5 tips for better Decision Making as an Entrepreneur
As a founder or entrepreneur, you have to make a lot of decisions. Some say up to 1.000 decisions a day (1). Rather than a number game, you are faced with complex and business critical decisions that can make or break your company (2). Adding to your challenge is the speed required to take these decisions (3).
With limited time to research and ponder options, entrepreneurs have often to rely on their gut feeling to make the right decisions.
So how can you make the best (right) decisions?
Develop and refine the skills needed for decision making
Understanding how your brain collect, retain and choose among information and our natural biases (4) is important to avoid decision fallacy. In the book “Thinking, Fast and Slow”, Daniel Kahneman describes how two systems: intuition and slow thinking shape our judgment, and how we can effectively tap into both.
Good listening skills are also essential to collect the right information prior to making a decision. The LinkedIn learning path “Develop Critical-Thinking, Decision-Making, and Problem-Solving Skills” can be a good reference in order to develop the skills associated with decision making.
Rely on a clear methodology / structure
The usual steps recommended for effective decision-making are the following:
1: Clearly identify the decision and its parameters
2: Gather all relevant information
3: Identify the alternatives
4: Weigh evidence
5: Select among alternatives
6: Take action
7: Review and learn from your decision
However some people advocate to take a different approach. In his TEDx talk, Matthew Confer suggests to follow 3 steps:
1: Challenge the constraints you are facing
2: Embrace a pre-mortem
3: Check the basics
Leverage tools for a thorough analysis
Weighting options often rely on tools such as Return on investment, a Decision Matrix or a Cost-Benefit Analysis. Quantifying components linked to your decision can contribute to better decisions and limit the cognitive biases highlighted earlier.
Discover more tools available in the following articles:
These tools and processes to take better decisions are useful. However some choices may still be difficult to make.
Overcome decision paralysis
In her TEDx talk, Mary Steffel acknowledges the decision paralysis often due to the fear of making the wrong decision when faced with multiple options. She highlights the cost of indecision and suggests delegating decision making as a solution.
While you might benefit from delegating some decisions to your team, this might not be suitable for business critical decisions and for solo-entrepreneurs or startups with a small team. Then, what are your options?
It’s good to get an outside opinion, especially when you’ve been wrapped up in a decision for a while. An objective voice can step in and help you out, and perhaps help you consider points you haven’t yet thought of. Could you enlist the help from a mentor, a coach, an expert from your network, a peer in a different company?
Avoid the pitfalls from external advices
Be aware of the following pitfalls identified by Raymond Lee (5):
1: Relying too much on expert information. Keep in mind that experts are human too and have their own set of biases.
2: Overestimating the value of information received from other people. Keep other people’s opinions in perspective.
3: Underestimating the value of information received from other people. Other times we may have a tendency to discount information received from others. Next time you are discounting someone’s opinion, ask yourself why.
Leveraging pieces of advice you received can be valuable for your business. But equally it is recommend that you develop a process to evaluate suggestions and advices. As pointed out by Steve Blank (6), there’s no handbook on how to evaluate and process “suggestions” and “advice” but you should look to combine outside advice with your own insights.
If you have read this far, you are probably facing important decisions for your business. Business coaches can be valuable partners for you. They can provide guidance based on their experience — allowing you to save time and resources by avoiding pitfalls.
The following articles make a great case for business coaching:
- Why Does Coaching Matter for Entrepreneurs?
- What Can Coaches Do for You?
- What are startup mentors, and why do you need one?
Book a free in-take meeting for our coaching programs at delighting.io.