Have you got DITH? Deer In The Headlights. I know that COVID has had paralyzing a lot of people’s decision making processes early on. Not knowing whether to pivot, close temporarily or keep going. Things have settled down somewhat and I think most have at least worked out the lay of the land.
This guide will help you if you’re still feeling overwhelmed with the choices you feel you need to make or that ‘new shiny object’ that has turned up.
Take time to work through your decision making process.
A complete step by step guide to being better prepared when making business decisions and improvements.
MISTAKES TO AVOID
Running a business is as challenging as it is rewarding. I’m sure there have been times when, as a business owner, you’ve wondered if it was all worth it and whether a JOB would be a better option.
The passion for what you do has got you over that hurdle, but you’re still faced with the frustration that after all this time your business feels like a JOB then this guide will help you make better decisions.
LEARNING FROM THE MISTAKES OF OTHERS
There are plenty of studies available on why businesses fail, why products fail, why established organisations fail to adapt. Although each has their own nuance, there are common threads to the failures and how to avoid these mistakes.
Here are some common mistakes that business owners and managers make.
Mistake Number 1. Lack of Planning. Leaders are leaders because they are prepared to be out in front and take risks. The challenge when choosing risk vs reward is always to weigh up the benefits of each. The key to making good decisions is having the right and enough information; having a plan for the long term strategy and prioritising the short term implementation, all with measurable results.
As the saying goes, “if you don’t know where you’re going, you’ll probably get there.”
Mistake Number 2. Leadership failure. A Leader can be the reason a business does not grow. The fear leaders have as a business grows is the way the day to day processes are managed moves further away from their style. “ No-one can do it as good as me”. To have growth with sustainability you’ll need to transfer your knowledge and equip your team with leadership and management tools so the business grows with consistency.
Transferring the Culture of Leadership is essential to the long term sustainable success and growth. You’ll also have to accept that it won’t be done just like you and that’s perfectly ok.
The alternative is you have a business that locks you into a JOB.
Mistake Number 3. Lack of differentiation. Lots of advice on differentiation is available and it typically focuses on the product or service. Your Unique Selling Proposition or Your Value Proposition. These are extremely important to attracting and retaining customers. A part of this is a business must also differentiate itself by being in favour of the customer over one of self-interest.
Too often the business advice is to make more money! Important yes, however internally focused strategies are transparent to the customer.
Returning to “We are in business to help solve a problem” has a greater authenticity and a clear differentiator.
Mistake Number 4. Premature scaling. Growing for growth sake. It’s great to have plans to grow but often the success is predicated on the previous 3 mistakes not being made. Improving profit or value can be achieved in many ways. Growth is only one option and if chosen for the wrong reasons can kill a product, a business, a department and a career.
Mistake Number 5. Knowing when to quit. There are times when retreat is the best strategy. This is the hardest mistake to avoid especially if the idea or concept is yours. Who has the courage to tell the Owner or Manager that it’s not a good idea?
Establishing a culture of “Open and Honest Communication” creates an environment where the employees are ‘partners’ in the success of the business and feel safe having a frank conversation and to give their opinion. At the end of the day it’s your choice, but wouldn’t you prefer to hear the truth from people who you trust?
A Leader who has the Emotional Intelligence to disconnect themselves from the outcome will see the truth.
GETTING STARTED WITH MAKING GOOD DECISIONS
Now that we know what mistakes to avoid let’s consider the choices to make when looking to make improvements or better decisions.
One thing to remember is that you don’t have to do this on your own. Enlist the resources you have inside your business, engage your staff and ask for their help. You don’t have all the answers and they are at the coal face and know the business as well as you, sometimes better!
6 Step decision making check-list
Step 1. “What is the problem you are trying to solve?”
To make sure your business remains focused in the right direction, it’s important that you consider whether the idea or problem that you are trying to solve is warranted.
I’ve been called into organisations to solve a problem only to find that the cause of the poor performance was not what the management thought. Detailed questioning or Mind Mapping the various aspects of the problem will help to identify what needs to be investigated. List the type of information you need and where to find it (sources could be internal and external)
Step 2. Collecting Information
Once you have decided that you have a problem that needs fixing, you need information. The most important step before you make any decision is to collect as much information as you can reasonably expect to help you make a decision.
How much information is enough? Use the 85% rule. If you’ve collected about 85% of the information you started out to collect and you feel confident that you have collected the answers to the core questions, that’s about right. That last 15% will help and still needs to be collected, but is not likely to shed too much light on the subject.
