How I make business decisions
Making a good informed decision is not that different to sitting on a jury – all reasonable doubt has to be removed before you can pass a verdict one way or the other. Thankfully, though, corporate decisions are seldom a matter of life or death!
Here are a few general rules that I have found help me to get to the point of taking the plunge (or not) within the appropriate time frames:
Don’t judge a book by its cover
Like me you may be someone who’s big on first impressions when you meet people but you can’t let the same thought process influence your decision-making. If on first hearing an idea strikes you as a really good one, you may well be correct, but you mustn’t allow that first reaction to influence your ability to objectively weigh the cons as well as all the pros when they are presented.
Do your homework
Just because no significant cons are presented it doesn’t mean they don’t exist, so get someone on to digging them up and evaluating them while you still have the time – discovering them after you’ve launched the deal doesn’t do you any favours. Insisting that this homework is conducted becomes doubly important if and when everyone is unanimously in favour of going ahead with the project. Nothing is perfect, so work hard at uncovering whatever hidden warts the thing might have and by removing them you’ll only make it better still.
Avoid making decisions in isolation
Every decision has some degree of impact on your ability to adopt other future opportunities in what the experts call ‘the decision stream’. This one may be a ‘too good to miss’ opportunity but how will it affect other projects or priorities and, if now is not the best time to do it, what risks if any are there in putting the thing on hold for an agreed period of time? If you cannot manage this project in addition to another that’s waiting in the wings, which one gets the nod and why?
Do everything you can to protect the downside
All wise investors go to great lengths to do this with their stock portfolios and when setting up a new business you should try to employ the same strategies. For example, when we started Virgin Atlantic, the only way I got my business partners in Virgin Records to begrudgingly accept the risks involved was by getting Boeing to agree to take back our one 747 after a year if things weren’t working out as we hoped. To this day, with giant, capital-intensive ventures like Virgin Galactic and Virgin Voyages, we always spend a lot of time in finding inventive ways to mitigate the downside.
Give it time
If you have the time to use the ‘orchestrated procrastination’ approach then do so. Without getting into the ‘paralysis by analysis’ mode, doing more rather than less homework on a project is seldom a bad thing. While looking at it more deeply you may find better alternatives or the marketplace may change.
Making smart informed decisions is why leaders get paid the big bucks. There is really no science to getting it right every time which is why (unfortunately) decision-making is not a process that can be programmed to come in ‘just in time’ across the board. However, across 50 years in business, I’ve used the tips above to help ease the process. I hope you find them useful too.
How do you make business decisions?