Since you make hundreds of decisions every day, chances are few things seem more obvious and innate than decision-making. Think about it. Over the past several decades, you’ve probably made hundreds of thousands of decisions about virtually everything. You should be a decision-making virtuoso.
However, when does doing something a lot make someone great at it? It doesn’t. Practice doesn’t make perfect. Perfect practice makes perfect. If you or I do something imperfectly over and over again, we simply get more and more imperfect results.
The reason this matters so much is because you and your business are the sum total of the decisions you and your team have made over the years. For good or for bad, every decision you’ve made has had an impact on the company you’ve built and the person you’ve become.
So, it just seems to reason, that if you want to scale your business and become a major player in your industry, you’ve got to study and keep improving the decisions you’re making. From strategy to marketing, from hiring to firing, from sales to customer service, from time management to financial management, from innovation to optimization, etc. You have to get better and better at making the best decisions possible for you and your company.
As the saying goes, “What got you here, won’t get you there.” To get to the next level, you can’t keep thinking or deciding at the same level that got you to where you are. You have to raise your game. And one of those game raising skill sets for any leader is increasing their decision-making capabilities.
So, how can you make better decisions as the leader of your business? Well, here are four keys that will help you improve your decision-making.
I. Remove All Emotion
I was having lunch with a friend the other day when he said, “I have a problem I’d like to discuss with you. I need the ‘Bruce Johnson, totally unemotional, detached, and fully rational perspective.” We both laughed. But his point was well taken. He knew he was too close to the situation (plus, he’s a more fully-developed human being with a heart as opposed to me … :-).
The challenge for most leaders, when it comes to decision-making, is that they get too emotionally connected to the problem. Sometimes it’s because it’s something they’re passionate about. Sometimes it’s because the issue strikes deep at the core of who they are. Sometimes it’s because the issue is a challenge to them. Sometimes it’s because it’s a relational conflict. Sometimes it’s because it’s an ego issue. Etc. Regardless of the origin, when emotion gets engaged, it’s infinitely harder to step back and see a problem clearly.
When an employee has done something wrong and it’s cost you time and money (and you warned them not to do X), it’s easy to lose perspective and want to make a rash decision. However, that’s not how great leaders made decisions.
Great leaders are able to separate themselves and their emotions from their decision-making. They’re able to step back, remove their personal emotions and think rationally, “What’s the best decision to make here for the company as a whole?”
There’s nothing wrong with being passionate and emotional. In fact, they’re critical if you want to be a great leader. The problem is when you combine them with decision-making, that’s when something bad usually happens.
So, how are you at removing your emotions from your decision-making?
II. Make Sure You’ve Identified the Real Problem
This is another one of the classic mistakes that most business owners and entrepreneurs make. They tend to assume that whatever the presenting problem is is the real problem, which is often not the case.
For example, let’s say Angela is a problem employee. She’s been with the company for the past two years. She’s a C-player at best. She doesn’t follow directions well. She’s usually late. Her work usually needs a fair amount of correction, etc. So, what’s the problem?
Well, most business owners and entrepreneurs would say, “Duh, the problem is Angela. Fire her.” But not so fast. Is Angela the real problem? I can immediately think of several potential real problems that ought to be addressed.
- Is the real problem the hiring process (i.e. how did Angela get through the hiring process in the first place)?
- Is the real problem that Angela didn’t go through any screening tests?
- Is the real problem that the on-boarding process needs an overhaul (or that there isn’t one in the first place)?
- Is the real problem that Angela’s boss hasn’t been managing her (i.e how has this gone on for two years)?
- Is the real problem that Angela’s job description doesn’t have clear expectations? Or maybe what she was hired for and what she’s supposed to be doing right now are two different things?
- Is the real problem that there’s an institutional failure because there’s no culture of accountability?
- Is the real problem that there’s no personal development or training process in place? Etc.
In other words, just because a problem presents itself as a problem does not mean that’s the real problem that needs to be solved. Frequently, there’s another problem that needs to be addressed.
So, when you’re working on solving a problem, do you ever stop and ask, “Have I correctly identified the real problem or not?”
