Decision Making for Senior Executives
Most companies fail not because of unforeseen competition, lack of cash, bad products and services, or dwindling market share; but rather because of poor business decision making processes. Decision making is the single most important task of an executive. Why? Because business decisions by definition allocates company resources and changes direction. Curious about the other aspects of decision making read on…..
The Challenges of Decision Making
.Decision making seems deceptively simple. We do it every day. However, it is the single most important activity a business executive can do; sadly most do it poorly. Poor business decision making is most evident when solving business operations problems. Operational problems often masquerade as dwindling market share, poor employee morale, ineffective or noncompetitive products and services, incessant customer complaints, and out of control costs. These are all symptoms; not problems. Surprised? Don’t be. These deadly symptoms needlessly sap the organization of its effectiveness consuming management’s time and company resources. They further devastate the company by conspiring to defocus management from the most critical objectives, including making the decisions today that will affect the value of the company tomorrow.
Management feels obligated to address these symptoms masquerading as problems by gathering the facts, then generating agreement on the path forward. It all creates a false sense of security that time is being used effectively and progress is being made. It is not. The market only pays for effective decisions that exploit opportunity. All else is an illusion.
Making Effective Decisions
Effective decision making does not start with facts, data, or information, but rather with opinions (Drucker, 1984). The need to quickly solve problems encourages mischaracterizations of the issues. Ignored are principles learned in grade-school about taking the time to set up or understand the problem’s root causes. The poor characterization of problems leads to even poorer solutions and wasted resources.
Making effective decision recognizes that there must be a choice among alternatives requiring judgment that will allocate resources for a new direction. Decision making starts with examining the variety of opinions, not facts regarding the situation. Assumptions about the situation’s realities must be examined before facts are uncovered. Facts can only be determined once there is agreement on what is relevant. Once the facts are agreed to then they can be grouped into relevant data and analyzed for information. Business decision making requires the synthesis of information on alternatives. Every decision has alternatives. If there are no alternatives, then there is no decision to be made. With agreement on the best alternative, then action can be taken to allocation resources for implementation. If there is no action to allocate resources, then there is only the intention to make a decision. The lack of resource allocation will doom any decision.
Making a decision effective requires involving those that must carry out the decision as an integral part of the decision making process. Decision implementers must buy-in with an understanding and support for the required results.
Summary
Effective decision making can be learned like any other skill. Like any other skill, it takes practice and a self-correcting process to develop the expertise. Effective decision making questions assumptions, invites collaboration, dissension, and debate when examining the choice among alternatives. What is relevant and the decision’s objective must be clear. A change in direction, action, and resource allocation distinguishes a decision from good intentions. An effective decision making process saves time and resources. Decisions driven by process allow management to more critically examine the issues at hand, while building support for the best solution and its successful implementation.
- Dr. Hiram Willis, Finance
