To decide on something, even as trivial as the dress you will wear to the office today, has implications. You choose a sloppy dress for a formal meeting and you end up losing your image. You dress up too much and you stick out sorely in the crowd.
Now think of decisions as your investments that give you returns. Some may turn out profitable, some may just go kaput. Some you may come to regret. But one cannot just leave it at that when you’re in a position where the decisions you make impact not just you but your company and the people working for it. That is why people in senior positions, the executive or the C-Suite, get paid more. Their work may seemingly appear less, but the impact is long lasting.
Whoever decided that they must increase the sugar content in Coke to compete with Pepsi would have had to give a lot of answers, not just to the customers who sorely disliked it, but also to the board and the stakeholders, for a long, long time. It was a mistake that cost Coke severely and a temporary dent in brand equity and market share.
Just how do we take the correct decisions is something one must reflect upon. There are a few factors that are integral to a decision-
- The information at hand (knowing what you know and what you ought to know)
- Risks associated with action
- The urgency to decide
- The visible and invisible impact (outcomes)
- The experience of a person taking that decision and its precedents if any
- Mental status of the person making the decision and personal biases
- External factors that exert pressure on the decision ( those you have no control over)
Strategic decision making is one thing and making day-to-day decisions is another, although both can have long-lasting impact. We have to make decisions almost every minute. Everything is not as easy as deciding if you want to have the pink candy or the blue. Putting up a menu for the family may be the least challenging one compared to deciding a menu for the guests- whose tastes you may not know in advance. Choosing a career, a job, a life partner, the first home and its locality, prioritizing work, choosing schools for your kids, the wardrobe, the investments we make and the time for taking the vacations, we make decisions on a compulsive level. At times, we may have the luxury of time before we decide and at others, we may have to hasten the process through sheer mental strength. In both cases, the above 8 factors will play a role and cannot be ruled out.
Why do we make decisions?
Decisions keep life from being in a state of inertia. They lead you from one status to the other based on your actions (or reactions). The theoretical decision-making models taught at B-Schools may be feasible for large, corporate decisions, but not all the time. Every decision comes with its shadow, that of going wrong. Even the most thought-about decision has the potential to go wrong because the environment in which it plays out is always volatile.
Risks associated with decisions
Since decisions are always fraught with risks, one must be better equipped to understand and be prepared to face them. Some of the risks associated with decisions include, but are not limited to:
- Loss of Money
- Loss of Opportunity
- Loss of Brand Image
- Loss of Crucial Time
- Waste Time, Energy, and Efforts
This is where Risk Mitigation comes into play. A decision can never be risk-free, at the most we can do is to mitigate the risks as much as possible. The first step is to acknowledge that there are risks involved and to set in place plug-ins to minimize the impact. Once you have these in place, even in the worst cases, the adverse impact can be absorbed.
Tools for decision making
Modern-day management speaks of using tool-kits for several functions that involve the company and the stakeholders. Decision being one crucial among them, it has several models depending upon the criticality of its nature.
- Risk analysis: This is the first step before decision making. Use and get as much information as you can before deciding. Today is the era of data-driven decisions when data is king.
- Decision tree: It puts up the steps needed to be taken before we arrive at a decision, shows us how to add or delete a step or two, who works at which level and how and how one level leads to the other without skipping the crucial aspects. It also takes into accounts probabilities- events or things that could go wrong on the way and the means of avoiding or dealing with them
- Identifying Alternatives: Every decision does have alternatives. Even deciding in favor of or against something is an alternative. Tap all possible alternatives to solutions before you decide the one you would go with. Weighing the alternatives against the best case scenarios helps in mitigating the risk of a decision going wrong.
- Sticking to decision: Once you decide, you need to own that decision. You cannot blame someone else for a decision that you were part of. Whatever happens, after you’ve decided is your responsibility and so is that of correcting it if things don’t turn the way you anticipated.
In a VUCA world, decision-making is no more a simple task like drawing lots. A lot is at stake when a decision is made, especially when you need to decide quickly to stay ahead of the competition, when you’re under pressure to take a decision or when decisions become existential. In spite of all the data available, one must, at times, rely on gut instincts before making a decision. This may work if you have good experience of acting on instincts and in the absence of real data, but it could potentially backfire. Avoiding impulsive decisions or deciding under pressure works best to mitigate damage caused by a decision gone wrong.
Did you notice any corrections to be made on this page? Submit your feedback here. We will take the necessary action.