As leaders, ideally, decisions would be made smoothly and with great certainty. However, that’s not always the case. We don’t always get the luxury of perfect information. Oftentimes, we get a handful of ‘maybes’, ‘perhaps’, and ‘if this…then that’s,’ that we need to work with, in order to come to a verdict. But, how do we properly come to a conclusion with imperfect information?
There are a lot of factors that go into making a business decision. Factors like cost, external economic influences, staffing, resources, and company direction are common impacts on our decisional judgment. Unfortunately, it is rare that we have a clear understanding of all of these pressuring factors at once. More often than not, we are able to see one or two influences clearly and the rest we must make our own best guess on.
Being a leader means working with imperfect information daily in order to make the best decisions possible. Your ability to strategize based on missing information is crucial to your role. Here are some ways to make the information you have work for you, your company, and your decisional thought process.
Follow Your Head, Heart, Or Gut
A method that has worked since the beginning of time is following your gut. This animalistic instinct has been a staple for mammals for years, helping them to escape danger and avoid predators. If it worked for our ancestors in the wild, it can work for us in our careers!
In the world of business, sometimes it’s not just a feeling in your gut that makes you land on a decision. Sometimes, the feeling is in your head or your heart. However, all of these instincts connect and no one is more important than the other. These innate feelings should always be listened to.
Of course, there are usually facts that support the ‘gut’ feeling that you’re experiencing. These facts usually subconsciously transmit this awareness of opinion to an almost physical sensation. You receive an undeniable urge to sway a certain direction. If you have a certain feeling, then you should take the time to understand where it is coming from and what facts reinforce it. That way, you can feel comfortable following your head, heart, or gut.
Even if you have imperfect information, it is still possible to see the situation that you are deciding upon from multiple perspectives in order to make a clearer analysis. You could do the hard-thinking work yourself to attempt to understand every side to your potential decision. But, this is not always accurate as you can’t actually jump into the mind of another individual. That’s why a great way to accurately assess the situation from multiple perspectives is to seek input.
A mentor is a wonderful resource to utilize during an important company decision that you’re struggling with. Chances are if your mentor has been in the game for a long time, they have had to make numerous imperfect decisions and may be able to shed some light on your current situation. They may even have encountered a situation identical to yours, but you won’t know unless you ask.
Another great resource to help you incorporate multiple perspectives into your decision is your team. Although, you are the leader and in charge of making the final decision, your team can be very useful in helping you determine the direction of the company. Your team is on the frontlines of the company, so they may have observed things that you have not. It is beneficial to listen to their opinions, questions, and concerns when making important company decisions.
Relying on your team for advice will also help to strengthen the bond of your team by fostering a collaborative environment in which all voices are heard and respected. Just be sure that all the opinions you decide to apply to your decision are credible and non-biased.
If you are asking a team member about a decision which would result in them getting a raise or a promotion, perhaps their opinion is biased. In terms of the credibility of input, make sure to pay attention to the track record of the person who is sharing, as well as if they are presenting their opinion based on data or personal knowledge. You certainly don’t want to utilize input that is swayed or not reliable.
Figure Out The Risks
Even with imperfect information, there are ways to calculate the risks. First, you must look at the best and worst-case scenarios of each proposed decision. If there is a major risk, and you are missing information to support any positive return, then that’s probably not the ideal direction to go. If there is limited risk with some potential for a positive return, then that direction is much safer.
The goal is to find the decision that has the least risk with the most return. But, of course, with imperfect information, this is sometimes hard to determine. This is why you must work with what you’ve got and employ other strategies along with this one to help you to come to a final conclusion.
Look at The Data
Along with figuring our the risks, it’s important to look at the hard data. This comes in the form of facts, statistics, and historical reference, rather than theory or opinion. Yes, it’s wonderful to get advice and input from your mentors and team, but if it goes against the facts, it probably isn’t the right direction to take.
Data and statistics will help you to properly predict what the outcome of your decision will be. Think of the facts as a blurry fortune-telling crystal ball or a vague horoscope. It won’t completely forecast the result of your decision, but it can be a clear indicator of the framework of the result without the minor details and setbacks.
What Is Motivating A Decision?
After you have done a complex analysis of your decision, using your imperfect information, it is time to move forward and put it into action. But, before you move forward, make sure you understand the motivation behind it. If you don’t, you could be putting your company and team at risk.
It’s crucial to understand the motivating factors behind your need for a decision. Is there external pressure in the market that is forcing the company in a new direction? Or internal pressures such as company cuts or reorganization? Whatever the motivating factor is, you need to make sure it is enough to drive a decision. You must also ask yourself, ‘what would happen if I simply didn’t make a decision?’
When you are analyzing the need for a decision, and you find that the motivating factor is not enough to warrant an immediate change in your company, then it’s best to put the decision off and wait for the appropriate time to follow through with a decision. Timing is everything and if the timing isn’t right, you must resist being eager and hold off until all the pieces are in the right place.
However, if you discover while analyzing your decision that it is imperative to move forward, then do so with vulnerability and grace, utilizing all of the methods available to you along with your imperfect information.
Have A Back-Up Plan
Let’s face it, sometimes our Plan A doesn’t always work. But, that’s why it’s important to always have a Plan B in your back pocket. Having a Plan B, while moving forward with Plan A will not only allow you to be more prepared if your initial decision fails, but it will set your mind at ease and give you the courage to move confidently forward with your decision as a leader.
Back-up plans should always be low-risk. There is no sense in putting your company in danger after Plan A fails. It’s better to take a small step, rather than a giant leap if you’re unsure of the result of the outcome.
No matter how you play the leadership game, you will always have work with imperfect information while making decisions. The most important thing to remember is to utilize what information you have as much as possible and don’t be afraid to strike out.
- Why is it important to follow your gut?
The gut, head, and heart have been innate instincts since the beginning of time. These are feelings that are usually based on facts and should not be ignored.
- How can you analyze decisions from multiple perspectives?
Asking input from team members and mentors are great ways to see your situation from multiple perspectives.
- What kind of risk/reward should your decision result in?
The goal is to have the lowest risk with the most positive return.
- Why is data so important?
Data is important because it is straight-forward information that can help you clearly see the result of your potential decision.
- Why do you need to know what’s motivating your decision?
It’s important to know what is motivating your decision because it will help you to determine whether you need to make a decision at all. Sometimes, it’s better to wait for the appropriate time to take action.
- Why should you have a back-up plan?
Back-up plans will help you to have something to fall back on. A back-up plan will also help you to move forward with your first plan confidently.