There are a few fundamental skills that a business owner needs in order to build a successful business. Motivation, persistence, marketing and sales, financial skills to name a few. However, one that gets left off most lists is decision-making skills. I’ve written before about how you and your business are a function of the decisions you’ve made over your lifetime both good and bad. Yet decision-making skills are not on most business owners’ radar.
Decision-making is simultaneously the best skill you can learn, and the hardest skill to actually master.
When it comes to decision making, there are a number of resources available to you to improve your skills and I’ve written about them extensively. You can read about my 7 step decision-making process here, However, this blog is about decision making styles and how they impact the growth of your business as well as the changes you need to make in your decision-making style as your business grows in order for it to be successful. Lots of people never think about their decision making styles and the fact that they need to change, to the changing needs of the business.
I have worked with hundreds of businesses over the years and this has given me the opportunity to observe how business owners make decisions and how they change their decision-making styles as their business grows. From this, I have found that there are 5 basic styles of decision making, some more appropriate to the early stage of the business and some not so.
- Intuitive decision-maker.
The drive to follow your intuition is very strong in most people, and the intuitive decision-maker is arguably the simplest decision-maker on this list, but that doesn’t mean this is a bad way to make decisions. Intuitive decision making is hardwired into the human species. When you’re wandering along the prairie in the Serengeti and you hear rustling in the grass, it’s not the time to start to analyse what’s making the rustling, you trust your intuition that it’s something with big teeth and make for the hills. Thus avoiding a potential rather unpleasant confrontation with a lion.
When presented with two possibilities and a handful of information on each, the Intuitive decision-maker will generally form an immediate impression using their ‘gut’, and side with wherever that impression lands. On the surface, this may seem like a faulty or superficial way to make decisions. However, the human brain is programmed to make snap judgments, and it’s pretty good at it, and with enough experience, this can actually prove to be a better way to make decisions because it’s fast, and it spares you the ‘possible misleading’ nature of outside information.
For lone entrepreneurs in a startup situation, where fast decision making is a prerequisite, then for the majority of decisions using their intuition is probably good enough. This does, however, come with a disclaimer.
‘Not all decisions are suitable for an intuitive style even for lone entrepreneurs’.
How can the intuitive decision-maker thrive? With more experience. The more decisions you make (and the more you see pan out), the better you’ll get at intuiting the “better” decision, subject to you auditing the decision and remembering that good outcomes can come from bad decisions and bad outcomes can come from seemingly good decisions.
- The Collaborative decision-maker.
The Collaborator doesn’t like to make decisions alone. When confronted with a tough choice, even if they’re leaning one way or the other, they’ll seek out alternative opinions and perspectives almost compulsively.
They’ll ask their top advisors, their peers, their employees, and maybe even their friends and family what they think about the matter. This doesn’t mean they let other people make decisions for them, but they do factor in their insights and opinions to a significant degree.
By involving a more diverse group in our decision-making, naturally, we’ll receive more diverse ideas than sticking to our established group. Different experiences trigger different ideas. In addition, through discussion, questioning, and collaboration the business owner can identify more complete and robust solutions and make better decisions in the end.
The key for the Collaborator to thrive as a decision-maker is to ensure that they’re asking the opinions of the right people. Often as a business mentor, you’re battling against uninformed advice from people close to those you’re mentoring. The point is that you can’t listen to just anybody, try to find people who have experience of successfully negotiating whatever decision you have to make, and see what they have to offer.
A word on experience.
There’s a world of difference between experience and learning. Just because somebody is experienced does not mean they’ve taken any learning from the situation. Make sure those you approach for advice have both experience and learning.
It also pays to ask the right questions; instead of focusing on which decision a person would make in your shoes, ask why they would make it, and what factors they’re considering that you might not be.
As a business grows there’s a need for a different style of decision making as the complexity of the operations of the business increases. It’s no longer possible for the business owner/startup entrepreneur to be the sole arbiter of decision making and a more collaborative style is necessary. However, this is often a difficult period as Intuitive decision-makers find it difficult to let go.
