Have you ever wondered why some business leaders seem to make decisions with ease while others struggle? Well, the secret lies in developing decision-making skills and learning soft skills.
Here are some important statistics from the McKinsey Global Survey on Decision-Making in 2022. They show why learning decision-making skills is crucial to overcome challenges.
- Only 20% say their organizations excel at decision-making.
- Only 37% say their organizations’ decisions are both high in quality and velocity.
- A majority say much of the time they devote to decision-making is used ineffectively.
Bad decisions can lead to lost opportunities, financial losses, and even ruined relationships. The good news is that decision-making is a skill that can be learned.
In this article, we’ve interviewed experts who have faced similar challenges and learned from their experiences. They’ll share valuable insights and advice on how to develop decision-making skills in business.
10 Tips to Develop Decision-Making Skills: What the Experts Say?
Limit Your Choices
In decision-making, we are often told that having more options is better. However, Derek Flanzraich, the CEO & Founder of Ness, a health-first venture-backed startup, suggests the opposite.
Derek believes that having too many options can lead to decision paralysis and unclear outcomes. By reducing the number of options, decision-makers can focus on the most essential factors and thoroughly evaluate each option’s potential.
Here are some tips for limiting your choices:
- Identify the most important factors: When you’re faced with a decision, identify the factors that are most important to you. These could be things like cost, quality, or convenience.
- Prioritize your factors: Once you’ve identified the most important factors, prioritize them. This will help you to narrow down your choices and focus on the most important ones.
- Set limits: Once you’ve prioritized your factors, set limits on the number of options you’ll consider. This could be a specific number, like three or five, or it could be a percentage, like 20%.
Critical thinking is essential in avoiding hasty judgments and arriving at well-founded conclusions. Decision-makers can make better choices by considering different perspectives and challenging their own beliefs.
Here are some tips for developing critical thinking skills:
- Be an active learner: Ask questions, challenge assumptions, and seek out different perspectives.
- Be aware of your own biases: Take some time to reflect on your own beliefs and values. Think about how they might influence your decision-making.
- Be open to new information: Be willing to change your mind if the evidence shows that you’re wrong.
Being process-oriented means approaching decision-making as a series of steps or stages. This involves defining the problem, gathering information, identifying options, evaluating options, and making a decision.
This is what Anthony Dutcher, the Chief Marketing Officer of Veriheal, says about embracing a process-oriented approach:
According to Anthony, adopting a process-oriented approach helps managers effectively lead and collaborate with their teams to achieve organizational goals.
Here are some tips for being process-oriented when making decisions:
- Define the problem clearly: What is the decision that you need to make? What are the specific goals that you’re trying to achieve?
- Gather information: What information do you need to make a good decision? This could include data, research, or expert opinions.
- Identify options: What are the different options that you have? What are the pros and cons of each option?
- Evaluate options: Weigh the pros and cons of each option and decide which one is the best fit for your needs.
- Make a decision: Once you’ve decided on the best option, make a commitment to it and move forward.
Make Evidence-Based Judgements
The next piece of advice is all about the power of evidence-based decision-making. Evidence-based decision-making means making choices based on facts and data, not on gut feelings or past experiences.
Prof. Dr. Te Wu, the CEO of PMO Advisory, says the primary objective of evidence-based management (EBM) is to leverage scientific evidence as the foundation for decision-making rather than solely relying on one’s intuition.
“Incorporating evidence into our decision-making process entails leveraging performance data to substantiate and fortify our strategic choices. Ensure that we acquire the most up-to-date and comprehensive data available. Assess the efficacy of prevailing business strategies in a scenario akin to yours. Do these circumstances align with our specific case?” he added.
Prof. Dr. Te Wu highlights that evidence-based judgments are crucial in avoiding biases and ensuring decisions are well-informed. By relying on concrete evidence and up-to-date data, businesses can tailor their strategies to the specific challenges they face.
Here are some tips for making evidence-based judgments:
- Gather data: The first step is to gather as much data as possible about the situation. This could include data on past performance, customer feedback, or market trends.
- Analyze the data: Once you have the data, you need to analyze it to identify patterns and trends. This will help you to understand the situation and make better decisions.
- Use the data to make decisions: Once you have analyzed the data, you can use it to make decisions. Be sure to consider all of the data and weigh the pros and cons of each option.
Apply Frameworks and Models
David Cohen, CEO of Badais International, shares his advice on how to improve decision-making skills. He says that one of the best ways to make better decisions is to use frameworks and models. These tools can help you to structure your thinking and to weigh the pros and cons of different options.
