Last week, we introduced what decision-making, the importance of wise decision-making, and the scope of choices that face us. Today, we will take up the principles and processes of wise decision-making.
Principles of wise decision-making: The right principles are to serve as guideposts for the basis upon which decisions are to be made. Typically, most of the decisions we take as entrepreneurs will be about jobs (tasks) and relationships to varying degrees. To be able to understand the meaning of each variable that makes up each choice and the true impact (apparent and latent, present and likely future) of any ultimate decision we take may have on our business, we need to have guiding principles. Without such principles in place, our decisions can be erratic, whimsical, and without the consistency that may be required.
- The end does not justify the means! Anytime you make an order on Amazon, their costing system estimates what they expect to spend on delivering the order to you in your country. It is a very comprehensive system and, quite understandably, conservative. They charge you for the delivery based on estimates that are tied to local Customs and other logistics. Consequently, they may end up with a surplus on what they have charged you that could be as low as a Dollar or running into a few hundred Dollars. Interestingly, by the time any such surplus is established when the delivery is finally made, Amazon will process and return the excess to you no matter the amount. They are contented with the margins they make and do not have to keep your money to be rich. Today, Amazon is a trillion-dollar company and its founder is one of the richest people on earth.
The point is that we do not have to cheat to be rich and successful. Do not do anything that hurts anyone or denies them of their rights. The end does not always justify the means!
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- It should always be about value: Always assess your choices based on the value you will be providing. It could be value to an individual, a group of individuals or an organisation. The value could be for the people within your business or outside of it. Regardless, always look out for the value you will be adding as a basis for your decision-making. The more good to more people and organisations the better.
- Engage others: Sometimes, it is clear and easy what a preferred choice should be among a range. However, other times, it is not as easy. In such situations, we should be willing to engage with others to arrive at a wise choice. The criteria for choosing those to engage should be:
Responsibility – Those with the responsibility for the decision.
Knowledge and experience – Those with requisite knowledge and experience regardless of whether they are within or outside your business.
Trainees – Those who are being trained to take up broader and/or higher responsibilities.
- Be comfortable: Contrary to what we are often encouraged to ‘get out of our comfort’ zones, we, on the contrary, should take decisions we understand and are comfortable with. What those proffering the ‘get out of your comfort zone’ cliché should be saying, instead, is that we should stretch ourselves within our comfort zones. These are two different things entirely.
Wise decision-making process: Making wise decisions on every issue that comes our way should be a fundamental objective we should internalise. And as mentioned last week, we have two major groups of decisions that always come our way, viz, strategic and operational. For operational decisions, we further sub-grouped them into programmed and non-programmed decisions. The principles of making each type of decision should be the same as mentioned above. However, given the different likely impact of each type of decision, the process should, naturally, differ, on emphasis, as follows:
- Making strategic decisions: Strategic decisions are those that affect the overall directioning of a business in terms of current and future operations. Strategic decisions have both heavy and lasting impact on a business. Consequently, they should only be made only after a detailed accumulation of facts, thorough review of issues and wide and deep consideration of each options. Where necessary and appropriate, experts should be engaged. Furthermore, the process of making strategic decisions should be initiated in advance of the execution of the decision and should never be rushed. Where possible, pilot test of decisions can be carried out.
- Making unprogrammed operational decisions: Non-programmed operational decisions tend to be taken mostly by middle-level to senior employees who are expected to be able to see issues on circumstantial and contingent basis. There are no ‘programmed’ steps on what to do because every situation comes up with its own peculiarities. What should suffice, therefore, are broad guidelines that educated and trained personnel at the levels mentioned can operate within with certain discretions.
Unprogrammed operational decisions require fluidity of thinking that only education, training and experience provides. The executors of unprogrammed operational decisions are next-in-line to becoming top executives and must be continuously trained.
- Making programmed operational decisions: Programmed operational decisions are those to do with the implementation of routine and recurrent activities. These are activities taken at various, but more often at lower levels, in organisations. The activities should be studied and decision-making process simplified for the operators to be able to carry out. Input from the actual operators at the lower levels and the strategic concerns of senior executives should be considered in developing operational programmes.
Typically, programmed operational decisions are stable for a reasonable period but may need to be changed with changes in technology or other factors in the environment. When changes have to be effected, they become of strategic importance because while errors in the impact of the decisions taken at the operational level might be light, any errors in the programs in themselves may be costly and deep until they are corrected.
The schematic below typifies the three possible options discussed above.
Making wise decisions is crucial to lasting and sustainable success. It is about doing the right things and doing them right. It is about surviving the short term and succeeding in the long run.
On popular requests, we will, next week, take up ‘Retirees Going into Business’.
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