Improve Business Decision Making - Episode 6

Transcript:

Lou Quinto:
Hi, welcome to Q&A on Breakthrough Leadership, I'm Lou Quinto.

Craig P. Anderson:
And I'm Craig Anderson.

Lou Quinto:
Today what we're going to do is we're going to talk about the topic of decision making, and we're going to talk about how to improve your decision making. When you look at your organization, your company, you've got to admit every dollar that you spend is based on a decision. The better the decision can be, the less chance of making an unwise decision and spending money that you shouldn't have to. What we'll talk about in this area is we're going to talk about three parts. One, how to develop and prioritize criteria. Two, gathering facts that match your criteria. And then three, making sure you involve all the stakeholders. So let's go ahead and take the very first one, developing and prioritizing your criteria.

Craig P. Anderson:
I think developing, prioritizing, that's easier said than done, right?

Lou Quinto:
Absolutely.

Craig P. Anderson:
How can you be sure you check every single box when you're developing it? Who do you need to pull in to the criteria? I've been part of organizations where the priority and the criteria were set so high that it didn't really end well. I talked about it just last week, I think, on the pod here. You end up not getting everybody's information. So it's important to be broad in your collection of this data.

Lou Quinto:
Yeah. With developing and prioritizing your criteria, when I consult with people on decision making and I jokingly ask everybody "How many of you have made a decision before?" Everyone's hand goes up and everyone laughs and it's like, "Okay, great, you've made a decision before." There are some things in decision making that most people don't do. The number one thing is before you even look at any of your alternatives, you're going to need to prioritize and develop criteria, and that criteria has to be measurable. You have to be able to quantify it in some way. The other thing is when it comes to your criteria, you have to be able to distinguish between what we call eliminating criteria and what we call judgmental criteria. And eliminating criteria is a very small list, those are things that you have to absolutely happen. If you don't have it, you will perish and die.

Lou Quinto:
Once you develop that criteria, you can quickly look at your alternatives. If none of them meet every single one of your eliminating criteria, it's out of the mix. Because you've said, "I can't live without it," so you're just going to be out of the mix. And then there's the judgemental criteria and that's the criteria that you actually begin judging each of the remaining alternatives to each other. Most people don't do that, they look at the alternative first and then they end up with something that we call buyer's remorse, because they bought something because they had a shiny object to it or something that was a neat feature. Then they regret the decision that they made after they've made their decision, because they didn't look at everything equal. When it comes to decision making, it's important that you look at each alternative in the same light, using that criteria.

Craig P. Anderson:
It's interesting you say that because I came up through sales and a lot of times what you're taught in sales training is, people make emotional decisions for logical reasons, right? So it's really about trying to push through to that emotional side of the buy and then go back and fill in. So it's interesting if you have all that really teed up up-front, how that works for, for that kind of decision.

Lou Quinto:
Yeah, because if you don't do that ahead of time, you're going to look at your alternatives and what do they say psychologically? There are 125 different biases we fight against on a daily basis. Two of them are confirmation bias where you look at something and you just go, "Oh, I know that's it." Or there's information bias where you only collect the data that is going to support the alternative that you want to go with, and you ignore other data.

Craig P. Anderson:
I can see that in hiring too because you're probably biased in hiring towards a friendly person. A person who presents well, but that doesn't mean they can do the job. It just means they can get the job. It does add a certain light, that this discussion isn't just about buying things. This is across all decisions you might be making.

Lou Quinto:
Right, yeah. Okay, second one is gathering facts that match your criteria. One of the things that people do is they say, "How do I know if I have enough information to make the decision?" Then there's that old adage of we don't want to get analysis paralysis, so if we have 80% we'll go with it. Which my question always to somebody is, or to a group, "How do you know when you had 100%?" They don't know the answer to that. However, when it comes to gathering information based upon your criteria, it's almost like creating a shopping list before you go to the store. I'm sure you've found the store not have shopping list before, and when you come home and put everything on the counter, what do you end up with? Lots of stuff you don't need. Right?

Craig P. Anderson:
Yeah.

Lou Quinto:
Exactly. But when you set your criteria, you create your list of data that you're going to gather, you know when you have 100% because all of those, I'll just say boxes are checked off. But you know I have that information for this particular one.

