How to make good decisions about growing your business

Oct 4, 2010

The foundation of lasting, profitable business growth is the ability to make consistently sound decisions (then, of course, to implement them). Many otherwise great leaders trip themselves up by having a too-rigid concept of how effective decision-making works. Here’s what I mean –

Assuming you have good data to hand, all decision-making is a playoff between three things – how fast you need or want to make the decision, how transparent you want the process to be to others, and how collaborative you want the decision-making process to be:

Ideal decision-making

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Rarely can you have all three in play, as shown above. Usually, creating a high-quality decision involves compromising, or ditching altogether, one of the three legs.

For example, making highly effective decisions about long-term strategy requires that we be both collaborative and transparent, but almost always, such decisions arrive slowly:

Strategic decision-making

Contrast that with what needs to happen when faced with a complex short-term problem (think Apollo 13 – and if you haven’t seen it, go watch the movie – it’s a great lesson in how to make good decisions under pressure). In this case, we need to be collaborative (every good idea needs to be heard), and we need to be fast. Transparency – communicating in detail as we go through the decision-making process – will only slow us up and must to wait until after we’ve fixed the issue:

Problem-solving decision-making

The third option is where a leader needs to take a decision based on clear ethical or moral grounds – think of the PR decisions around the recent BP oil spill (not the operational decisions around fixing the spill – those fall into the second group above).

Here, ‘collaboration’ is usually unnecessary (the moral principles involved are usually quite clear enough), and invoking it is in fact a fudge and will make the resulting decision seem contrived and weaselly:

Principle- or ethics-based decision-making

What type of decisions do you face this week? Which model is right for each?

And more importantly, which of the models above, if any, are you wedded to? Which of speed, transparency and collaboration do you need to use less? Or more?