by Jason Richmond, CEO and Chief Culture Officer at Ideal Outcomes, Inc.
Have you ever wished that life had traffic lights—telling us when to go for it, when to be careful, and when to just stop?
Many business leaders crave structure and certainly. Some of us are under the misapprehension that we’re in control. In truth, we aren’t (and never will be) immune to the relentless force and pace of change. For this reason, swift and timely strategic decision making is vital to effective modern leadership. By honing this skill, you’ll put your business on track to quickly adapt to market or industry changes and be less likely to see opportunities passing you by and competitors moving into your lane.
What Stands in the Way of a Swift Strategic Decision-making Process?
Leaders often face a paralyzing volume of high-stakes decisions. Many postpone these big-bet decisions to “wait for more information.” Waiting to decide is a decision in itself and not always wise.
The Fortune 500 is littered with casualties that failed to make timely, bold decisions. Think of Kodak, which held the patent to the digital camera but chose to cling to its paper-based photography model, or Blockbuster, which went belly-up after Netflix swooped into its territory and stole away its market share.
Brave leaders are the ones who say, “There’s no good time to jump, but jump we must!”
The Elements of Timely and Effective Decision Making
We’re not advocating for rash or risky actions that could lead to poor outcomes. Going back to our theme of traffic lights: In an area I travel frequently, there’s a large intersection. Those traveling North enjoy a full 9 minutes of green lights, but those traveling South only get 4 seconds! There’s hardly a day that goes by without an accident caused by Southbound motorists who lose their patience and take a foolish risk.
Swift, informed, and responsible decision making involves diligent risk assessment and mitigation, careful consideration of various options and courses of action, and the correct degree of consultation and collaboration.
Practice the following principles in everyday leadership situations to tap into your capacity for sound judgment:
Step 1: Assess Risk and Evaluate Potential Consequences
In the leadership context, risk comprises two elements: the probability of a decision resulting in a poor outcome and the negative consequences for your enterprise if it does.
Risk analysis puts you in a position to identify and understand the risks you’re facing and better manage them, minimizing their potential impact on your plans. When you approach risk systematically and logically, you can identify what you can and can’t control and tackle potential issues with the measured and appropriate action.
The first step in risk analysis is identifying existing and potential threats. These could be:
- Human: Death, injury, illness, or other unwelcome outcomes for consumers, employees, or communities
- Operational: Disruption to operations, supply chains, and distribution channels or loss of access to essential products, services, or other key assets
- Reputational: Damage to customer, employee, and shareholder confidence or a compromised market reputation
- Financial: Cash flow issues, projects going over budget, interest rate and stock market fluctuations, or non-availability of funding
- Technical and design: Technical failures or issues with product or service quality
- Political: Changes in tax laws or government policies
- Workplace occupational safety: Injuries to employees caused by structural faults, dangerous chemicals, poor lighting, etc.
Risk analysis can be complex and multi-faceted. It will require that you draw on detailed information such as financial data, security protocols, project plans, marketing forecasts, and more. It’s a vital insight and planning tool.
Step 2: Manage and Mitigate Risks
Once you’ve weighed your risks, it’s time to look at ways of managing and mitigating them. Here are some strategies to consider:
Sometimes, avoiding risk altogether will make business sense. This might mean declining the offer to invest in a new business venture, passing on a specific project, or not getting involved in high-risk activity. Risk avoidance is a sensible course of action when the opportunity comes with no guaranteed advantage to your organization or the cost of addressing the potential downsides outweighs any potential benefits.
Some leaders interested in pursuing an opportunity while reticent to shoulder the entire risk burden opt to partner with individuals, organizations, or third parties. For instance, if you want to expand your traditional brick-and-mortar business into the ecommerce space, you might decide to enter into a profit-sharing arrangement with a software development partner that employs specialists to build your online presence.
Accepting risk is usually the best option when:
- There’s little you can do to prevent or mitigate risks, or
- The potential gains are worth accepting the risk.
For example, you might decide to bear the risk of taking a new product to market a few weeks late if the anticipated sales still cover your costs and result in you turning a profit that quarter.
Should you accept risk, several ways exist to reduce or offset its impact. Contained experiments are one way to do so. They involve engaging in high-risk activity on a very small scale and in a controlled manner. Controlled experiments allow you to observe where problems might occur and devise preventative actions or workarounds before fully introducing the product or activity into your environment.
Step 3: Engage with Stakeholders
Now is the time to share your decision and invite feedback. Unfortunately, oversharing and undersharing both come with potential downsides.
Having limited sources of feedback can be problematic as those sources may not be reliable or have a comprehensive view of the opportunities, risks, and pragmatics. Relying solely on these sources dilutes your chances of making the best strategic decisions.
Equally, having a variety of sources of input isn’t ideal for every situation. Information overload can quickly confuse you and get in the way of following your gut instincts.
Agile Decision Making is Key to Business Success
Making faster decisions may mean that mistakes happen more frequently. Give yourself—and your people—room to make mistakes as long as they don’t threaten the business.
Continue to move with speed. Embrace the mindset that progress and learning as you go are better than perfection. Ultimately, the risk of standing still, represented by a red light, is far greater than the risk of making bold moves. Sometimes which choice you make is less important than making a choice and committing to it. Don’t wait for permission to move on or for someone else to greenlight your success.
In the words of American author Robert Kiyosaki: “If you are the kind of person who is waiting for the ‘right’ thing to happen, you might wait for a long time. It’s like waiting for all the traffic lights to be green for five miles before starting the trip.”
If it’s time for you to make a strategic decision to improve your workplace culture, narrow down where to start by downloading our free Culture Readiness Tool.