Updated: Feb 28, 2020
As business owners ourselves, we know the ongoing challenges of decision making and finding the fine balance of risk and reward. Gathering information and identifying alternatives are necessary to effectively make a decision, however, there are a few other strategies to help guide you and keep you from getting stuck at a crossroads.
Seek opposing views:
It's easy to cling to our own beliefs but the goal is not to be right, it is to find the right answers and solutions. Listen to the opposing views that others have considered that perhaps you haven’t.
Evaluate opportunity cost:
Opportunity cost represents the benefits that could have been gained by making a different decision. Although it’s not a new concept, this awareness can help make decisions with the best returns in mind, especially when resources are limited. Example: If you have $5,000 to launch Project A or Project B, it doesn’t have to be a one-or-the-other decision. Consider both the overall return for each project and when you’ll get your return on investment for each. If Project A has a potential 40% return in 5 months and Project B has a potential 30% return in 2 months, you may choose to prioritize project B first, and take the faster return to help you launch Project A in two months for the greater return.
The fear of failure. It can stop you in your tracks. A premortem is a strategy that forces you to imagine that a project has failed, and then work backward to determine what potentially lead to that failure. This allows you to build in preventive measures from the very beginning, and it instills confidence. It also sensitizes you to pick up early signs of trouble. Here is a great premortem exercise you can run with your team to help you identify all the reasons your project could fail and how you can prevent those problems.
Test or sample before over-committing:
Confidence is your friend, but overconfidence can get you into trouble. In business, there is always some degree of uncertainty. Consider your risks and how you can mitigate or limit their impact. Limit the downside by testing with a smaller sample to get answers with less at stake, and then go bigger. Consider the answers to these questions prior to testing:
How will we know if this sample had favorable results?
When will we know?
What action will we take if so? ... and if not? * Schedule review points against a metric. (This should return X dollars in sales with X dollars investment within the next 3 months.)
With each important decision, consider all of your options and stay aligned with your instincts. The ability to make a decision and stick to it is the cornerstone of good leadership. Once a decision is made, make plans and take action. Don’t forget to review your decisions and their outcomes to learn from them and continuously develop your decision making skills.