- The Endless Analyser
We’ve all met those people who spend hours and hours on every single decision going to the far end of a fart, researching every single element that they can think of. Often going over and over the same information to check if there’s something they’ve missed.
What makes the Analyser unique, however, is the process. They will continue to draw in new information about the situation from as many sources as possible, hoping to find some nugget of data that will lead them to a definitive conclusion.
For example, if trying to decide between two cars, they may dig deep into customer reviews of the garage, look at the latest ‘JD Powers’ reliability surveys, calculate the cost of ownership and seek out others they know that have owned that type of vehicle. Even then they may not make a decision, they will go into endless internet searches seeking out more information.
The Endless Analyser can benefit from expanding their research sources and acknowledging that no one piece of evidence will be enough to make any decision complete. They would also benefit from using a structured process as described in my 7 step process.
People who tend towards this decision-making style can sometimes struggle in business leadership or entrepreneurial roles where fast and firm decision making is often required. However, as a business matures there is a distinct advantage to using a decision-maker who seeks out information from multiple sources before making possibly rash decisions.
Finally, there is a danger of analysis paralysis (or paralysis by analysis) which describes an individual or group process when over analysing or overthinking a situation can cause forward motion or decision-making to become “paralyzed”, meaning that no solution or course of action is decided upon and none of us want that.
- The Consensus Seeker.
As a rule consensus decision-making is a creative and dynamic way of reaching agreement between all members of a group. Instead of simply voting for an item and having the majority of the group getting their way. The consensus seeker is committed to finding solutions that everyone actively supports, or at least can live with.
The consensus seeker is similar to the ‘Collaborative’ decision-maker in the sense that they thrive on the back-and-forth with other people, and value the input that other people bring to the party. The major difference between the two is that the Consensus seeker will not be the sole arbiter of the decision and will go with the consensus of the group.
By getting others involved in the decision-making process it ensures that there is more ‘buy-in’ and in theory a better decision. Of course, this is not always the case. There’s plenty of documented cases of where group decision making has proven to be faulty (John F Kenedy’s Bay Of Pigs decision springs to mind, read about this here).
In order to establish the situations where group decision-making is better than individual decision-making requires you to determine the speed at which the decision must be made. If time is of the essence, it often necessitates an individual decision. As noted, there are disadvantages to consensus decision-making in cases like these. But where an issue requires more input and consensus, a group decision may be the best way to go.
On the surface, the consensus seeker seems to be the most logical, and therefore the most effective decision-maker in the bunch, and for mature businesses operating in mature markets then this may well be the case. However, for start-up businesses or those businesses in dynamic environments that need fast decisions then the need to seek consensus can hold the business back.
Of course, seeking consensus is an anathema to lots of entrepreneurs and business owners who tend to have more invested in the outcomes of decisions than those who are employed by them and struggle with letting go of decision making.
- The Random Chancer
Any of the above types of decision-makers can become the type to rely on random chance if they have a hard enough time picking a clear winner among their possible options. Sometimes there is just not a clear winner. You might have done your research and evaluated the options carefully, but if you reach the point where there still isn’t a clear option, a coin toss can seem the way to go.
This isn’t the best way to make a decision, but for some, it’s a decent enough standby, especially if you maximize your chances of success by only considering the worthwhile options to begin with.
I’d be lying if I said this model is rigid, or that everyone in the world neatly adheres to it, but it can help you better understand the methods you use to make decisions, and quite possibly, make you a better decision-maker in general.
In fact, it’s more likely that you see shades of yourself in all these types of decision-makers, even if you find yourself aligning to one more than the others. This is good; it means you’re open about the decision-making process, or that you use different approaches for different situations.
As your business grows the nature of the types of decisions you take will change and the type of decision-maker the business owner/entrepreneur needs to be will also change. The more willing you are to learn or adapt, the better decision-maker you’re going to be.