The Process of Decision Making — Part Three
In part one of this series, we discussed the importance of having a decision making process in place and the general outline for that process. Part two identified and elaborated on the first step, posing then reexamining your decision problem.
Now that you have posed and reexamined your decision problem, what about your strategic objectives? That is, how do the implications of this decision align with what you really want?
You can manage the risk inherent in decision-making by better understanding your long-term objectives. You will find that clarity here gives you decision criteria for virtually any problem. The following example is more personal than commercial but it illustrates the point just as well.
Reduce Risk—Consider What You Want
Let’s say you’re faced with a decision that is more financially lucrative but less sound in terms of personal fulfillment. It would require moving from Southern California to New York City. Will you be making the best choice if you decide to accept the offer and move ahead? As you work on your objectives with your family: quality of life, personal development, financial stability, contributions to the company etc., you realize that quality of life is a key requirement for you. Though your salary would increase substantially, you and your family might be making a quality of life trade off by relocating to New York. By examining what you really want, you in turn learn what you don’t want.
The same is true in a commercial setting.
Let’s say you’ve been a supplier of hops to the beer industry and are interested in expanding your business vertically. You know beer. You know manufacturing (growing/harvesting) and you understand sales. Do you purchase a brew pub which has a restaurant component as part of the business model or do you focus on production breweries? Being clear about what you do/don’t want as well as the skills you have to leverage might naturally direct you to the production brewery with its familiar processes over the brew pub.
Strategic Objectives—Start Here
Strategic objectives help you:
Determine what key information you should be looking for.
Explain your decisions to others.
Determine the importance of a given problem in the overall scheme of things.
Still, there are several pitfalls to be aware of in defining your strategic objectives. One: you might take too narrow a focus and emphasize the short term over the longer term. As with your action steps described as Step One in the earlier installment of this series, you might simply be spending too little time focusing on your objectives and concentrating on a quick fix. Two: it’s difficult to define objectives because all of the factors involved: pressure from family, too little time, societal obligations, and demands from your business. The key is to soul-search at the deepest level. Unfortunately, such activity makes people feel uncomfortable and hesitant to dig deeper. The authors of Smart Choices advise us that the more we know about what’s important to us, the more powerful our future decision-making payoffs will be.
There are five steps in the process of identifying strategic objectives:
Spend a few minutes jotting down what you hope to accomplish with your decision.
You might want to consider coming up with a wish list of what you really want. You also might want to consider the worst possible outcome of how your decision could affect others. Have you considered the full range of alternatives—including the terrible ones?
Once you’ve determined concerns, rephrase objectives as concisely as possible.
Construct a tight action phrase using a verb and object i.e. “save money”, “increase efficiency company wide”.
Organize the objectives by splitting up the ends from the means.
In other words, get to the heart of the matter. Use the following Japanese saying to cut through the means to the desired end: “You don’t really understand something until you’ve asked five times ‘why?’”. If your objective is to save money for your retirement, you might find the end is achieving and securing a high-quality life after age 65.
Determine what each objective means to you.
What is the bottom-line intention of your objective? If it’s to save money, find ways to cut costs or increase revenue or both.
Reexamine your objectives for soundness.
Can you live with the objectives you’ve constructed?
The authors then provide some insights that may shed more light on the process of identifying objectives.
Objectives are highly personal. What’s important to you is probably not even a factor for your colleagues.
Objectives should not be limited by the availability of data.
Well thought out objectives rarely change over time.
Overlooked or even unrecognized objectives could end up affecting your decision. Perhaps you didn’t know you had the objective until it was staring you in the face.
If you have come to this post before reading the first two installments in the series, go back and read Part One and Part Two for a fuller understanding of the discussion. The investment of time you make in developing your strategic decision-making skills will pay dividends in reduced risk and better choices.
Let us know if we can help you with your decision making process. Our team of subject area experts can help guide you through the steps you need to improve your business’s performance and profitability. We have decades of experience servicing businesses in the Tampa and greater Florida area.