Craig P. Anderson:
How do you know though, when you're getting going through that, that you do get 100% of the criteria? What's the way to make sure you're all encompassing?

Lou Quinto:
That would lead to our next area, and next area is involving all shareholders. One of the things that you find with decision making is that sometimes groups will make decisions that are very narrow focused. Which means, I'll use an example, you bring a bunch of accountants in to make a decision to purchase a new piece of equipment. Well, which piece of equipment are going to end up with?

Craig P. Anderson:
The accounting one.

Lou Quinto:
Which is?

Craig P. Anderson:
[inaudible 00:05:36].

Lou Quinto:
The cheapest, usually.

Craig P. Anderson:
All right, so the accountants.

Lou Quinto:
No offense to accountants, but that's their discipline. That's what they're paid to do, to make sure that they're getting the best product for their money. That one criterion, which is price, is going to dominate all the other ones. Whereas if you're using the equipment, you may be the individual that has to use it and so therefore usability becomes a criteria. Service, if you've got a problem with a piece of equipment, being able to get quick service is going to be an issue. Technical support is going to be a technical issue. I'm not saying that accountants won't consider it, but they'll discount it heavily because double cap price. So whenever you're making a decision that's going to affect a whole bunch of people, it's going to have an impact on them. You need to have the key stakeholders in the group so that this way it takes the blinders off of the group and it gets them to look at the decision from different areas that this decision is going to have a significant impact on.

Craig P. Anderson:
Yeah. Not to go back to hiring again, but that's one of the practices we had always. We probably were light on the written criteria, but when we hire people in my last firm really worked at, if I was hiring somebody from the leadership team, I made sure that all the leadership team interviewed. We've drove that down to the teams, "All right, this is the team, let's get some input from them. But let's also get some input for the people that are going to be working with all the time." So you get a broad sense of what it is we're looking for. I think this can be applied along a lot of different vectors. I think where I could have been better was to have the actual criteria really delineate.

Lou Quinto:
Right, and with everybody who's going to do that interviewing of that leadership, potential leadership person, making sure that they were looking for the same qualities and the same characteristics, competencies. Because if not, you're going to get six people in a room that interviewed somebody and 10 minutes into it, someone says, "If we all interview the same person," because they looked at them from different perspectives, and then when you get everybody together it gets very confusing. So all the stakeholders involved have to be at the end or at the beginning so that when you get to the end, everyone's on the same page. It works out perfectly.

Craig P. Anderson:
That's great.

Lou Quinto:
So, key takeaways for today. Craig, since you're a great decision maker or have been.

Craig P. Anderson:
I made decisions, we'll say that. I like the idea here, what we talked about, about really quantifying, getting a lot of that information pulled together up front, so that everybody's working from the same page from day one, so you don't get into these kind of shiny object things or different things. I guess part of that too is if there is a shiny object and you say, "Hey, maybe that is something important." Let's rework the criteria. Maybe we didn't hit your 100% if somebody brings up something that we hadn't considered.

Lou Quinto:
At that point it's evolving. So it's not like someone came down from a mountain with carved tablets and said, "Here's your criteria." You may discover some things that you didn't think about and you may have to search that out. The one key takeaway that I have is that in my work with organizations, when it comes to decision making, is that everyone needs to be on the same page. And the only way they're on the same page is they need to have that criteria in advance and they're looking at the same data. Most of the time someone enters a meeting and they've already made the decision that they want to have and they spend the entire arguing for that alternative that they want. If everyone's not on the same page, you're really not going to get a good decision.

Craig P. Anderson:
Then there's always the fun one where you've gone through and the team has made that decision and the boss comes and says, "Yeah, but we're going to go with that." That's a topic for a different question.

Lou Quinto:
Without question. All right, we hope you enjoyed today's topic of improving your decision making on Q&A on breakthrough leadership, I'm Lou Quinto.

Craig P. Anderson:
And I'm Craig Anderson.

Lou Quinto:
Check and click on the like button. If you liked this video, write some comments down. Maybe there's a topic in decision making that you want in the future, and also subscribe to our channel so that this way, you know when the next podcast is going to be. Thanks again.

Craig P. Anderson:
Thank you.