Running a business is not easy and it does not come without its fair share of difficult decisions.
Small business owners are not immune to the need to make these tough decisions, and sometimes it can seem that none of the alternatives are all that pleasant. On the flip side, the various options might all seem good, leaving you to wonder which one to choose.
Of course, regardless of the decision that is ultimately made, there will always be consequences and implications that go along with it. Learning how to balance your emotions, take steps to properly analyze the options, and considering each possible decision that can be made in light of those implications is critical when it comes to maintaining your success and your sanity.
Types of business decisions
What types of business decisions are we talking about? Well, any and all of them! There are honestly so many different decisions that could pop up for both small owners and large business executives that it would be impossible to list them all here.
Examples of common business decisions:
- Whether or not to fire an employee
- Whether or not to hire an employee
- How to allocate company resources
- Whether or not to borrow money to fund new initiatives
- Whether or not to involve investors who will take some control away from you
- Which products to cut and which to pursue
- How to hold a difficult conversation with someone
These decisions all make an impact on the day-to-day running of your business—or do they?
Do you know the implications of each option? If not, you should, because this is critical to your overall success. You just need to know how to think about each option. First, let’s take a look at the role of emotions when it comes to making decisions.
Emotions in decision-making
It has been proven that decisions are at least in part based on emotion. In fact, Janet Crawford, a pioneer in the field of bringing neuroscience to the realm of business, told Forbes that our innate biology controls about 90 percent of what we do, while the other 10 percent is what our logical brain contributes. Crawford says that business leaders that understand this are at an advantage.
With this in mind, it might seem that Brian Tracy—a well-respected business consultant who came up with a decision-making method called zero-based thinking—is way off in left field. As Forbes describes this method of decision-making, you are “more concerned with what’s right rather than who’s right.”
This is all about thinking like an entrepreneur. It involves looking at past decisions, about going back to before you made the decision and considering your position at the time, in light of how it turned out. Would you do anything differently than you did the first time? More importantly, does this mean not taking emotion into account? No, it doesn’t.
The value of emotional intelligence—or EQ—in business has been recognized, and Huffington Post reports that people with a high EQ are actually better equipped to make decisions. What people with a high EQ are able to do which others cannot is remove any emotion from the decision-making process that is not directly related to the situation at hand.
For instance, a person who comes into the office feeling angry after having an argument with their spouse that morning can easily allow that anger to cloud their decision-making ability. A person with high EQ would be able to set that anger aside and deal with decision-making independent from that emotion. However, that would not stop them from allowing emotion around a situation with an employee weigh in on a decision if it was appropriate.
Yet, while emotions are drivers of decision-making, there is also a need to analyze the potential options when making a decision. So, the logical part of the mind does get to have some fun after all. Let’s take a look at the best methods for analyzing the situation when a decision needs to be made.
The need to analyze
Naturally, when you are faced with tough decisions, you need to think through them very carefully. But how do you weigh each option and choose the best one?
The following two methods have been proposed by people who are very experienced in having to make tough decisions on a regular basis. Fortunately, the two methods presented here are not mutually exclusive; you can approach decision-making with each of these methods in mind.
The CIA way
There is something to be said for taking advice from someone who had to make really tough decisions for 25 years. Fast Company reports that Philip Mudd spent 25 years working for the U.S. government, including time as the deputy director of the CIA’s Counterterrorist Center and the FBI’s National Security Branch.
He knows all about making tough decisions—many of his decisions were literally life and death—and he developed a streamlined process to ensure decisions were made quickly and efficiently.
5 steps to consider when adopting the CIA way:
1. Determine the real question
The key here is to decide on what the real question or issue is—what you really want to know—before looking at the data. To do this, you have to look back at what started the wheels in motion, rather than looking ahead.
2. Identify the drivers
In other words, break the entire issue down into categories or segments so you can focus on each one individually and have a way to determine what is working and what isn’t.
3. Determine the metrics
Now you can determine what you will use to measure any progress that has been made toward your decision.
4. Gather the data
Now it is time to assess the data, which you can sort based on the drivers you have identified.
5. Determine what is missing
Finally, you can look at your overall analysis to see where the gaps are, making sure to consider the negatives as well as the positives, and see past the obvious or that with which you are most comfortable.
These steps are especially useful for larger decisions. However, conducting such a deep analysis based on past experience and data or information doesn’t mean that you shouldn’t look to the future and the potential consequences of your options.
The “10-10-10 Rule”
Suzy Welch has developed a system of approaching decision-making that does not completely rule out emotion but allows you to consider the implications of the decision in a unique way. Her rule, as she calls it, is the “10-10-10 Rule.”
The rules of 10-10-10:
The way it works is each time you are faced with a decision, you must look at in light of these terms:
- What are the consequences of the decision 10 minutes from now? This means the immediate consequences of the decision, the ones that will be felt within the first day or even week.
- What are the consequences of the decision 10 months from now? This means the consequences in the not-so-distant future, a time close enough that you can imagine how it might play out.
- What are the consequences of the decision 10 years from now? This means in the distant future, a future that is so far away there might not be a way of knowing how the decision might affect it.
So, don’t take the 10-10-10 literally. Instead, look at each decision in terms of the implications or consequences it can have in terms of immediate, short-term and long-term consequences.
The beauty of these two systems is that they can be used in tandem, first taking the time to determine what the real issue is by looking back, determining the specific drivers and the metrics needed to measure them, gathering the data, and filling in the gaps. Then you can use the 10-10-10 Rule to look forward and weigh your options based on how the future looks in terms of consequences.
Finally, you can allow emotion to help guide these two processes so you aren’t like a robot making a purely rational decision, something it seems we aren’t capable of doing anyway, no matter how much we would like to sometimes. The key is to allow emotions connected to the decision itself guide you, rather than your overall emotional state.
When making tough decisions, whether in business or in life, we need to look backward, then forward, and then bring ourselves back to the present to do what we feel is ultimately the right thing to do. It isn’t always easy and it is never black and white.
However, by taking the time to consider any decisions that need to be made in this manner, you will have a far better chance of making the right one. Can you think of a better way to ensure you can sleep more soundly at night?