Making smart business decisions - whether about initiating a project, reengineering a process, allocating resources, or any issue of potential impact on an organization's offerings, operations, revenue, or reputation - is one of the most critical and challenging tasks leaders face. No wonder leaders often agonize over making the right call - especially when they feel pressured by a tight deadline, a limited budget, and lofty expectations of high-level stakeholders.
Effective business decision-making is an art, influenced by a leader’s creativity, vision, and gut instincts. But it’s also a science. And, like any science, decision-making is significantly improved by applying a structured technique to analyzing relevant data and refining hypotheses.
Here are three reliable, step-by-step approaches for weighing the pros and cons of any major business decision. What’s more, these tools can help business leaders complete the decision-making process with confidence in the outcome of whatever option they choose. All three tools use the same basic formula: listing alternatives, considering circumstances, and then choosing the option with the most advantages.
Facing a tough decision for your team, your division, or the entire organization? First, try using a decision worksheet. This is just a simple chart; you can easily find a downloadable and printable version or make one of your own. Along the top, list all the possible alternatives to the decision you’re trying to make. Then, under each alternative, list all the circumstances to consider before making your decision. For example, you might be faced with a decision about how to execute a newly proposed project. If you list “Outsource the project” as an alternative, the list of circumstances underneath might include “Access to outside experts,” “Free up internal talent to focus on other vital issues,” “Less control,” and “High cost.” Other alternatives, such as “Handle the entire project internally,” “Divide the project between an inhouse team and external experts,” “Hire a specialist,” and “Put the project on hold,” would each have their own list of circumstances. Then weigh or score the circumstances for every alternative. The alternative with the most positive circumstances seals your decision.
Another helpful decision-making tool to try is a decision tree. This is a specific type of flow chart that uses a tree-like diagram. At the top level, list the decision you’re faced with making. Then, in the various “branches,” list all the possible alternatives or courses of action. Then, from the ends of each branch, fill in the “leaves” with the possible outcomes or consequences of each of those alternatives. This tree will help you visualize the decision-making process and weigh the pros and cons of each alternative. Again, the alternative with the most pros and/or least cons is your best course of action.
Finally, there’s a force field analysis. This tool can help you choose the best course of action by discerning which option has the most driving forces toward your desired outcome, as opposed to the most resistant forces against it. Begin by listing each course of action. And then under each, write down the forces that will help you move the situation forward and then list the forces that will keep you stuck. Next, assign a score to each force for its degree of influence on your ultimate goal - for example, from one (weak) to five (strong). Then, add up the scores for the forces that will drive you forward and the forces that will hold you back. The course of action with the highest score on the forward-driving side is the alternative you should choose.
Give these three decision-making tools a try, and see which works best for you. Before long, you’ll be making business decisions with much less churning. Using one of these tools is also a good way document how you arrived at whatever decision you finally make - and useful to keep in case that decision is questioned later.
This article first appeared on amanet.org in November 2021. Used with permission.