In 1979, Bill Gates was 23 years old and looking for someone to invest in Microsoft for about $30 million. Ross Perot turned it down as “unreasonable.” Obviously, years later, Perot told The Seattle Times, “It was the worst decision I ever made.”
Other poor decisions have been made by “big boys” in the corporate world. M & M’s (Mars Candy) turned down a chance to appear in the movie ET and Reese’s Pieces (Hershey) reaped the rewards; Coca-Cola, already the leading soft-drink seller in the world, decided to invest millions in New Coke, which was a horrible flop. Apple came out with its PDA (the Newton) too early for public acceptance, in 1992.
We have all made poor decisions in our lifetimes. Who hasn’t blown hard-earned money on an impulsive purchase, taken a stupid risk with bad consequences, chosen a bad relationship, or perhaps taken a job we knew we probably were going to hate?
Each time we make a bad decision, we vow to make better decisions in the future, but we never really look at the strategies that will make that happen. As a business leader, however, whether it is as an employee of a company or as an entrepreneur, sometimes poor decisions can be costly if not disastrous. Here are some tips to add to your repertoire for making good decisions when they count.
1. Don’t Procrastinate
The simple decisions are easy. When the stakes are high, however, they get harder to make, and there is a tendency to put off a decision because we are still “thinking” about it. We are weighing the pros and cons and risks over and over and “beating the issue to death.” Set some blocks of time for the thinking and discussion and make the best decision based on needs, budget, pros, cons, and risks. You are not a fortune teller, but you can look at the factors and make a reasoned choice.
Suppose, for example, that you are agonizing over whether to move training and development toward an e-learning environment. You have spent a lot of time studying the research and some case studies. You have explored some highly recommended coursework. You’ve gathered all of the pros and cons from your employees who would be impacted. The time for research and discussion is over. If you have used a good overall strategy, you have probably explored all of the options you have if you decide to implement e-learning. Choose the one you believe is best – perhaps a pilot program with a small group of diverse individuals. Inform the stakeholders of the decision and move forward with it.
2. Get Your Ego and Emotion Out of the Process
It’s easy to become emotionally involved in a project and decisions that impact that project. Even when others are pointing out high risks or the potential negative consequences that have not been considered, we push forward to “make it work.”
It’s also difficult for some leaders to accept the fact that they have made a poor decision. Instead of admitting it, they continue to pour time, work, and money into a failed endeavor. This is often known as the “Sunk Cost Fallacy.”
Sometimes getting objective about solutions and decisions means consulting others who have expertise in the matter and listening carefully to their advice. Sometimes it means listening to team members and taking 24 hours to consider what they have to say. When we “have to be right,” is often when we are wrong. If too many people are disagreeing with you, it’s time to take a step back and “check” your emotional attachments.
3. Identify Supporters and Detractors
As a part of your decision-making process, you must identify those who will support you and establish their roles in implementing the results of your decision. Detractors, or those who will oppose the decision, must also be identified. It is time to have discussions with them, to listen and understand their objections, to validate their objections and, perhaps, persuade them to at least take a neutral rather than an oppositional stance. Making enemies of them will not bode well for the successful implementation of your decision.
4. Carefully Review the Data
Seeking evidence may be important in reaching decisions. When considering a new product or service, for example, how much market research have you done? Have you bothered to check with current customers and received some feedback on what you are considering? Do competitors have similar products or services and can you make yours better somehow? What are the industry trends?
Sometimes, when we are facing a decision, we already have a bias, and so we only look at the data that supports that bias. One of the best ways to get all of the correct data is to have team members or a trusted “other” do the research. Then you can really weigh the pros and cons and risks.
Colgate is a huge name in toothpaste. So, the decision was made to extend its brand to produce a group of food products, titled, “Colgate’s Kitchen Entrees.”
The products were not a hit, probably because consumers could not emotionally make the leap from the taste of toothpaste to food. Obviously, the company had not done enough good research.
5. Identify All of the Risks and Plan for the Worst
When decisions are made, the final strategy tip is to identify all of the potential risks and negatives and develop a plan for the worst case scenarios. If for example, you must reduce staff and must make decisions regarding who to let go, you must identify the potential negatives of each termination. Which task responsibilities will other team members have to assume? Are there any potential lawsuits that could arise? When you pan for these, the fallout is far less consequential.
You will make some poor decisions, but it is important that you put them in perspective. Rather than beat yourself up and agonize over them, reflect on them, gather the factual data, determine why your decisions failed and use the understanding to move forward with better ones.
