How to Make Better Business Decisions

Posted On: August 31

Over the years I watched a number of very talented and bright leaders make decisions that were highly damaging to their organizations. Although they had the best of intentions, their decisions did not deliver the results they were hoping for. There are numerous reasons this happens and some simple steps you can take to avoid decision pitfalls. Let’s take a look at the traps first and see if you might recognize any of these patterns in your organization.
Common Decision-making Traps

The overconfidence trap: sometimes a sign of hubris or arrogance, this is the leader who believes that because they have made some good decisions the past, they have the ability to make excellent decisions on just about any issue going forward. Or, that because they are the “leader” they are the only one qualified and smart enough to make key decisions in the business.

The honest feedback trap: for any one of a number of reasons, people in the organization are afraid to tell the leader he or she is making a bad decision. This is a close cousin to the “yes-man” trap where sycophants and suck-ups feed the leader’s overconfidence. This kind of “kill the messenger” or “only tell the boss what he wants to hear” culture is a sure way to damage the future of the business.

The “no time to think” trap: yes, business is moving at an insanely fast pace, but that does not mean that every decision must be made immediately. Leaders who fall into this trap make incredibly bad decisions because they do not take even a few minutes to collect information and the weigh their options, they instead shoot-from-the-hip in an effort to make the fastest possible decision.

The analysis-paralysis trap: rather than move too quickly, this leader takes so long to make a decision, that it never gets made, or the marketplace makes it for them. Speed can kill, but over-thinking a decision can lead to a slow death. A subcategory of this trap is the leader who lacks the courage to make difficult and uncomfortable decisions and simply ignores them in hopes that the situation will eventually fix itself. I think we all know that this approach rarely turns out well.

The assumptions trap: I believe I see leaders fall into this trap more often than all the others combined when they make extremely important decisions based on little or no data, WAGs, erroneous assumptions and completely fabricated forecasts. I have witnessed multi-million-dollar decisions made based on pure guessing at critical data… very, very scary.

So how do you make sure that you don’t fall into any of these deadly decision making traps? Here are a few tips to help you make much better decisions in your organization:

1. To make sure you’re not too close to the problem, or becoming overconfident in your position, assign someone on your team to play the devil’s advocate and defend the opposite of your decision. If you do not have anyone who can do this for you, at least take out a piece of paper and list 5 to 10 reasons that the decision you are about to make might NOT be the best one possible.

2. Foster a culture of open, honest and completely transparent communication. Clearly demonstrate to everyone in your organization that even when they deliver bad news or challenge your position, you openly welcome critical debate and rigorous thinking. Make it safe to tell the truth and question authority.

3. Determine how important the decision is, how much time you truly have to make the decision, and what information you must have in order to make a high-quality decision. The best way I know how to do this is to create a detailed decision-making checklist to ensure that you are following a solid process for making superb decisions in your organization. Here is an outline of the process I go through when faced with an important decision:

Go/No Go

Am I even the right person to be making this decision? Should I delegate away to someone else who has more expertise or information? Even if this decision is my responsibility, is there anyone else that I should involve in helping me make this decision?


Do I clearly understand exactly what is at stake and specifically what outcome I am driving for as a result of the decision I’m about to make?  Who are all of the other people that will be impacted by this decision? Am I taking their concerns and point-of-view into account? Will this be the best possible decision for ALL involved?


Once I am clear on the decision I need to make and the outcome I want to achieve, do I have all of the information, input, facts and data I need to make a high-quality decision? Am I confident the information is correct? What assumptions might I be making about the quality of the information? Is there anything else that I absolutely must know and understand before I can go forward with the decision?

Probability & Impact

Based on the clarity of my decision outcome and the information I have available to me, what is the probability (high-medium-low) that my decision could be faulty? Am I just guessing or do I have a very solid handle on this decision? Also, if I do make the wrong decision what would the impact be (high-medium-low) to the organization?  Would it be catastrophic were just a minor inconvenience?

Time Frame

When do I really need to have a firm decision? Do I have to decide right away, or do I have more time for information collection and consideration? If it is a low probability/low impact decision than I can move on it quickly, however, if it is a high probability/high impact decision I want to take as long as I possibly can to make the decision… but not one moment longer.

Make the Decision

Based on a clear idea of the desired decision outcome, all the information available to me, input from the right people and a clear understanding of the probability & impact – make the best possible decision in the appropriate time frame.

At this point, you might be thinking that you’ve done an awfully good job in making a thorough and thoughtful decision, but you’re actually only half of the way there. For a decision to be truly effective, the thinking must be closely followed with a clear and detailed action plan. So here are a few more questions to make sure that you address this critical last stage of the decision-making process.

Implement the Decision

In order to implement the decision, what specific action steps must be undertaken? Who will be the “action owner” that is responsible for making sure all of the action steps are carried out correctly? Does the action owner need any additional resources for help in order to accomplish the action plan? What is the time frame for completing the various action steps? What will the process be for holding the action owner 100% accountable for the flawless execution of the action plan?

I know this seems like a lot of time and energy to spend on making a decision, and if it is a low probability/low impact decision than there is no reason to go through every single step, but if you are charged with making a big decision that could have a significant impact on your organization, I strongly urge you to carefully answer every question I’ve listed above. If you do that, I can assure you that you will make much better decisions.

Hope that helped!  As always, I encourage your feedback and comments. Take good care – John

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  1. Once again John while you have stated the obvious to those who have many years experience with this, it is a good reminder to step through the process each time (each day) a decision has to be made. Fo the new owner or new President, CEO, CFO this is a critical way of reviewing the decision making process.



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