Think for a moment – what drives your management decisions?
Even if you’re a “gut-feel” kind of manager, how did you arrive at your last big decision?
Imagine that you took the gutsy call to shut down a product line or open up a new distribution center – how did you get to that point in time where you pulled the trigger to make it happen?
Chances are you based that action on your own intelligence and understanding of the situation. Perhaps you saw the tell-tale signs of a market shift and knew your product was no longer the right fit for market demand. Perhaps you’ve launched distribution centers in the past so recognized the signs for further growth and expansion.
Decisions like this require multiple information sources: Sales performance, staffing costs, available budgets, market sentiment, the list goes on…
But it all comes back to the same issue – how do you make the right decision?
Scientific studies have concluded that far from being rational creatures, we make our decisions based on emotion. In cases where people have suffered injuries affecting their ability to feel emotion there have been reports that they struggle to take even the most basic of decisions. It appears as though emotions help us “get over the line” when making a decision.
But it gets worse. Science also shows that we are more emotive around loss than gain. If we’re about to lose something e.g. customers, profits, competitive advantage, our careers – we’re more likely to take action. If there is a potential gain to be had for the same amount of risk we tend not to act in the same manner.
So with all this emotion in play the problem is that many companies fail to equip their managers with the ability to link data into information and consequently intelligence. As a result they fall back on emotion which forces them to draw on past experiences and “gut-feeling”. You probably see this all the time when working with peers, there are the gung- ho types who love to take a risk if there is a chance of a gain. Then there are the procrastinators, those who put off big decisions, normally because they’re terrified of the loss.
So how can you improve your own decision making?
The next time you’re faced with a tough decision, simply jot down all the different entities that are connected to the problem e.g. Sales, Customers, Orders, Staffing, Products and Competitors.
Then, list everything that can impact your decision.
Next, identify what data you need for each entity.
For example, if you’re looking to bring out a new product do you have any data on existing competing products? What do analysts think of competing products? Who in your organization has used the competing products? Who can tell you more about this tool? What features does it have? What about performance? What do past customers think about this tool?
The key to this phase is brainstorming, get others to lend a hand.
Once you’ve created a large list of what you need, examine the data you’ve already got – where are the gaps?
Do you have analyst data? Do you have customer sentiment analysis? Where can you get this data? What’s involved?
Importantly, the next step is linkage, transforming all this data into information. Data in isolation is useless, it’s when we link it in context that it adds value.
Look at your new information – does it help you make a better decision? Ultimately it will still come down to emotion to get over the line but hopefully you’ll have exhausted all lines of enquiry.
It’s when we skip data for emotion completely that mistakes happen. See if you can take some small steps today and turn your decision making process around.