No matter what you face later in your business career, nothing will ever test your skills as much as the first few months or years when starting up a business. Nor will anything ever be quite as exciting as the moment when you realize that a decision you were really nervous about has paid off and that you can make a big leap forward because of it.
The pressures you face as a manager in this situation are considerable, and this makes the decision-making process vitally important. Our understanding of what those processes involve, however, is a continually evolving thing. By improving the strategy that you bring to decision-making, you can take some of the pressure off and get much more consistent positive results. This article looks at how you can achieve that.
Establish clear goals
Do you have a vision for your business? Do you know how to translate that into clear, specific goals in both the short and long term? Many businesses flounder, especially in the early stages, because they don’t align the decisions they make with their goals. To do the job properly, you need to know exactly what you’re aiming for so that each decision can be evaluated in terms of how it helps you to progress toward your target.
It’s not unusual for start-ups to have multiple priorities, and sometimes these may even conflict with one another. Decisions that advance you in one area may set you back in another, but this is no excuse for approaching them haphazardly. Before you begin making individual decisions, take the time to define your strategy and get your goals in order. Work out what you are willing to sacrifice, where you can afford to deal with delays, and what needs to come first. Approach every decision with these factors in mind.
Formalize the decision-making framework
To succeed in business you need one of two things: luck, or awareness of the role of luck in many of the most highly praised business decisions. That is, you need to recognize that on most of the occasions when bold business leaders decide to go it alone and make decisions based purely on instinct, it’s luck, rather than genius, that lets them get away with it.
We simply don’t remember the leaders who tried the same approach and failed. Although it can be tempting to try to make yourself look like a genius, the most reliable route to success, at least in the early stages, comes from demystifying the decision-making process so that you can get a much clearer idea of what works and what doesn’t.
Break it down into stages, make lots of notes, and do what your grade school teacher told you to do: “show your working out”. This will make it much easier to get other people to assist with the process, and much easier to evaluate it in retrospect.
Never skimp on research
Luck aside, good decisions are always informed decisions. Although you obviously won’t want to miss out on time-sensitive opportunities, taking as much time as you can to ensure that you have fully investigated a situation is something that will almost always pay off. As a start-up—at least if this is your first company—you may be hampered by a lack of familiarity with research facilities, so a good place to start, even before you’re thinking about specific decisions, is with short courses that will improve your knowledge in a given area. These are often available free through local business support organizations.
You should also explore the business sections of your local libraries in order to familiarize yourself with what’s available and talk to the staff, who can often provide helpful advice. You should also learn how to read and properly evaluate research papers, and develop your personal networks with a view to being able to draw on the expertise of friends and former work or college connections, especially if they work in the same or related sectors.
Make key decisions in the mornings
In the context of exploring the mechanics of decision-making, suggesting that the time of day when they are made matters might sound like superstition, but there is good science on this. We are much better at making big decisions well if we do it first thing in the day (as soon as we’re up and feeling refreshed), for the simple reason that, though it varies from one person to another, the amount of energy which we have for making decisions is finite.
Life is full of little decisions—what to have for breakfast, which turns to take when trying to dodge traffic on the way to work, or how to respond to each email waiting in the work inbox—and they all eat away at our energy. When you hit those moments toward the end of the day when you just can’t face having to deal with another tough decision, you’re in a state known as decision fatigue, and you’re far more likely to make poor decisions just to get them out of the way.
Be aware of your cognitive biases
Recognizing your vulnerability to decision fatigue is just one element in the process of understanding your own limitations as a decision-maker. The more you accept that you, like all human beings, have certain inbuilt weaknesses, the more easily you will be able to work around them. One of the most common is confirmation bias, which inclines us to assign more value to information that we already believe, and which can easily distort efforts to make rational choices.
People are also vulnerable to giving undue weight to the most recent information they have acquired, or to information that is attractively presented. We also tend to falsely assume that things that unexpectedly pop up in our memory are important. Again, when you set out your decision-making process and go through it step by step, you will be in a stronger position to analyze it rationally and filter out these biases.
Listen to your team
When you’re serving as a manager in a small business, that’s generally because you’re the most confident or have the best track record when it comes to decision-making, but that doesn’t mean that others have nothing useful to contribute. Especially in decisions relating to operations, it’s important to consult the whole team, including employees working in the production process.
Any or all of them might have useful insights to share. Make it clear from the outset that you will have the final say, but invite them to contribute their ideas. It’s also good to draw on their specialist knowledge—your finance officer will be able to fill you in on any important considerations pertaining to the economic climate, while your marketing manager will be able to analyze the language of proposals and identify any hidden areas that might raise concerns.
Even if what you learn doesn’t turn out to be helpful immediately, you will find that listening to your staff does a lot to increase loyalty to the business and build strong bonds within your team.
Seek out differing views
There’s a longstanding culture in the business world of manufacturing consent by pressuring people to agree with their bosses, and this can be incredibly damaging when it comes to decision-making. It’s generally less of a problem in start-ups because members of the business team are likely to be on a more equal basis, and have often known each other as friends before starting to work together, but even in this situation, those in management roles can easily become domineering, especially if they’re feeling insecure.
