Make sure your decision making has a company value and net worth building process
Like so many executives, I prided myself early in my career on being decisive, make that quickly decisive. I came to realize I was placing as much importance on the speed of my decision making as I was its effectiveness. In my first general management assignment at Ingersoll-Rand Corporation, the group president said to me, "Larry, good leaders learn the art of decision making." He went on to explain that the art of decision making included having a repeatable process for runing each decision through in your mind. Doing so over time would help you build the decision-making muscle so critical to building the worth of your business.
The next piece of advice given to me early on was to ensure that before I jump to making the decision, I should first start with determining if I have the right people and right information available to me in order to make the best decision. Not making this my first step puts me in danger of making a poor decision and one I might regret later. So before starting to solve the issue and make your decision, think about whether you have included others that perhaps have prior experience with the particular matter and can add great value by keeping you from repeating mistakes others have made.
Let me share the muscle that I was encouraged to build early in my leadership career pertaining to effective decision making. These questions come naturally to mind whenever I'm navigating the smallest to largest of decisions. With smaller decisions, I run through these same questions but just very quickly. For more a meaningful decision, I am much more methodical in how I address each:
1.) Do I need and/or do I have access to the person or people that could help me look at this decision from all the right perspective? Is there someone on my team who might have experience with this particular matter, someone on my Board, my accountant or lawyer, etc. and am I including them in this particular decision?
2.) Do I have the data or information I will need to make the best decision? Using my gut is great with some decisions but for others, could be dangerous. As the old expression goes, "In God we trust, all others bring data".
3.) What is the magnitude of the decision, so I know what level of thought/time to give it? If it's a minor decision and easily reversible if I were to make the wrong decision, perhaps I can shoot more from the hip. But if I assess the magnitude could be greater, I need to give it due time and energy.
4.) Will this decision impact my company value in the near and/or long term? If it has the potential to do so, that clearly tells me I need to address it very carefully. If not, I can move to decision making much more quickly.
5.) Relating to specific drivers of company value, do I understand the impact this decision will have on my company brand/reputation in the market, on my employees and on my financials?
6.) Is there a precedent for making this decision? Perhaps I've made it before and want to be consistent or perhaps need to be consistent for legal purposes. Or in making this decision, what precedent might that set for me and my business going forward?
7.) Have I played the movie forward on this decision? Meaning, have I thought through any ramifications from my decision by anticipating how others might react (and do I care?) and do I understand how their reactions might then impact me so I can anticipate the fallout I may have to manage?
8.) Who are the various stakeholders that I should convey my decision to? Who are those that will need to know and should hear it directly from me, so as to avoid confusion and who should I communicate with simply out of respect?
9.) For the higher magnitude decisions, how will I monitor the impact on my business? I need to monitor the higher magnitude decisions not only for their potential business impact but also for the purposes of learning from them to further build my decision making muscle.
10.) And ultimately, I ask myself how might a future investor or acquirer perceive the decision made on this matter? Is this a decision they would ever see the outcome of and if yes, need to ensure they see it was well thought through otherwise they may question lots of things about the business if they believe your company lacks a good decision making process!
In order to build your company valuation and overall worth, it takes building lots of various muscles. Decision making is perhaps the largest muscle group of all. Start today by evaluating whether your decision making muscle is repeatable, scalable and whether you should step back and rethink this key aspect of your leadership and your business.