Some common decision-making frameworks include:
- SWOT analysis: This helps you to identify your strengths, weaknesses, opportunities, and threats.
- Cost-benefit analysis: This helps you to compare the costs and benefits of different options.
- The 5 Whys technique: This helps you to drill down to the root cause of a problem.
Here are some tips on applying frameworks and models in decision-making:
- Familiarize yourself: Understand various decision-making frameworks and models available. Familiarity with these tools will enable you to choose the most suitable one for different situations.
- Define clear objectives: Having a well-defined purpose will guide you in selecting the appropriate framework to address your specific needs.
- Gather relevant data: Accurate and comprehensive data will provide a solid foundation for evaluating options and making informed choices.
- Evaluate options systematically: Take each step in the process seriously, ensuring a thorough evaluation of alternatives and potential outcomes.
- Consider multiple perspectives: Involve stakeholders and team members in the decision-making process. Encourage diverse viewpoints and seek constructive feedback to gain comprehensive insights.
Keep Your Business Information Up-to-Date
Rhett Stubbendeck, the CEO of LeverageRx, understands the vital role of keeping every piece of information up-to-date. With accurate financial data and relevant insights, he makes smart decisions on investments and strategies.
In addition to staying informed, Rhett ensures that he seeks input from others before finalizing any decision. He views situations from different perspectives by consulting employees or finding at least three people who agree with him.
Here are some tips for keeping your business information up-to-date:
- Gather data regularly: Collecting data on a regular basis, such as weekly, monthly, or quarterly. This data should include financial data, market data, and customer insights.
- Use tools to help you track and manage your data: There are many tools available that can help you track and manage your data. These tools can help you to automate the process of gathering and analyzing data. They can also help you to share data with others in your business.
- Share data with others in your business so that everyone is on the same page: Make sure that everyone in your business has access to the same data. This will help to ensure that everyone is making decisions based on the same information.
- Consult with experts: If you’re not sure how to interpret your data, talk to an accountant, financial advisor, or marketing consultant.
Embrace the Culture of Self-Honesty
Have you ever found yourself making decisions based on what you hoped or wished were true rather than facing the reality of the situation? It’s easy to fall into that trap, even as professionals. This is where self-honesty comes in.
Self-honesty in business is the practice of being honest with yourself about your own motivations, biases, and limitations. Ryan Steinolfson, Business Owner at Accelerate Marketing, says:
Ryan says that his company prioritizes introspection, or self-examination, in order to make informed decisions. He believes it is crucial to cultivate a deep understanding of our own motivations in order to make informed decisions.
Here are some tips on how to embrace a culture of self-honesty in your business:
- Ask yourself tough questions: What are your motivations for making this decision? What are your biases? What are your blind spots?
- Challenge your assumptions: Don’t be afraid to question your own beliefs and assumptions. This can help you to see the situation more clearly and to make better decisions.
- Seek feedback from others: Talk to people you trust about your thoughts and feelings. This can help you to get a different perspective and to see things from a different angle.
Taking big decisions or actions without testing them on a smaller scale can be risky. It’s like diving into the deep end of a pool without checking the water first. Small-scale testing lets you dip your toes in first, get feedback, and make improvements before going all-in. It’s a smart way to avoid big mistakes and ensure success in the long run.
Carl Jenson, Founder of Compare Banks, shares:
Here are some tips on how to do small-scale testing:
- Start small: Don’t try to test too many things at once. Start with one or two ideas and see how they work.
- Be specific: When you are testing a decision, be specific about what you are testing. What are you trying to achieve? What are the different outcomes that you are hoping for?
- Get feedback: Talk to people you trust and get their opinions on your decisions. This will help you to see your decisions from different perspectives and to identify any potential problems.
- Be patient: It takes time to get feedback and make adjustments. Don’t give up if your first few tests don’t work out. Keep testing and adjusting until you find something that works.
Create a Timeline
To make great decisions, Joe Coletta, the founder & CEO of 180 Engineering, emphasizes the importance of creating a timeline.
Planning your decisions with a clear timeline can be a game-changer. It’s like having a roadmap that guides you step by step toward success.
Here are some tips for creating a timeline:
- Start by identifying the key milestones: What are the most important steps involved in your decision?
- Estimate how long each step will take: Be realistic about your time and resource constraints.
- Set deadlines for each step: Make sure that your deadlines are realistic and achievable.
- Track your progress: As you’re working on your decision, make sure that you’re staying on track.
- Make adjustments as needed: If something changes, be prepared to adjust your timeline accordingly.
