Consultancy is one type of expertise business besides financial advisors, personal stylists, a wedding planner, brand photographer, videographers, etc. As expertise business owners, we face different types of decision-making day in, day out. Let’s have a closer look at the types of decisions I have come across as a consultant, helping business owners, as well as choices I had to make as a small business owner.
Decisions govern the flow of our life. We make decisions at every step of the way of our waking moments, from the moment we open our eyes till we fall asleep at night. Our decisions reveal our values, beliefs, and experiences. Moreover, some choices happen at and create new junctures in life. Although, not even good decisions can guarantee optimum outcomes or even an improvement in our lives. The way how we make choices influence these decisions, and therefore the results as well.
The process of decision-making
Decision-making is a process that considers the decision-maker and the environment in which the choice is made. The process of decision-making consists of a series of steps an individual follows when making a choice: collecting information, evaluating alternatives, and making a choice based on a set of criteria; finally, you act. During decision-making, various things are linked to you, which affect how you make your choices. These variables could be your fears, your deepest desires, circumstances, lifestyle, your beliefs to the overall outcome, and so on.
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Now, let’s get back to our topic today. When you own or run a business, no matter the size, you are required and trusted to make the best decisions for your team. Business owners and managers must understand the impact and importance of each decision they make. The results of the wrong or right choices can affect the entire business. Business owners must continue to improve and update their decision-making skill set. Most of the time, the basics of decision making are the same. However, new techniques are evolving every day, impacting making significant decisions for your company.
Collaborative technique of decision-making
Also known as group decision making, collaborative decision making is a decision-making technique that works precisely the way it sounds. A group of people discusses and weighs up decisions. Most often, these people are chosen either at random or are compiled based on their experiences and knowledge in the company. This decision-making method is one of the most impactful ways to decide, but it is also the most time-consuming.
For example, a company would like to make an investment, and you are part of the team that is preparing the analysis connected to this potential deal. When you work as part of a team, you need to approve a presentation supporting a decision-making process. The analysis is wide-ranging, considering the effect of the investment on the legal, economic, brand-related aspects of the business. This is a typical example of collaborative decision-making. Alternatively, when a firm decides that they would like to make an acquisition or a merger is also a good example of collaborative decision-making. Technology businesses, especially app development, require lots of decisions made in collaboration between team members and partners.
An even more direct example of this technique is the following. In the pharma industry, there is fierce competition between companies in significantly shortening the molecules’ testing and approval time. In this process, many groups work together. The sales and marketing, product development, and regulatory teams work together on the decision of reducing the testing and approval time.
Reaching a consensus
When something is decided through the collaborative technique, it can happen through reaching a consensus or a non-collaborative decision. Decision-makers reach a consensus when all of the parties making the choice come to a common agreement. The above examples have a good outcome if they are reached through unison amongst the parties. The advantage of such decision-making is that it’s a win-win for all involved. It’s not about having a win here and be on the losing side elsewhere. The decision has the agreement of all parties because they accept the group’s choice due to it bringing them the value that is in line with their interest. Nevertheless, not all collaborative decisions will be consensus-based. Some may be ‘dictated’ from upper management levels, and they need to agree, rather than want to agree with the decision fully.
Sir, yes, sir! – The command technique
The command technique is very rare nowadays. You may come across it in the army, or not even there. This decision-making technique is connected to the autocratic leadership style. Through the command technique, leaders make decisions without talking with higher managers or their teams when deciding. This style is standard and often speeds up the decision-making process. Often, this technique works best when you must make a quick, time-sensitive decision.
This type of decision-making is used, for example, at the time of a merger or acquisition decision when leaders of an organization may not consult with you when making their choice. If the firm’s strategy and growth dictate to make an acquisition, they may not discuss with all managers that they are taking this step. In this case, the board of directors comes together, and they may make a collaborative decision. Still, that may not involve other managers in making this choice. Therefore, the decision will be collaboratively made for the board of directors, but it will be more of a command for the rest of the organization. So, the same decision from different angles may appear in a different light.
Some decisions are made out of convenience. The decision-maker may choose to go with the flow or pick the option with less resistance, even opting for the alternative with the least pain. This technique comes in handy too, when the decision-maker wants to gloss over something they consider a weakness.
The convenience technique is a ‘hands-off’ approach to decision making. This technique can be one of the toughest for business owners and managers. Delegating and trusting another person to make the best decision for your company may be daunting and stressful. However, this decision-making technique also opens up perspectives you had not looked at before. Handing over a decision to someone else on operational matters can empower your team while clearing up time on your schedule. The convenience technique is one of the most difficult methods, yet it is an impactful and rewarding way to make a decision. It has downsides, too, unfortunately. Placing decisions in an employee’s hands may leave you open to not knowing what is happening in your business. This notion could leave you facing trouble when they step out of the company.
A stitch in time saves nine…
As an example, for making a convenient decision, here is a situation that I’ve found myself in. I consider it as my life lesson. In my business’s technology department, I left many decisions to the person responsible for the IT side of my company. This was a decision I made out of convenience, as I did not want to spend time or energy with the technological details. Soon I had to realize that I got distanced far from the applied technological solutions. When this person left my company, it left me feeling uneasy that I didn’t know these things. I then had to learn everything connected to the technological solutions to be able to work my way through it all. I am a small business owner, and I must admit that I cannot be a jack-of-all-trades. Simultaneously, I have to possess enough knowledge to pull through and resolve occurring issues after someone leaves the business. My convenience decision stemmed from wanting to focus on product development, sales, and so on and therefore wanted the technological stuff to get resolved ‘on their own’. Well, lessons learned, I won’t do this in a hurry any time soon!