Far too often, business owners and managers delay making important decisions out of pure fear. They fear the uncertainty that accompanies decision-making, which is understandable but rarely helpful. As an Indiana business lawyer, I have witnessed small businesses suffer from “paralysis by analysis.
Consider a sampling of the questions with which small businesses routinely suffer:
- “Should I hire Company A or Company B for that big job?”
- “What will happen, if I buy that new machine?”
- “Will I have enough business to hire those additional employees?”
- “Should I retain that marketing firm and implement that new product launch?”
- “Or, should we wait and decide later?”
On the other hand, many business decisions should be delayed, because of a lack of data. The art and science of business decision-making rests mostly in deciding whether a decision is to be made currently or after further inquiry. As they say: “A decision not to make a change is a decision to stay the course.” Likewise, a decision not to decide is a decision itself.
So, if you are currently using Acme Consulting and elect not to replace that firm with a new firm (say NewDay Consulting), then you have effectively decided to retain Acme Consulting indefinitely. The decision to delay the decision to retain a different firm (here, NewDay Consulting) is likewise a decision to retain Acme Consulting. Now here’s the crazy thing. . . every day, tens of thousands of business decisions are delayed for a range of reasons, but are most often delayed out of fear of making a mistake. That’s the uncertainty I described above, and it is real and widespread in the business world. Fear, however, is rarely a good reason to stay the course.
With that background, consider this important phenomenon: The risks associated with most choices do not decrease merely with the passage of time. Risks increase or decrease for reasons generally unassociated with the passage of time. What does change over time is our ability to perceive, measure and judge risks. In other words, as time passes, we learn more and can evaluate newly-learned data. Most business decisions do not involve evolving risks factors. We may not know what all the risks are today, but those are not often going to change over time. What can change over time is our awareness of the risks and rewards of particular choices.
So, that would suggest that we delay business decisions as long as possible to gather more data in order to increase the odds of making the best decision possible.
So, delay is good, right?
Consider two factors that are pushing us to make business decisions sooner than later. First, our competitors may not be delaying their decision-making. If the competition makes the right moves, we may lose clients, jobs or other opportunities. Business is not always a zero-sum game, but all business ventures feel pressure from competition and alternatives available to our customers and clients. Secondly, if we delay making the right decision, we lose profits that could have been gained while we were debating our choices. If we take six months to make a decision that could have been made in two weeks, we have lost at least five months of business opportunities, profits and rewards.
The key then to good decision-making is to expedite the process of gathering data to evaluate risks. It’s not “Hurry up and decide.” Rather, it’s “Hurry up, gather data quicker, so we can decide.” When the benefits of gathering additional data begin to outweigh the rewards that could be realized during the additional decision-making and debate, it is time to decide. At that point, the advantages of delaying the decision-making are no longer justified. Decide.
Let me share a final thought. . . on making the wrong decision. The sooner you make a bad decision, the sooner you can begin to recover from its consequences. One way to minimize losses while expediting decision-making is to implement some form of incremental improvement, such as the Japanese management concept called the Kaizen Method. The general concept is that continuous improvement comes from small but consistent change based on good data. If you make a mistake, it is likely to be a small mistake from which you can recover quickly. An additional advantage is that small changes provide more data to determine whether a particular course of action was warranted or should be modified.
Rather than fire Acme Consulting to hire NewDay Consulting, we could transition from the former to the later over time- one project at a time. If we discover during the transition that Acme Consulting is the better choice, we can stop the transition. If NewDay Consulting proves to be the better choice, we can move quicker through the change process. If both companies disappoint, we can “cut our losses,” and begin searching for a third vendor.
In short, the sooner we make the right decision, the sooner we will enjoy the rewards. A balanced approach focused on incremental change just might provide all the benefits of change without the attendant risks.