Needless to say, those who do that miss out on the advantage of hearing critical voices which might offer valuable insights during the decision-making process. Similarly problematic, and much more of an issue in small businesses, is filling up the team with people who seem as if they’re obviously going to fit in socially, for example, people from the same background with the same interests.
This can be detrimental, as businesses with more diverse teams tend to do much better because they’re able to bring a wider range of perspectives to bear on any given problem.
Examine alternative possibilities
One of the reasons why drawing on different perspectives is helpful is that it’s important to establish, before making a big decision, that you’re fully aware of your options. One unfortunate side-effect of pressure is that it tends to narrow our thinking, so that we only see a small range of possibilities, or even come to view decisions in black and white terms.
To people who are not directly experiencing that pressure, or who have very different experiences to draw on, other possibilities might be apparent. This is particularly helpful in contexts where people you are negotiating with are deliberately trying to narrow your perspective, which is not an uncommon technique.
When you are aware of a wider range of options, you can analyze each of them and assess what they have to offer. Even if you have already worked on narrowing down your list of choices, if nothing that remains suits your aims, it’s worth stepping back again and considering whether or not the options you rejected could work out better for you after all.
Make use of predictive analytics
Basing decisions primarily on your own experience and that of your team, especially if you’re new to the world of business, is only going to get you so far. To better inform the process, you can draw on large-scale statistical data, using predictive analytics to make better strategic decisions, which students can learn how to do at reputable institutions such as Marymount University.
This has long been a tool available to managers, but it has been significantly enhanced by the use of AI, which makes it possible to bring much larger data sets into play. At Marymount University, the curriculum focuses on delivering up-to-date courses that keep pace with technological change, ensuring that you are able to hit the ground running when you launch.
More and more managers are now bringing in AI assistants to operate alongside their boards when making decisions, providing a quantitative complement to their own qualitative assessments. This can also help with the process of weeding out bias. AI might not always be right, but if its assessment strongly disagrees with your own, that is a good sign that you’ve misunderstood something and need to go over your work again.
Don’t try to copy your heroes
When you have a difficult decision to make, it’s tempting to ask yourself what the business leaders you most admire would do. This is a bad idea for two reasons. Firstly, if they’re running big, established businesses, then they’re operating in a very different strategic environment.
Secondly, they’re not you. They will be factoring in different personal strengths and weaknesses as well as different business priorities. Rather than relying on role models like this, it’s much better to draw on large-scale analysis of what other start-ups have done in the situation you’re facing, looking at what has worked and what hasn’t. Pay particular attention to decisions made in similar economic environments.
The downside of building all these additional steps into the decision-making process is that it can sometimes leave you feeling overwhelmed and eat away at your confidence. When this happens, take a step back if you can, and reflect. It’s really valuable to have other factors informing your decision-making, but in the end, the choice is yours, and you can’t afford to keep second-guessing yourself. What’s more, situations will inevitably arise in which you don’t have time to go through the full decision-making process and you do have to rely more on your gut.
The thing to be aware of then is that the more time you have spent making carefully considered decisions with a lot of additional input, the better your instinctive understanding of the best way to proceed will be. Good instinct doesn’t come out of nowhere—it develops in response to exposure to different ideas. Take a careful approach when you can and then, in situations where that’s not possible, you will be justified in having more confidence in yourself.
Measure and analyze results
Whatever happens in the aftermath of your decision, you’ll do a better job in the future if you can capture as much information about it as possible. This includes everything from the associated financial data to knock-on effects on operations, potential impacts on customer confidence, and the way that it raises or lowers morale within your team. This will give you a clearer idea of what’s at stake in future scenarios, enabling you to mitigate some potential risks and put yourself in a position to take advantage of potential benefits.
Quantifying data where possible will help you to produce a more focused analysis and compare the results of different decision-making experiences so that you can measure the impact of changes in your approach. You will then be able to track your improvement over time as you fine-tune the process.
Recognize your failures as learning opportunities
Inevitably, there will be times when you make the wrong decision. The real trick to success as a business manager lies in the ability to bounce back after this has happened. Nobody is entirely unsentimental about business, even if some people are good at faking it. It’s natural to feel upset about mistakes, and easy to respond to that feeling by trying to forget about them and brush them away. Don’t do that. By acknowledging and accepting them, you can not only learn to manage your emotions more effectively in the future, but you can also take advantage of the rich learning opportunities that they provide.
A mistake allows you to evaluate your decision-making process and understand where you went wrong. You can then refine and improve your approach to reduce the risk of similar errors occurring in the future. Over time, every mistake that your business survives will help you to make fewer mistakes overall.
Optimize and apply yourself
Once you demystify the decision-making process and begin to understand it as something practical that you can break down into discrete units like any other aspect of business, it will become much less intimidating. You really don’t need to be a genius to do well, and although luck will remain a factor, a carefully reasoned approach will do a lot to tip the odds in your favor.
Good decision-making is all about recognizing the strengths and weaknesses of yourself and your team, building on the former, and working around the latter while obtaining useful data and subjecting it to effective analysis. That’s something that anybody can learn. As you get better at it, you’ll grow in confidence and your team will enjoy the confidence that comes from having a tried and tested leader at the helm.