Get Rid of Cognitive Bias
Biases can cloud our judgment and lead us astray from making the best choices. Biases are like hidden traps that can impact how we perceive information, assess risks, and ultimately make decisions.
Josh Snow, the CEO of Customerfeedback, sheds light on the significance of considering biases when making decisions:
An example of bias in decision-making could be during the hiring process. If a hiring manager unconsciously favors candidates from a particular background or gender, they might overlook highly qualified candidates from other diverse backgrounds. This can lead to a less diverse and inclusive workforce, ultimately affecting the company’s performance and growth.
Josh emphasizes that emotional acuity is crucial when it comes to decision-making. Emotional acuity refers to the ability to recognize and understand our own emotions and those of others. It helps us become more empathetic, open-minded, and objective, reducing the impact of biases on our decisions.
Here are some tips for mitigating the effects of cognitive biases:
- Practice emotional intelligence: Emotional intelligence involves recognizing and understanding your emotions and how they can influence your decisions. By developing emotional intelligence, you can become more aware of your emotional biases and make more rational and objective decisions.
- Be open to new information. Be willing to change your mind if you learn new information that contradicts your existing beliefs.
- Seek diverse perspectives and network with others: Improve networking skills and connect with diverse individuals from various backgrounds and industries. Listening to different perspectives can help challenge biases and lead to more well-rounded decisions.
More Tips to Develop Decision-Making Skills in Business
- Sharpen your strategic planning skills: See the big picture, set goals, and develop a plan.
- Improve your business skills: Understand the financial and legal aspects of your business.
- Be a good time manager: Prioritize tasks, set deadlines, and manage your time effectively.
- Consult with a trusted friend or colleague: Get a second opinion and see things from a different perspective.
- Think long-term: Consider the long-term implications of your decisions.
- Be aware of time limitations: Stay calm and make the best decision you can with the information you have.
Frequently Asked Questions about Developing Decision-Making Skills in Business
Why are decision-making skills essential in business?
Effective decision-making skills are crucial in business as they directly impact the success and growth of a company. Making sound decisions leads to improved efficiency, cost-effectiveness, and better resource allocation, which ultimately contributes to achieving business objectives.
Can decision-making skills be learned and improved over time?
Absolutely! Decision-making skills can be developed and honed through practice, learning from experiences, seeking feedback, and analyzing outcomes. Online courses, workshops, and mentorship can also significantly enhance decision-making abilities.
What are the key factors that influence decision-making in a business setting?
Several factors influence decision-making in business, including available information, time constraints, company policies, market conditions, financial implications, risk tolerance, and the ability to anticipate potential consequences.
How can I enhance my ability to make well-informed decisions?
To improve decision-making skills, start by gathering relevant data, considering different perspectives, weighing pros and cons, and seeking advice from experienced colleagues or mentors. Embrace a rational and systematic approach to decision-making rather than relying solely on intuition.
What role does emotional intelligence play in decision-making?
Emotional intelligence is crucial in decision-making as it enables a leader to understand and manage emotions effectively. Emotionally intelligent leaders can handle stress, empathize with others’ perspectives, and make more balanced and thoughtful decisions.
How can I overcome decision-making paralysis or indecisiveness?
Overcoming decision-making paralysis involves breaking down complex choices into smaller, manageable steps. Set clear objectives, prioritize them, and gather essential information to help make an informed decision. Additionally, don’t be afraid to seek advice or delegate certain decisions to trusted team members.
What are some common decision-making biases to be aware of?
Decision-making biases, such as confirmation bias (favoring information that confirms preexisting beliefs), anchoring bias (relying heavily on the first piece of information received), and availability bias (prioritizing readily available information), can cloud judgment. Being aware of these biases helps in making more objective decisions.
Can technology aid in improving decision-making skills for businesses?
Yes, technology can be a valuable tool in enhancing decision-making skills. Data analytics, artificial intelligence, and machine learning can help process vast amounts of data quickly, identify patterns, and provide valuable insights that can inform better decisions.
Decision-making skills, along with emotional intelligence and other soft skills, form the foundation for successful leadership and organizational growth. The good news is that these skills are not innate traits; they can be developed and refined over time with practice and the right guidance.
We have shared 10 actionable tips from experts to develop decision-making skills in business. Embrace these insights to sharpen your abilities and lead your organization to greater success.
Subscribe to Skill Success All Access Pass to become a more decisive and effective leader. Skill Success All Access Pass gives you unlimited access to a wide range of online courses on decision-making, leadership, emotional intelligence, and other essential business skills.
Remember, developing decision-making skills is a lifelong journey, and there is always room for improvement. Stay curious, embrace challenges, and never stop learning.