As a business owner you are likely called on to constantly make decisions. Some days one after the other without time to take a breath in between, let alone perform the type of analysis you would like to perform before committing to a decision. In some instances quick decisions may be necessary and based upon their nature and possible ramifications should not be belabored. But we shouldn’t make snap decisions on major matters out of our desire to move at the speed of the Internet or the simple desire to cross something off our to-do list.
John M. Bernard, author of “Business at the Speed of Now” classifies decisions into three categories: routine, important and strategic.
• Routine decisions, right or wrong, have minor consequences and the consequences of wrong decisions in this category can often be easily rectified or lived with. These decisions should be made quickly. In fact the best decision you might make related to this category is to simply delegate decision making authority over many, if not all, routine matters to someone else in your organization.
• Important decisions have a greater impact than routine decisions and wrong decisions in this category can be costly in terms of dollars and lost time rectifying them, assuming they can be rectified. Many human resource decisions fall into this category such as hiring and firing and compensation packages. Pricing and resolving disputes (litigate or settle) also fall into this category. These decisions should not be rushed and unlike routine decisions that you may delegate, you as the leader should make the final call after careful analysis of the pros and cons of the various alternatives.
• Strategic decisions have the highest impact and ultimately may make or break your company. Examples of these types of decisions include matters such as: forming strategic partnerships, mergers and acquisitions, product development mapping, changes in distribution strategy and adoption of new technologies. Needless to say, you as the leader must ensure that such decisions are well thought out with proper consideration given to the potential upsides and downsides. You must carefully monitor progress and the impact on the company as you implement these decisions. Also, you should have an alternate plan or an “escape hatch” should you subsequently determine that you made the wrong decision.
Research indicates that only about one third of strategic decisions are on target. About one third turn out to be wrong, the final third have mixed results. For some guidance on how to increase your chances of making the right strategic decisions Mr. Bernard provides a list of questions to test your decisions against in his article “The Best Leaders Make the Right Decisions the Right Way.”