Thursday, June 2, 2016

Failing to See the Alternatives in Business Decisions

Business after business has failed from poor decision making. Chronic poor decisions indicate a bigger problem. It isn't necessarily that the ideas brought forward aren't good but that they aren't well thought out. Where long-term planning is needed short-term decisions are made. Chronically poor decisions are a result of executives listening to the same logic of a tight group of individuals and begin to make decisions in a bubble.

Strategic decision making is a little like free flowing a piece of art where you come up with a lot of great ideas based on a few needed principles such as cutting costs or expanding services. Out of the many ideas that are generated most should be thrown into the mental trash can, a few put on the shelf as alternatives, and others explored for possible implementation.

The problem is that many organizations begin to engage in a cultural environment where the same actors and players make decisions about what is important. Good ideas are thrown out and poor ideas are kept and explored based on issues beyond the needs of the business. They use the same short-sighted justifications for their decisions and check with the same individuals to validate their ideas.

Good strategy figures out all the contingencies and options. It doesn't seek to push through an idea regardless of its merits. Surrounding yourself with people who will challenge your ideas when necessary, work with you on improving your ideas, and finding new solutions is important for overall success. Few executives have the foresight to think about the merits of disagreement.

Any strategy should thoroughly look at the risks of implementing that strategy. It should actively seek out the worst case scenarios and reevaluate to ensure that the strategy minimizes the risks.  Some very large and important catastrophes can be avoided if the extra effort and time was made to ensure decisions were truly in the best interest of the organization.

1.) Surround yourself with competent people who are willing to challenge ideas.
2.) Evaluate all worst case scenarios and adjust the strategy to minimize risk.
3.) Fire and hire new executives to ensure you have the right culture and people to compete.

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