Dimensions of confident business decisions
Amongst all the blueprints for making good business decisions, our experience has shown us that it frequently boils down to four basic elements: robust internal and organisational data; insightful and targeted external market and competitor intelligence; clearly articulated strategic and commercial objectives; and a proper understanding of how a decision relates to your business values.
Internal and external data and insights
Relevant internal data and information should be easily defined and available (department silos and organisational blocks aside) and shouldn’t require too much effort to pull together. This is the obvious starting point for most business decisions.
External intelligence can be a different matter. Only the biggest firms can afford the luxury of an in-house research team to mobilise around every business decision or strategic shift. Most rely on whatever time marketing or business development executives can garner to put together just enough on external issues and factors.
However, the amount of available and relevant external business intelligence is growing all the time and using it effectively can be can be an important differentiator to business decisions. Sometimes, this type of information is a required part of the process, to prove validity or make a business case for a new product or strategy. But it can feel optional and be overlooked. A survey by management consulting firm Arthur D. Little showed that companies actually become more innovative and profitable by analysing external sources of information. Surveying 275 C-level executives, they found that the best innovators scored 25% higher in their ability to use external business intelligence data and earned 13% more in profits from new products and services, compared with average firms (see External Business Intelligence Boosts Innovation and Profits).
With increased volume of external information, the skill of sifting and extracting what’s most important for your decision making becomes highly valued. Findings need to presented clearly and give confidence that all bases have been covered. They must also highlight the most relevant insights, give warnings about issues and barriers and offer alternative options, so you can interpret the information. Professor John Payne describes this rather eloquently as cognitive and emotional fluency in his fascinating 2013 TED talk, Overcoming Information Overload in Decision Making.
Delegating, or outsourcing, what can be an extremely time-consuming task ensures that results are communicated with ease and ‘fluency’ and more importantly, frees you up to focus on more value-added tasks.
Business objectives and values
If internal data gathering can be easily delegated and external market intelligence outsourced, this leaves time for the critical thinking on business objectives and values to the decision makers. Payne also urges decision makers to invest upfront time weighing up these values and objectives before they start examining the information provided as a way of making “value-based decisions.” Clarifying objectives and testing decisions against values is necessary work that will underpin your final decision. Moreover, for Payne, the more information you are faced with increases the need for upfront time thinking about your values and objectives to help you filter that information.
Quality business decisions balance critical business objectives and values with a full assessment of the relevant internal and external data and insight. So, mobilise your internal resources, outsource the gathering and assessment of critical external market and business intelligence. That leaves you to get your head down thinking about the values, objectives and criteria that will help you make the best decision with the best outcomes.
What do others think about the important elements of business decisions and how decisions makers should prioritise these?