Making Decisions: Follow your gut, or dig into data?
As business leaders we have one job, and that’s to make decisions.
But how do we make decisions? What process do we use? Do we “go with our gut”? Or look at all the angles and reason it out?
The best business decisions are those that are made purposefully, without wasting a lot of time — but that also minimize risk and get our team moving together toward a new outcome.
About “gut” decisions
I know very successful business owners who swear to me that they “always go with their gut” when making decisions. When I slow them down and ask them what “going with their gut” means they talk about not deliberating too long. They look at the facts, and if the answer isn’t obvious they trust their intuition and go in the direction that “feels best”.
If the decision is in an area where you have a lot of experience, this process likely works reasonably well. You have a lot of information from those experiences, and that intuition you trust is the accumulation of all of that data. Plus, “gut” decisions have the advantage of being quick — you make the decision and move on.
But if you are deciding on an area that is new for you, that you haven’t experienced over and over, or the fact pattern is significantly different from what you’ve experienced in the past, it might make sense to slow your decisions down and take in more information. In those situations your “gut” is starved for data — you need to catch it up.
First, gather the facts
The first step in making better business decisions is to collect as much information as is readily available. I see business owners skipping this step because “they know” what they are going to find (back to that gut instinct again) – yet when we pull out the actual data sometimes there are surprises! Data should not be threatening — even if it challenges your assumptions, you want to have all the relevant data.
So if I was trying to decide if I needed to add an additional Account Manager, I might ask:
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…
There’s a lot of data that we can look at, and we don’t want to spend weeks pulling out every possible piece of data – too much data is just as bad as too little. What can we get our hands on reasonably quickly?
Then, gather the opinions
This is where the waters can start to get muddy. If you are an extrovert, other people’s views can cloud that strong “gut” instinct that you started with. But as your organization gets bigger, it’s harder and harder for you to have access to all the information you need to make good decisions!
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.
We’ll dig more into this process on Saturday, but for now, take a look at where you might add some additional data to your “gut instinct”. Where might slowing down and taking in the opinions of others help you to “sell” your decisions to your team?