longer term interests. Strategic decisions set direction and point toward the long-term vision.
Here’s an analogy. Think of a road trip. You first pick a destination (at a high level, this is the equivalent of your company’s vision; at the project level, it’s the equivalent of a goal), and then you decide which roads you’ll take to get there.
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Traditional companies, born in the days when companies were managed like machines (a model that pervades today), ignore the value of emotions, viewing them as irrelevant to rational decision-making. This view assumes that people who operate like robots and don’t allow feelings to cloud their intelligence make better decision-makers.
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Intuition is the process of perceiving or knowing things without conscious thought. When you access your intuition for decision-making, you reap a number of benefits, such as the following:
You can make fast, effective decisions in complex and unfamiliar situations and in high stakes, dynamically changing situations, which are often standard at the strategic and executive level.
What kind of decision-maker are you? To help you find out, review the different styles of decision-making. These styles are conveniently labeled, but how you apply them depends on each situation you’re in and the people you’re with. The following is a list of decision-making styles, drawn from the work of Kenneth Brousseau, CEO of Decision Dynamics:
Decisive: With decisive decision-makers, time is of the essence.
The kinds of decisions you face fall anywhere on a spectrum from strategic to operational/frontline. If you’re a small business owner — until you add staff and distribute responsibility, that is — you make decisions across the full spectrum.
If you’re in a medium-sized to large company, the kinds of decisions you face depend on how your organization distributes decision-making authority and responsibility: centralized at the top or decentralized through all levels, for example.
When decisions don’t go as planned or teams don’t perform as well as they could, egos are often involved, particularly as you move higher up the chain of command.
The fact is that the ego gets blamed for a lot of poor decisions. Fair enough. When the boss is critical or puts an employee down in order to feel more important himself, blaming the ego makes sense.
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Emotional and social data arising from interpersonal relationships and the degree of happiness or stress directly impact decision-making. The data that reaches the brain from the heart has been well documented to affect mental functions.
The heart performs an important role that goes beyond pumping blood. The heart’s 40,000 neurons are a complex information-processing center, able to sense, regulate, and remember.
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Research conducted by the HeartMath Institute suggests there are three different categories or types of processes that form your intuitive strengths, or channels: implicit knowledge, energetic sensitivity, and nonlocal intuition. Your intuitive strengths aren’t limited to only one of the three strengths. You can access one or more at a single time.
In fast-moving, complicated, and unpredictable situations, decision-makers can hesitate because they fear making a mistake or are overwhelmed by uncertainty. Hesitation, once it becomes a habit, weakens personal and organizational confidence. But make no mistake: Doing nothing is a decision. If you choose to do nothing, make sure it is a choice instead of a default position for coping with the unknown.
Timing is everything. When assessing any decision, you have to figure out whether your action plan needs to be put into effect now or whether it can wait. Some companies operate permanently in crisis mode, treating everything as urgent; others apply a more strategic approach and rely on an intuitive sense for timing entry into new markets, for instance, or initiating new product development.
Consider using risk as an opportunity to make a radical leap of trust. Companies often wait for a crisis before changing, yet doing so narrows options and ultimately pushes the company to panic rather than to come up with a creative solution. Although a crisis can be the impetus for making a radical transformation, you don’t have to wait for a crisis before you make a bold move.
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Slow decisions are costly, and the inability to get real-time information is frustrating to staff. Anything that slows down the information exchange or cooperation from team members affects the speed and accuracy of the decision. One of the simplest ways to accelerate decision-making is to pay attention to the design of the workspace.
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Vision is a long-term view that articulates the company’s contribution to the world. Consider it a visual and visceral description of what inspires the company’s decisions and guides direction. It hooks your imagination.
For vision to inspire action, it must emotionally hook customers, employees, and supplier networks that contribute to company performance.
Vulnerability — the willingness to be changed and to let the walls down — can be a strength in business leaders. Without it, you can’t lead, learn, or do anything other than what you’ve already been doing. Lack of vulnerability creates an exceptionally threatening world, in which those at the top defend their companies and themselves from risk, from information, and from meaningful relationships.
A company’s position on the innovation curve indicates how it thinks about, embraces, or adapts to change. On one end of the innovation curve are Innovators; on the other end are Laggards:
Innovators: A very small percentage (2.5 percent) of companies and decision-makers fall into this category. They break the rules because, as far as they’re concerned, there are no rules.
The Pugh Matrix, designed by Professor Stuart Pugh, answers the question, “Which option will most improve what is in place now?” by including a baseline in the calculations used to weigh comparative criteria. The use of the baseline indicates whether the option will positively improve or negatively subtract from what is currently in place.
Most decisions that backfire do so for two reasons: The people who must implement them aren’t involved in the decision-making; the decision fails to take into account the emotional needs and values of the customer (or anyone else impacted by the implementation).
These needs and values aren’t limited solely to the impact that the decision has on people.
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