The Decisions Before The Business Decision

Last week, I was asked about how to make good business decisions. Before we dive in, a big thank you for the amazing response I have been getting from my readers. I’m so happy that these articles are resonating with so many of you.

Now back to the question at hand.

Good decision-making is entirely about context. If you’ve spent any time in corporate environments, you know that we love our acronyms and matrices. We have the classic SWOT analysis, the Eisenhower Matrix, the BCG Growth Share Matrix (Cash Cows, Stars, etc.), First Principles Thinking, OKRs, and more. Depending on your industry, the toolkit changes entirely. Customer Acquisition Costs (CAC), Lifetime Value (LTV), MAUs, company valuations, and campaign benchmarks all vary by industry.

Every tactical decision you make should stem from a macro-level vision to reduce the gap between daily operations and long-term goals. What stage of growth is the company in? Are you currently focused on intensive growth, or is achieving positive revenue the number one goal this year? What is the big dream? What real impact do you want to make? Where do you see your company in 5+ years? Once you have those answers, it becomes simple to identify the gaps and work on them methodically by deploying an appropriate framework to tackle the most effective, high-impact challenge first. And because those frameworks and metrics can easily be found online, I won’t focus on them.

Instead, I want to highlight the opportunity to build a culture of effective decision making.

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Here are four rules I suggest:

1. Give important decisions enough time and breathing space. It’s obvious but crucial to remind ourselves that some decisions are high-risk while others aren’t. High-risk decisions affect the course of your company and its employees massively. They deserve dedicated, slow, and deliberate attention. Low-risk decisions shouldn’t take up more time than necessary. Amazon’s Type 1 & Type 2 framework is a great example of this. If a strategy or process is working, dig deeper into it and explore its full potential. Avoid changing directions frequently, especially for high-impact decisions. Indecisiveness and continuous restructuring of teams and department roles can be incredibly draining for the entire organisation.

The exception: Rules differ for new companies, but communicate it clearly from the get-go that while the internal infrastructure is fluid, the ultimate direction is fixed. Keep your team small in this instance.

On the other hand, if I find myself stuck in a low-risk decision, I often ask myself: Does this specific direction directly align with what my team and I have set out to do? Does it align with the values we hold true? If the answer is no, we pass on it. If the answer is maybe, we get more information and think about it, and if the answer is yes, then you guessed it, we act on it :)

Daily decisions and vision alignment

2. Explicitly expect your team to make decisions. Empower and encourage your team to think critically, train them on the business context, and let them learn from their non-critical mistakes. This will foster trust and growth when they know you have their back.

And, if you are just joining the workforce, don’t expect things to be handed to you. Learn how to make decisions using frameworks and processes adopted by your company, but also build your own process. Everyone has a unique way of doing things - don’t be afraid to share yours with your team and manager, as you never know what operational improvements could come of it.

3. Clearly communicate your decisions. Communicating change is just as crucial as executing it. There will be times when things won’t be in your control or when external variables go against your strategy. Macroeconomic factors that are out of your control like sudden market shifts, geopolitical tensions, regulations, etc., may force you to change your initial approach. If your long-term vision and priorities are well-thought-out and clearly communicated, changing your tactical course makes it easier for the team to follow a course of action. Confusion and uncertainty should not be a part of the company culture if you want to build loyal and resilient teams.

Explore your instinct by studying the available data, and trust your intuition when looking at market trends.

4. I’m going to throw a cliché at you: decision-making is an art and a science. If I look back at how my own philosophy was shaped, it comes down to a balanced approach that started many years ago at my graduate program at Northwestern. On one hand, I was studying statistics (think SPSS and predictive modeling), and on the other, I was also studying an elective called the Intuitive Marketer that encouraged us to think creatively and instinctively. That balanced approach has pretty much shaped how I approach each business decision. Explore your instinct by studying the available data, and trust your intuition when looking at market trends. This is a skill that can be built over time.

What decision-making guidelines do you swear by? Let me know in the comments below.

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