Make Good Decisions All the Time in 8 Easy Steps

1. What does it mean to Make Good Decisions?

The ability to make good decisions in business is akin to playing a strategic game of chess. A chess player lacking strategy and clear thinking often makes impulsive moves leading to defeat. Similarly, a business that struggles with making effective decisions often acts impulsively, increasing risk, leading to ineffective outcomes, and decreasing success.

But what constitutes good decision-making? This is an important question as “having a good ability to make decisions” and “a good decision” are 2 fundamentally different things:

• The first refers to an individual or organization’s ability to make good decisions continuously and consistently and does not speak to quality of the actual decision itself. It references the process of making the decision.

• Whereas a “good decision” refers to the quality and impact of the thing decided. Essentially, good decisions are those that are based on a thorough understanding of the situation, a careful evaluation of all options, and the foresight to anticipate potential outcomes.

This quote from a white paper on globalknowledge.com defines it well:

“A decision is of high quality to the extent that the decision maker knows what risks they are taking by making that decision. They know how good or bad their information is and the biases inherent in their reasoning.

A good decision is one in which you know what you do not know.”

globalknowledge.com

Good decisions are not made in a vacuum but require a supportive system and culture within the organization that encourages information sharing, collaboration, and a willingness to take calculated risks. Without this support structure you often find situations where a good decision is more a matter of luck than of intent.

2. The impact of being able to Make Good Decisions

The quality of decision making can be indicative of a company’s culture: reflecting the values, beliefs, and norms that guide behavior within the organization. A culture that fosters open communication, values diverse viewpoints, and tolerates mistakes tends to make better decisions compared to a culture that stifles dissent, discourages risk-taking, or promotes groupthink.

Business Good at Making Decisions	Business Poor at Making Decisions
Has a structured decision-making process in place.	Lacks a structured process for decision-making.
Decisions are based on data and analysis.	Decisions are often made based on gut instincts.
Decisions are consistent and timely.	Decisions frequently change or shift, leading to confusion and inefficiency.
Effective outcomes and competitive advantage are noticeable.	Delays in decision-making processes result in missed opportunities.
Decision authority is shared through the business with people given authority to make decisions relevant to their focus and responsibilities	Decisions are only made by a handful of senior managers or executives and not delegated through the organization

The inability to make effective decisions can have a profound impact on businesses. A poor decision can lead to wasted resources, lost opportunities, and a damaged reputation. For instance, consider a tech start-up that decided to launch a product without conducting adequate market research. The product didn’t meet customer needs, resulting in significant financial losses and tarnishing the brand’s reputation.

3. Identifying the Challenge

You might be facing this challenge if you notice the following symptoms in your business:

• Decisions are often made based on gut instincts rather than data and analysis.
• Team members frequently second-guess decisions or fail to execute on them.
• Decisions frequently change or shift, leading to confusion and inefficiency.
• Delays in decision-making processes result in missed opportunities.

4. Addressing the Challenge

Short Term:

Implement a structured decision-making process across the business. Start by clearly defining the decision to be made and the criteria for success.

Medium Term:

Build on this by gathering relevant data and information, analyzing this to identify potential options, and evaluating the options against the success criteria. To aid in this, you can consider decision-making models like the “DECIDE” model, which stands for Define the problem, Establish the criteria, Consider all the alternatives, Identify the best alternative, Develop and implement a plan of action, and Evaluate and monitor the solution. Choose the best option and establish a plan of action.

Long Term:

Monitor progress and adjust the plan as necessary. This can be facilitated by tools such as a Decision Matrix, SWOT Analysis, or even software designed for decision management. Training your team to follow these steps instinctively is crucial. Regular workshops or training programs can help engrain these decision-making models and tools into your team’s approach. This not only boosts decision-making efficiency but also builds confidence within the team.

5. Implementing a Good Decision-Making process

In the next part of this article, we’ll help you with the first steps to helping your organization become a decision-making super-machine. Not just in terms of the quality of decisions but also ito terms of the process to make great decisions. If you’ve ever lost out on an opportunity due to poor decision making, this should happen no more:

Some important things to note:

The following steps outline the guidelines for a process that can be implemented in any organization. You can take this detail, update it as needed to fit your needs and then implement this as a policy. But implementation is only the first step. Once in place is needs to be reviewed for effectiveness and useability.

