Decision Making In Business
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Decision Making In Business

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The majority of problems in business are not because someone made the wrong decision, but because no one made any decision. Will Rogers summarized the risk of indecision with this, "Even if you are on ...

The majority of problems in business are not because someone made the wrong decision, but because no one made any decision. Will Rogers summarized the risk of indecision with this, "Even if you are on the right track, you will get run over if you just sit there."

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Decision Making In Business Document Transcript

  • 1. Decision Making In MaB us i ne s sAbraham Lincoln once described a general who was unwilling to make decisions underpressure as "acting like a duck that had been hit on the head." I have never actuallyobserved the behavior of water fowl suffering from cranial trauma, although I onceaccidentally hit a duck with a stone skimmed across a frozen pond. But that was longago and involved an entirely different part of the d ducks anatomy.I have observed the behavior of managers making (or not making) decisions enough toconclude that the majority of problems in business are not because someone madethe wrong decision, but because no one made any decision. Will Rogers summarized decision. summarithe risk of indecision with this, "Even if you are on the right track, you will get run over ifyou just sit there."To be sure, there are "mission critical" decisions that have the long-term potential tomake or break any organization. Nevertheless, unless you are a heart surgeon or anairline pilot, most mistakes are to some extent correctable, at least within limitedtimeframes.Decision making is a cognitive process involving logic, reasoning and problem solvingskills. Unfortunately, each of us enters the process with preconceived biases and entersexhibits some degree of "decision inertia" or a reluctance to move off those biases whenfaced with new facts or circumstances. Business decisions can be reduced to a four-step decisions fourprocess as illustrated in the foll following diagram.
  • 2. The first step is to analyze the problem and identify solutions. This is largely a factgathering exercise involving input from multiple sources and considering alternativecourses of action.It is important to differentiate between problem analysis and decision making. Althoughit may sound redundant, success requires the decision maker to do just that, make adecision. Theodore Roosevelt said, "In any moment of decision the best thing you cando is the right thing, the next best thing is the wrong thing, and the worst thing you cando is nothing."While the dreaded "paralysis of analysis" may be seen as the cause, the reality is manypeople, perhaps including Mr. Lincolns general, simply find it safer not to makedecisions, even in obvious situations.As an example, I was once responsible for opening three new offices and hiring severalhundred employees, including managers with company cars. The fleet manager came tome in a panic one day. Company policy allowed employees to select their own cars. Thismeant they would be without cars for several weeks. I calmly asked what the choiceswere, and immediately ordered 15 identical cars. She asked how I knew they would likethe cars. The truth was I neither knew nor cared! Since a decision was needed, I made it.The managers arrived on their first day to find a fleet of new cars waiting on the frontrow. As expected, no one died.Investment professionals report there is a tendency to "sell winners too quickly and holdon to losers too long." The reason we hold on to losers is primarily a subconsciousreluctance to admit mistakes. Your focus should be on early detection of challenges andthe identification and implementation of appropriate corrective action. American authorArnold H. Glasow put it this way, "One of the tests of leadership is the ability torecognize a problem before it becomes an emergency." Be willing to make changes ifindicated by the monitoring process, even at the risk of exposing your mistakes. TonyRobbins put it this way, "Stay committed to your decisions; but stay flexible in yourapproach."Accountability is paramount to a successful decision making process. If you want creditfor your accomplishments, be willing to take responsibility for mistakes. Have enoughconfidence to say, "I was wrong, now lets fix it." Remember, your goal is not to avoid allmistakes. Simply doing nothing would accomplish that. Your goal is to minimize theimpact of missteps and learn from them.I end with this comment by Peter Drucker, management consultant and author of 39books. He said, "Whenever you see a successful business, someone once made acourageous decision." 2
  • 3. P.S. My apologies to PETA for the whole duck by the frozen pond rock skimming longtime ago hit in the anatomy thing. © 2011 by Dale R. SchmeltzleAbout the author: Dale R. Schmeltzle, CPA is a founding partner of CFO America, professionalconsultants dedicated to helping business owners define, implement and monitor the strategic andtactical elements necessary to achieve long-term financial and operational success. CFO Americaprovides fractional or part-time executive management expertise not available on an in-house basis.Dale is a frequent speaker for numerous professional, civic and non-profit groups. He wrote HighlyVisible Marketing, 115 Low-cost Ways to avoid Market Obscurity. He has also taught college levelaccounting and financial courses to non-business audiences. For more information, please visithttp://www.CFOAmerica.biz or follow on Facebook at http://www.facebook.com/CFOAmerica. Consulting CFOs & Executive Managers 3