Note: the above has nothing to do with whether or not Angela should be fired. The answer is, “Yes. She should be fired. She shouldn’t have been hired in the first place. A C-player who doesn’t follow directions, shows up late and produces poor work should be fired.” That’s the easy decision. The hard one is figuring out what the real issue is that you should be investing your time fixing.
III. Clarify The Result You Actually Want
Again, if you’ve identified the wrong problem, you’ll probably be shooting for the wrong goal. But even when you’ve identified the real problem, most business owners and entrepreneurs don’t stop long enough to ask the question, “What’s the real objective here? What result do I really want?”
For example, let’s say your revenues aren’t growing aren’t growing as fast as you’d like. I know, imaginary problem. You’ve identified that the real problem isn’t a revenue problem, the real problem is a lack of enough qualified leads to generate the kind of revenue you’d like to see. Good call.
The natural conclusion for most business owners and entrepreneurs I know is, “Well, the solution is we need a better marketing campaign or marketing system.” Fair enough, but there are 150 different ways to solve that problem. You need a little more detail because, at the end of the day, you don’t really care what system you use, you want a result from that system.
In other words, if you want 10 qualified leads per month or 100 qualified leads per month or 1,000 qualified leads per month, those are the results you want. And each of those numbers requires a radically different marketing approach.
Moreover, you probably don’t just want any lead, you probably want a very narrowly defined lead. “Someone who has money,” is probably not a good lead. If your niche is professional service firms, you probably still have some additional criteria for what a qualified lead looks like. For example, you might want to say,
“We need 25 qualified leads per month of owners or managing partners of accounting firms, law firms, consulting firms and/or architectural firms that have between 10-50 employees, are generating north of $2M per year and are located in South Carolina, North Carolina or Georgia.”
Based on your closing ratio and average transactional value, along with your capacity to actually serve that many new clients per month, that is the result you’re after.
In other words, if you want to become better at decision-making, don’t stop at the presenting problem. Always look deeper for the real problem and then clarify the actual result you really want (which will then help you select the right option for solving it).
So, how do you do at taking the time to clarify the result you actually want when you’re trying to make a decision?
IV. Challenge Your Assumptions
This fourth and final key for today is one of my all-time favorites. Why? Because sometimes we’re wrong.
I don’t know if you know who Ray Dalio is but he’s the founder of Bridgewater Associates, the world’s largest hedge fund. He recently came out with a book entitled, Principles, which was originally a document he wrote internally about lessons he’s learned over the years. One of his classic lines is,
“One of the biggest problems of mankind is that people get attached to the opinions in their head and don’t properly stress test them so they end up making bad decisions.”
I love that! As owners and CEOs, we tend to trust our guts. If we think a thought, we tend to assume it must be right because, well, we thought it and our track record is pretty good compared to other people who haven’t been as successful as we are.
But that’s not a great advertisement for decision-making, is it? And frequently, because we all have preference bias and blinders (as well as we all lack full information), we can often miss something.
A better idea to ponder is, “How do I know I’m right?” Or “How do I know if the assumptions I’m making are correct?” For example, you may assume that the revenue problem is related to lead generation, but what if that’s not the real problem?
- What if the real problem is your lead conversion?
- Or what if the real problem is your training program?
- Or what if the real program is your copy?
- Or what if the real problem is a strategic one, like you’re going after the wrong market or the wrong segment of your market?
If you get the assumption wrong, you’ll probably get the solution wrong as well.
Just because you’ve assumed something to be true does not, in fact, make it true. That’s why great decision-makers train themselves to always challenge their assumptions. And the larger your business, the more important this skill is. Why? Because the impact of the decisions you have to make is always larger. That’s why you have to become great at this.
So, how often do you challenge your own assumptions?
Well, there you have it. Four keys to making better decisions every day.
- Remove all emotion
- Make sure you’ve identified the real problem
- Clarify the results you actually want
- Challenge your assumptions
If you make these four keys the foundation of your decision-making process, you’ll be way ahead of your peers. And you’ll have a much higher probability of building a great scalable business.
To your accelerated success!