We include here a sample decision authority matrix that you can use as base to help your team understand where – and by whom – specific decisions can be made.

Take into account that implementing something like this in an organization not used to thinking like this may take some time – so be patient managing this change. To help with this we include, at the end, a sample email that you can send out to explain the change to be implemented.

What to take into account to make good decisions

• Decisions should be based on factual, relevant information and data. This includes market research, customer feedback, financial data, and expert opinions.
• The timing of a decision can significantly impact its effectiveness. Too quick, and you risk overlooking important information. Too slow, and you risk missing opportunities.
• Not all decisions carry the same weight. Consider the potential impact of each decision on the business, and allocate resources accordingly.
• After a decision is made and implemented, measure its impact. Compare the actual results with the expected outcomes and learn from any discrepancies.

The Good decision-making process:

1.1 Define the Problem or Decision:

The first step in any decision-making process is to clearly define the problem or decision that needs to be made. This should be a clear, concise statement that everyone involved can understand. For example, “We need to decide on a new supplier for our product materials.” Or “The client wants to cancel the contract, we need to quickly decide on next steps”.

1.2 Establish Decision-Making Criteria:

Next, determine what criteria will be used to make the decision. These should be specific, measurable factors that are relevant to the decision. For example, price, quality, and delivery time might be criteria for choosing a new supplier.

Note: It is not necessary for these 2 steps to be formally documented as part of a rigorous process. Doing so might add unnecessary burden to a process that needs to be light and flexible, so take this on a case-by-case basis. The outcomes and requirements for some decisions – for example big strategic decisions at board level – should be meticulously documented as these can have quite severe impact. But – matters to be dealt with during day-to-day operational activity often do not require this level of rigor, but they are important steps to go through as the set the scope for the decision to be made.

1.3 Gather Relevant Information:

Collect all the necessary data and information to evaluate the options. This could involve market research, data analysis, and consultation with experts. For faster day to day operational decisions this may simply require an overview of the history leading up to this point or discussion with relevant role players.

1.4 Identify Options:

Generate a list of potential solutions or options. This is where things can go wrong quickly – even with small decisions. A good decision is the best decisions based on the situation and circumstances. That means you need to have more than one decision to select from. Do not make the mistake of impulsively implementing the 1^st decision you come up with. Quite frankly, in most cases that is not the best or most appropriate decision.

1.5 Evaluate options and make the Decision:

Assess each option against the decision-making criteria. This can be done using a decision matrix where each option is rated on each criterion. The option with the highest overall score is the best choice. Again, use discretion on the amount of documentation or effort employed here. This must depend on the complexity and impact of the decision. For example – selecting a new CRM system should be a process that takes a while with much due diligence, reviews and evaluation of various options that are carefully documented and considered objectively. But it should not take an army of people to decide on refunding a customer who quite clearly received shocking service or a dysfunctional product.

1.7 Implement the Decision:

Once the decision is made, create an action plan to implement it. Assign responsibilities and set a timeline for completion. Consider this a mini-project and treat it accordingly – especially with reference to the next steps.

1.8 Review the Decision:

After the decision has been implemented, review the outcomes and measure them against the expected results. This is an opportunity to learn from the decision-making process and make improvements for the future.

A sample decision authority matrix

Decision	CEO	Department Heads	Managers	Employees
Strategic decisions (e.g., mergers, acquisitions)	X
Operational decisions (e.g., hiring, budgeting)	X	X
Tactical decisions (e.g., project management, team assignments)	X	X	X
Routine decisions (e.g., daily tasks, customer service)	X	X	X	X

A Sample Email Notice to the Business

Subject: Enhancing Our Decision-Making Process for Mutual Success

6. Conclusion

In conclusion, the ability to make effective decisions is a critical factor in business success. It leads to better outcomes, more efficient use of resources, and a competitive edge. As Peter Drucker, a renowned management consultant, rightly said, “Whenever you see a successful business, someone once made a courageous decision.” With a structured decision-making process in place, that someone could be you.