Not making the wrong decisions is half the job done well. Making decisions is one of the most critical functions of a leader, irrespective of the size of your team.
Despite that, there are a lot of us for whom decision-making is often a hit-or-miss proposition.
However, you can consistently use a few practices and hacks to make better and clearer decisions. So let's jump in.
Best practices while decision making
Consider second-order consequences
It is easy to identify the first-order consequences when you decide on something.
For example, when you hire freelancers to get things done, the first-order consequence is getting your work done without hiring someone full-time.
However, the second-order consequences for the same decision could be:
- Developing a dependency on contract talent
- The freelancer could abruptly stop working for you
- Lack of consistency
- More time spent communicating online
- Variable costs weekly/monthly
The second-order consequences are often not considered, and what sounds like a good decision could quickly turn into a bad one.
Consider the opposite
When making a decision, consider the opposite of that decision and the consequences it might have.
You can then weigh both options and determine which one is more feasible.
For example, if you are contemplating whether to change your logo design based on market feedback, consider the consequences of not changing the logo design.
If the consequences of not doing are far harsher than doing it, then it is in your best interest to get a new logo design and vice versa.
Use third-person perspective
Often, we are too close to the problem or the situation that it hinders our ability to look at the problem and propose solutions objectively.
Hence, it makes sense to do a bit of roleplay where you look into the problem from a third-person's perspective and determine what could be possible solutions to the problem.
Who should make decisions and when?
While the decision taken is essential, it is enhanced by who takes the decision and how you arrive at a decision.
For example, you should not decide on clerical accounting decisions when your accountant has more context and expertise in dealing with those issues.
Also, in most cases, accounting problems don't require a case study or a debate-centric analysis to arrive at a solution.
Hence, even the method used to arrive at decisions is important.
There are layers and roles that you can design and occupy, making decision-making effective.
Here they are:
Big-bet decisions (high risk & infrequent)
- The board or the founding team should make decisions.
- The best method for arriving at a decision should be a debate with both sides of the argument presented with facts and context.
- Examples: Mergers, acquisitions, company vision, product direction
Cross-cutting decisions (high risk, frequent & collaborative)
- Business unit heads, managers, or team heads should make the decisions.
- Breaking down the process and making sure it makes sense for all stakeholders involved is the best way to arrive at a solution/decision.
- Examples: Operations, Pricing & Support Management
Delegated decisions (low risk & frequent)
- Individuals and on-field teams should make these decisions.
- The decision's efficacy depends on the fulfillment status of the commitments made. Since individuals make the decisions based on their own best judgment, commitment to fulfill is given more weightage than consensus among the group.
- Example: Everyday tasks in marketing, operations, support, etc.
So that is all for this post. Decision-making is a big topic with many nuances that need to be taken into consideration.
I hope this post helped set some ground rules for effective decision-making.
If you want me to cover other aspects of the process, do let us know on Twitter at @ProductiveHQ.
Thanks for reading.