This does mean that you have set some guidelines around the key questions and information that you need to make any decision. What is the problem you are trying to solve?
Step 3. Collate, Group and Cross-Check the Information
Once you have the necessary information you need, start grouping these into common themes. It’s a bit like mind-mapping in reverse. Where you have multiple sources of information grouping the information gives you an opportunity to cross-check the validity of the information. The source of information is important. Information from a recognised expert in their field is very different from a post on social media or a ‘How to’ web-site.
There are too many decision-making processes to recommend the best. The decision should have the Pros and Cons and weighting of each based on the impact of that decision. The results should give you a clear set of options to consider and their impact on the problem.
We have some options you might like to look at on our website.
Step 4. Prioritise
Now that you have all the information grouped and a list of options, you can now determine which ones need to be investigated first.
If it’s a new Product you may want to start with Market size and penetration probability, and then follow that with the financial analysis.
If it’s to change some aspect of people like the Organisational Structure or Performance Management, then you might want to start with the Management Information Systems you have on performance or the processes that support the organisation.
Business Owners and Managers often think the people are the problem when it comes to productivity, in my experience it’s invariably the processes that are the problem, so start there before you look at making wholesale changes to the people structure.
The key is to focus on the areas that will have the maximum impact on the problem in the optimum amount of time. Before you make any final decisions or announcements make sure you have completed the planning phase.
Step 5. Plan & Implement
Now that you have worked out Why things need to change, and What needs to change, you can now start on the How plan.
Any major change to a business needs a well thought out and developed plan. It’s best to take a Project Management approach to this process with dedicated Resources, specific Targets, Milestones and a Budget.
The biggest mistake here is to rush through this process and set unrealistic time frames. Using a Participative management style is best and to include all the people resources identified so they have ownership of the solution. I made mention of this at the beginning in asking for help.
Once you have set the Plan in place it’s best to take a Delegative Management style in the implementation process. This is typically difficult for the Business Owner as there is usually an emotional connection to the outcome. The success of any change is for there to be as little emotional connection to an outcome as this usually clouds the judgment.
Passion is different to an emotional attachment
I like the idea of the Business Owner taking on the role of a Project Champion. Here they intentionally distance themselves from the Project and be more of a Mentor and supporter of each of the stakeholders.
Obviously, where there are limited resources the Business Owner may need to be part of the team AND a Mentor.
The Champion can also be a stakeholder, a member or an external resource whose only role is to support and guide.
ADDITIONAL ISSUES TO CONSIDER
Is the problem an internal or external problem, idea or development?
Is this to take advantage of existing skills, knowledge and markets or is it a strategic pivot based on a change of circumstances, research or advice?
How important is solving the problem to the success of the business?
Do you have the resources available to solve the problem? (capital, time and people)
Do you need to bring in additional resources?
Product / Idea improvement
Where did the opportunity come from to consider this new Product/Service?
Is this an improvement on an existing product/service?
Is this an existing product/service that is not profitable?
How big is the market?
Is there competition in the market?
What is the process that needs to change?
EG Customer Service, Sales, Marketing, Promotions, Manufacturing, Operations, Distribution, Logistics, Human Resources,
What problem will the process improvement solve?
Has the process worked well in the past?
Why does the Process need to change?
What problem are you trying to solve?
What changes do you want to make with your people management and why?
Some improvement could be in:
Recruiting: Attracting people to fit into the culture, improves retention.
Remuneration Planning: internal equity, improve retention, attract quality candidates.
On-boarding: Reduce onboarding time, improve ‘being productive’, compliance
Code of Conduct: Create a positive Culture, compliance.
Employment Contracts: Systemised and standardised; internal equity, compliance.
Organisational Design: Identify Operational gaps, develop career paths, rationalise operations.
Job Design and Descriptions: Improve recruiting and selection, remove duplication, improve accountability.
Identify skills gaps: develop career paths, improve quality, improve efficiency.
Skills Training: develop career paths, improve efficiency, employee retention, succession planning.
Leadership and Management Training: Builds capacity, helps with succession planning, improves efficiency, and identifies future leaders.
Succession Planning: Create leverage, build capacity, identify future leaders.
For more information on how Inspiring Business can help you improve your business value, efficiency and culture, visit us at www.inspiringbusiness.net