Table of Contents
- Why Poor Decisions Are So Easily Made
- Why Exactly is This Opinion-Driven Decision Anyway?
- So, How Can You Start Improving Your Decision-Making Process Right Now?
- Final Thoughts
Disclaimer: I am writing this article because I currently work on my own decision-making process. And even though I already improved it quite a lot, it is not an easy change to make especially if you are visionary and dreamer as I am. So I decided to write down the why and how to make better decisions. Hopefully it’ll help some other small business owners to realize that there are much better ways than jumping from one idea to another or randomly trying things and much more likely failing. Think smarter, not harder. ❤ Zuzana
If you are an entrepreneur or business owner of any kind, you for sure are forced to make some very important decisions.
And while sometimes you simply KNOW that you’re choosing the right way to go (based on your skills or previous experience), more often you THINK there is some chance it may work (especially since it is working for your competitors).
And so you take the risks. And you hope. Anyone?
Why Poor Decisions Are So Easily Made
You’d be surprised how small amount of companies are actually making data-driven decisions (you know, based on some actual research and strategy). Unfortunately, the truth is that even the most important decisions are sometimes done under the pressure. Not enough resources. Deadlines. Limited information. You name it. All of these can lead to bad choices.
What makes it even worse is that the decision-making person is often the highest paid person in the company, but even then their decision are still often driven by opinions, personal preferences or even moods.
Here, I said it. The CEO title on your About page does not mean you are making better decisions than others.
Bernard Marr called it a HIPPO (highest paid person’s opinion) effect.
“A study from the Rotterdam School of Management found that projects led by senior leaders failed more often while projects led by junior managers were more likely to be successful. The junior managers had the benefit of critiques to their project plans from others that helped them build a stronger plan, while employees didn’t feel as able to give critical feedback to high-status leaders.”
Isn’t that interesting?
But when you think about it, it really makes sense. Would you tell your boss that he/she is not correct and that you (an intern/junior) would do it differently? And if so, would they really listen anyway? Or even let you make that decision?
Why Exactly is This Opinion-Driven Decision Anyway?
Simply said, its a decision base on your current opinion or mood, not on real data and research. It is not reliable in any way and may be constantly changing together with your opinions and mood changes.
The most common showcase is when you are positioning yourself in your customer’s shoes and THINK that what you like = what they like. The huge problem is that you, as a business owner, are not necessarily your business’s target customer.
Shocker? Let me give you an example.
If you’re a coach, you already know everything you are teaching (obviously). And since you are most likely targeting people who do not know anything about that topic yet, you can’t think that you have the same preferences, pain points and reasons to buy as your target customer.
Therefore, if you base your decision on your personal preferences/opinions instead of on real research of your target audience, you may be creating an offer for yourself instead. But people like you already know all the stuff you are teaching… do you see my point?
So, How Can You Start Improving Your Decision-Making Process Right Now?
Follow these 5 steps:
Step 1: Identify Your Goal.
Identify the importance of the goal as well.
Ask yourself: Do I want, need or have-to-have/do/buy this?
Want = something that would help you personally (by making your job easier for example);
Need = something that is important to get the job accomplished (if you don’t have/do/buy this, you cannot do your job);
Have-to-have/do/buy = something that is necessary for the success of the operation (if you don’t have/do/buy this, your whole business is not working).
Step 2: Set Expectations.
Instead of daydreaming, set some reasonable, short-term and long-term goals for your business based on your top values. Create a hierarchy and define some logical steps leading toward the final goal.
Step 3: Consider All Consequences.
Develop a list of pros and cons for each possible action. Be fair and include all pros and cons no matter how upsetting it may be (in case there are more cons than pros).
Step 4: Make The Final Decision.
Make the final decision based on the prior steps and stick to it. You’re more likely to get where you want to go if you set a goal and commit.
Don’t forget that especially with big decisions like when you are changing your whole business model, adding/changing services, targeting new customers etc., you need a longer time to collect objective and reliable feedback.
What works very well is 90-day period of time, where you focus on one main goal only and you commit everything to it. This will not only give you the time to really execute the goal but it will help you not to jump between fifty different goals.
Step 5: Evaluate The Decision.
After a certain period of time that you set (for example those 90 days), evaluate the data you collected. It does not really matter if you feel or do not feel that what you are doing is working until you have the numbers in your hand.
Remember that feelings and moods are not a reliable decision making factor in business, especially because they are changing every day 🙂
If you are tired, not feeling well, upset, or feeling impatient, wait a day or two (or until you are back to your normal self) before you make an important decision.