Are You Making Great Business Decisions?
What is the one thing that every growth company must do to sustain a competitive edge in today’s fast-paced economy? The answer? Make great decisions. Simply stated, your success as a business leader equals the sum total of all the decisions you make. As Jim Collins states “it’s the combination of thousands of decisions that lead to greatness.”
Put another way: Greatness = Many smart decisions.
So, how do you make business decisions? How would you measure the success of your decisions?
I am always looking for a different perspective, or a new lens to examine the behaviors of successful business leaders. In this article I look at how Warren Buffet and Richard Branson make decisions as well the Harvard Business Review perspective on 4 things that set successful CEOs apart. Read on to learn more about business decision making!
4 Things That Set Successful CEOs Apart
A recent HBR article reported on a 10-year study called the CEO Genome Project. Its goal was to identify the specific attributes that differentiate high-performing CEOs. It tapped into a database containing more than 17,000 assessments of C-suite executives, including 2,000 CEOs, looking for what distinguished candidates who excelled in the role from those who underperformed. Here are the four behaviors that set successful CEOs apart:
1. Deciding with speed and conviction.
2. Engaging for impact.
3. Adapting proactively.
4. Delivering reliably.
Yes! The number one behavior is Deciding with speed and conviction. The finding was that high-performing CEOs do not necessarily stand out for making great decisions all the time; rather, they stand out for being more decisive, even amid ambiguity, with incomplete information, and in unfamiliar domains. People who were described as “decisive” were 12 times more likely to be high-performing CEOs.
The moral of the story here: Good CEOs realize that a wrong decision may be better than no decision at all. Check out the other attributes here.
Learning from Warren Buffet
Last May Berkshire Hathaway held its annual meeting hosted by chairman and CEO Warren Buffett and vice chairman Charlie Munger. Here are seven things we as business leaders can learn from Buffett’s comments.
1. As a CEO, act fast.
2. Get involved in multiple projects.
3. Don’t focus too much on the economy.
4. Move online.
5. Tax cuts could help businesses, but don’t change because of them.
6. Healthcare impacts business.
7. Don’t miss an opportunity.
Yes. Once again, the leading comment was on acting and deciding fast! Buffett discussed the Wells Fargo fake accounts scandal that unraveled late last year, highlighting where exactly the company went wrong. The biggest mistake that Buffett mentioned was the company’s CEO at the time, John Stumpf, not acting quickly and effectively enough after he found out about the situation in 2012.
“It had to stop when the CEO learns about it,” Buffett said. Check out the other six comments here.
Richard Branson Decision Making Rules
Branson says that “making a good informed decision is not that different to sitting on a jury – all reasonable doubt has to be removed before you can pass a verdict one way or the other.” Here are a few general rules that help him.
Don’t judge a book by its cover
If on first hearing an idea strikes you as a really good one, you may well be correct. But you cannot allow your first reaction to influence your ability to objectively weigh the pros and cons as when they are presented.
Do your homework
Just because no significant cons are presented doesn’t mean they don’t exist. Nothing is perfect, so work hard at uncovering whatever hidden warts the thing might have and by removing them you’ll only make it better still.
Avoid making decisions in isolation
This one may be a ‘too good to miss’ opportunity but how will it affect other projects or priorities.
Do everything you can to protect the downside
All wise investors go to great lengths to do this with their stock portfolios and when setting up a new business you should try to employ the same strategies. To this day, we always spend a lot of time in finding inventive ways to mitigate the downside.
Give it time
If you have the time to use the ‘orchestrated procrastination’ approach then do so. While looking at it more deeply you may find better alternatives or the marketplace may change.
Branson noted “There is really no science to getting it right every time which is why (unfortunately) decision-making is not a process that can be programmed to come in ‘just in time’ across the board.”
Making smart informed decisions determines your ultimate success. I have given you a several viewpoints or lenses to “chew on.” I hope you find them useful.
How do you make business decisions? I’d love to hear about it. Contact me here to discuss these how these ideas can impact your business.
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