Decision-making and leadership are two CEO skills inextricably entwined. It’s true that you can be a world class decision-maker and still be a lousy leader . . . that is, you can be a great decision-maker but still have other behavioral characteristics that disqualify you as a great leader. However, the reverse is not true. You can’t be a great leader and a lousy decision-maker. The two characteristics are mutually exclusive. After all, who’s going to follow someone whose decisions are consistently flawed and who frequently sends us down the wrong path. That’s not to say that great leaders can’t make decisions that turn out badly. Nobody bats a thousand. But it does say that great leaders need to follow a decision-making process that is consistent, understood, and trusted by those he or she is trying to lead. When you make a decision that results in an unwanted outcome, you want your people to say, “Hey, based on the information we had at the time, it was a reasonable decision. It didn’t turn out the way we wanted it to, but given the same circumstances, we’d probably make the same decision again.” If that’s the case, your standing as a leader is relatively unscathed. On the other hand, if your people feel that the decision was made in haste, that the boss shot from the hip without proper forethought, your standing is going to take a hit.
For more on avoiding bad decisions, please continue reading below.
“Why Do Smart People Fail?”
That’s the title of a book written by management consultant, keynote speaker, and author Norris Beren. In it, he uses the acronym CHOICES to describe seven decision-making rules that, when followed, will improve your decision-making process and reduce your risk of failure. Those rules are:
C – Challenge Your Assumptions
Throughout your decision-making process, look for information and/or opinions that would undermine your assumptions. Some businesses use this technique when considering a new product or service offering. They will write a business case for the new offering, and then do everything they can to tear holes in it. If they can tear legitimate holes in it, they kill the idea. If they can’t, it goes forward.
H – Honor Your Gut Instincts
While it’s generally not a good idea to make important decisions on gut instinct alone, sometimes your instincts are guiding you to pay attention to something that has not yet entered your conscious thought process. Pay attention to those instincts and probe them to see if there might be something substantive behind them.
O – Overcome and Avoid Your Obsessions
Don’t become so obsessed with the outcome you envision from a decision you’ve made that you blind yourself to danger signs. We’ve often heard CEOs say, “We’ve invested too much time, effort, and money in this to stop now.” That’s a recipe for throwing good resources after bad.
I – Ignore Your Ego
We’ve all got one, right? We couldn’t survive without one. Yet uncontrolled, our ego can get us into a lot of trouble. It will whisper to us that we are both brilliant and infallible, and that our decisions are beyond reproach. Where decision-making is concerned, as author Beren points out, humility trumps hubris. Invite others into your decision-making process and keep an open mind about their thoughts and suggestions.
C – Confirm: Trust but Verify
When you’re dealing with reliable sources of information and opinion, don’t be lulled into a false sense of security. Maintain a healthy level of skepticism. Whenever possible, seek to validate the information you’re getting through secondary sources. When your mother says she loves you, check it out.
E – Eliminate Your Emotions
Tough to do. We are, after all, emotional creatures, so eliminating emotions may not be entirely possible. But we’re also intelligent creatures, so we can be aware of our emotional baggage and consciously avoid allowing it to guide our decision-making process. Or, to say it another way, don’t become so invested in a particular decision that you allow your emotions to overcome your good judgement.
S – Select Your Exit Strategy
The ultimate decision for every business owner is deciding how and when to exit the business. Do you pass it on to your kids? Sell it to your employees? Sell it to a competitor? Keep it as a “cash cow” while you play golf and sit on the beach? These are just a few viable options among many others. The point is, your ultimate decision for leaving the business should be the filter that guides the decisions you make up until that point. In other words, while you’re still active in the business and making an important strategic decision, you should ask yourself, “Will the expected outcome of this decision support my exit strategy or undermine it?”
There you have them . . . the seven CHOICES you can make to insure your decision-making process is both sound and effective. If you would like more of the detail behind these seven rules, get “Why Do Smart People Fail?” by Norris Beren. It’s available on Amazon and includes a self-assessment tool aimed at helping you identify the rule(s) that you need to work on.