How to make a business decision
It could be said that business leaders have one job, and that’s to make decisions. The decisions we make affect people’s livelihoods, their careers – not just our employees – but our customers, our vendors, our community.
I wonder how often any of us sit down and think about how we make business decisions – is our process any good? What could we do to improve it? It’s in that spirit that I offer you Brad’s guide to business decision making! (I’m sure books have been written about this, there’s lots to say, so consider this an incomplete summary…)
To help us to walk through this I’m going to illustrate how to decide if we need to expand our account management team by hiring someone new.
First, gather the facts
The first step in making better business decisions is to gather as much information as is readily available. I see business owners skipping this step because “they know” what they are going to find – yet when we pull out the data sometimes there are surprises! Data should not be threatening — even if it challenges your assumptions you want to have all the relevant data.
How many clients do we have? How are they distributed among the existing team? What’s our track record of closing new clients, and losing old clients? How many hours are each of them working and billing…
There’s a lot of data that we can look at and we don’t want to pull out every possible piece of data – too much data is just as bad as too little. What can we get our hands on reasonably easily?
Then, gather the opinions
Opinions are not as powerful as facts – but they do carry some information. I want to ask the people most likely to be affected by the decision and hear their input. The opinions you hear may get you to think about things from a different angle. They may also help you to understand the obstacles you may have to overcome or people you have to persuade as you choose a course of action.
What do the current account managers see? Are there opportunities for efficiency (instead of hiring)? If we were hiring what type of position do you see (another person like you, someone more junior or someone more senior)? When you look at this data what do you see?
By listening to the opinions of those likely to be affected it also conveys respect and makes them feel like they are part of the solution.
Purposefully eliminate uncertainty and risk
As I’m framing a decision there’s usually one or two places where there’s really no good data. Or where the data isn’t really pointing in a direction. Where there’s uncertainty there is risk – so I’ve come to be very wary of uncertainty.
Is there a way to test a solution that might produce meaningful data? Are there other people (friendly competitors, network partners, etc.) who might have some data that they can share?
Customer A seems very wary of changes in their account team, they’ve dropped some hints in the past that they feel like we don’t know their business well enough and a change in account team might trigger that again… Could we sit down with that customer and discuss their concerns (without mentioning any possible changes)? Could we add someone to the team without changing who they work with…
I want to attack the riskiest part of the decision first because if it’s going to fail I want it to fail quickly, before we’ve spent a lot of time and money on a bad decision.
Commit & Communicate
Once you’ve looked at the available data, listened to the opinion of others and eliminated any uncertainty through testing, experimentation, or exploration, it’s time to decide. At this point you might not have a clear cut winner, the data, opinions and risk may point to risks and opportunities on both sides. This is why you get the big bucks! It’s time to make a clear decision, and explain to your team why you are making this decision.
We have been bringing on an average of 3 net new clients a year, we don’t see that changing this year. Our account team is very nearly at capacity (based on their time sheets) and our clients are reporting that they feel like we’ve made some mistakes recently. Based on that we feel like we need to add at least one junior person to our team and will be starting to recruit right away. Hiring a junior person enables us to leave the relationships intact while giving our account managers more support.
Organizations usually resist change — so if you want the team to make a change you need to be clear and demonstrate commitment to the new direction to overcome that natural resistance.
Revisit if/when new data becomes available
Just because you clearly communicated your commitment to a certain direction doesn’t mean that you are wed to that direction forever! You may encounter new data in 3 months (or 3 weeks) that changes your mind. But because you explained your thinking you can then explain how the new data changes your thinking if you have to make another decision.
This is the principal of strong opinions, weakly held — we commit to our decisions (because they are the best decision we could make with the information present). This means that we can make decisions rapidly (as our fast moving times require of us) and not invest our egos in always being right.
After recruiting for some time it appears that the market for junior account managers is very thin — there are very few good candidates and they weren’t really that much cheaper than experienced candidates. So instead we are going to hire an experienced candidate and put them on these 2 new projects we’ve landed; then look at moving 1 – 2 projects from the existing AMs to this new person over time.
So there you have it — a 5 step outline for making better business decisions. Let me know how your process differs or anything I might have left out!