grow your bottom line one decision at a time: shortcuts for making better business decisions

Grow Your Bottom Line One Decision At A Time

Shortcuts for Making Better Business Decisions

Today’s PresenterRick Lepsinger, President, OnPoint Consulting

rlepsinger@OnPointConsultingLLC.com | 212.472.8081

Welcome to Our Webinar!

OBJECTIVES● Understand what impacts judgment

and our ability to make good decisions

● Apply practical techniques to overcome the obstacles to effective decision making

● Learn pros and cons of different decision-making styles

● Discover how to involve the right people and clarify decision authority

Quality is never an accident; it is always the result of high intention, sincere effort, intelligent direction and skillful execution; it represents the wise choice of many alternatives...

- John Ruskin, author

What impacts our judgment and the quality

of our decisions?

How our brain responds to and

processes information

Automatic reactionsActions that kick in when a situation seems familiar and requires little or no conscious thought. (Ex.; following a procedure when responding to a common customer complaint without regard for the specifics of that situation)

Voluntary ProcessingOur conscious and deliberate information manager that is slower to engage. (Ex., You see this month’s sales are down; rather than immediately increasing the marketing budget, you take time to examine the cause of the decline)

EmotionBehavior in response to a particular situation, such as feeling threatened.(Ex., Deciding to discount prices solely out of fear of being unable to keep up with competitors)

ReasonA more rational approach that takes a long-term view and considers the consequences of our actions. (Ex., Analyzing market conditions and developing a long-term plan that anticipates potential problems and actions to address them.)

5 Common Biases That Hinder Decision Making

1. Staying in Our Comfort ZoneChoosing solutions we are familiar with and selecting the

things that are brought to mind more frequently.

2. Jumping to ConclusionsActing on assumptions before we have

enough information

3. AnchoringRelying too much on the first piece of information we get

about a situation and letting it shape our overall perspective

4. ConfirmationOnly seeking evidence that supports our assumption, preference or our intuition

5. Investing in a Failing Course of ActionRefusing to give up on something that isn’t working out of a

desire to save face or prove we were right

How to overcome the obstacles to effective

decision making

Use a Systematic Process

Develop a Decision Criteria● Focus on a few criteria that answer the question “what does

the best alternative look like?”

● These criteria outline the characteristics of a high quality decision

● Could include measures of quality and quantity, time to implement, cost targets or constraints, and expected performance.

Example of decision criteria● Able to launch in 90 days

● Costs less than $500,000 to develop

● Help regain 5% lost market share within 3 months

● Improves the perception of product quality, and

● Does not require an increase in cost to the consumer

Develop a Decision Criteria● Ensures all stakeholders have a shared picture of what the

best decision should look like and the data that is required to make a decision

● The criteria guides your search and lets you know when you have enough information.

More Data Is Not Always Better● Common belief - the more information you have the better the

decisions you’ll make.

● Experienced horse handicappers were presented with datasets of variable sizes. They were asked to predict the outcomes based on variables such as○ The weight to be carried○ The percentage of races in which the horse finished first, second or third during

the previous year○ The jockey’s record○ The number of days since the horse’s last race

More Data Is Not Always Better

Involve The Right People

1.Make the Decision YourselfOne person makes the call and informs others of their choice+ The need for action is urgent

+ All options are equally acceptable

+ The person making the decision has all the information

- Team is not consulted and may not feel invested

- Decision quality may suffer if the leader doesn’t have the right information

2. Consultative Team has opportunity to offer input, though the leader ultimately makes the final decision

+ Team members feel invested

+ Decision quality is more likely to be higher

- May take more time

- Innovation may suffer if the leader surround themselves with people who tend to agree

3. ConsensusDecision is discussed by the group and majority rules.

+ Generates high levels of buy-in

+ Can improve decision quality

- Can be time-consuming

- Difficult to reach consensus if goals are not shared

Choosing the Right Decision Style● Decision quality

● Decision acceptance

● Time

Which Style Should You Use?

Ask yourself the following questions...

How important is decision quality?Does the decision have major consequences for the organization?

Do I have the information to make the decision without the input of colleagues and/or direct reports?(If not, making the decision yourself will not assure quality.)

How important is decision acceptance?(Does the leader depend on others to implement the decision?)

Is acceptance assured?(If the leader does not have the support and commitment of others, making the decision yourself won’t work.)

Do stakeholders share my objectives?(If not, making the decision yourself won’t work.)

How quickly is a decision needed?(On urgent matters, there may not be time for a consultative or consensus approach.)

Clarify roles and decision authority

Who’s In Charge?One of the biggest challenges in matrix organizations is clarifying decision authority.

When there isn’t a clear hierarchy, the roles and decision authority within a team representing different departments or regions are often blurred.

The RACI MatrixHelps clarify who to involve and how to

involve them in decision making.

R-ResponsibleWho is in charge of ensuring the decision or task is carried out? This single point of contact (project manager, team leader, etc.) should identify who should be involved, communicate with them and obtain the necessary information and resources

A-AccountableWho has ownership of the decision or project? Who will take the blame if something goes wrong? If this isn’t the responsible person, he/she needs to work closely with them and oversee decision making.

C-ConsultedWho can provide important information? Whose support is necessary for implementation? This person should be consulted early in the process and give feedback prior to the final decision.

I-InformedWhose work will be impacted by the decision? Who needs to be updated on the progress?The responsible person should maintain ongoing communication with this group, build support and provide assurances.

Tips for Using The RACI Matrix Well

Start Early.Clarify goals, roles, responsibilities and decision authority from the very beginning.

Prioritize.Use the 80-20 rule to determine which of your decisions will have the most impact.

Build Trust.● Meet face to face when possible, especially early

in the process● Listen; earn the right to make suggestions● Share information ● Focus on the goals and needs of others

Stay committed to your decisions, but stay flexible in your approach.

-Tony Robbins, motivational speaker

THANK YOU!If you’d like to learn more about specific training programs to enhance decision-

making, feel free to contact us.

www.OnPointConsultingLLC.com | 203.533.5128