Stay in the know. Subscribe to Currents
CurrentLead

12 Techniques Entrepreneurs Can Adopt to Improve Decision-Making Skills

8 Mins read

In the fast-paced world of entrepreneurship, making the right decisions can be the difference between success and failure. We’ve gathered insights from CEOs and Founders to provide you with twelve techniques to sharpen your decision-making skills. From adopting a Pre-Mortem Analysis to implementing decision deadlines, discover the strategies that can transform the way you lead your business.

Adopt a Pre-Mortem Analysis

After over 10 years advising entrepreneurs, I’ve learned that sharpening your decision-making skills is critical to success. The most impactful technique I recommend is adopting a “pre-mortem” before making major choices.

A pre-mortem involves imagining that your decision led to failure down the road, and then analyzing what went wrong. Ask yourself questions like “What factors did I overlook?” and “How could I have anticipated those consequences?” This pushes you to deeply consider potential pitfalls and think through backup plans. It’s an invaluable exercise for avoiding rash judgments and strategically mitigating risks.

I once consulted an e-commerce startup that wanted to rapidly expand their product line. Through a pre-mortem, we uncovered that their operations weren’t scalable yet and that new products would distract focus from their core offering. Avoiding those mistakes was crucial – the pre-mortem enabled much smarter growth.

Adopting this forward-thinking approach allows entrepreneurs to make decisions not just based on optimism, but on wisdom. It’s a technique I highly recommend to sharpen judgment and set up strategic success.

Jason Hunt, CMO and Co-Founder, Merged Media

Distinguish System 1 and 2 Thinking

The fastest way to improve one’s decision-making skills is to recognize the difference between System 1 and System 2 thinking.

System 1 thinking is quick, intuitive, and automatic but is susceptible to biases, errors, and intentional misdirection. System 2 thinking, however, is more rational, analytical, and resource-intensive, representing carefully considered decision-making.

Entrepreneurs making high-stakes decisions should write down their immediate System 1 conclusion when making decisions and then play devil’s advocate. If, after serious consideration, you fail to discredit your original conclusion, then you know you are on the right track.

However, if you identify errors in your original reasoning, this helps improve your thinking moving forward, making you a better decision-maker in the future.

Ben Schwencke, Business Psychologist, Test Partnership

Utilize Decision-Making Trees

When working all over the world, I have found that developing and utilizing decision-making trees has become a cornerstone of my strategy to ensure I make informed choices while on the move. These trees act as roadmaps, helping me visualize the potential outcomes of various decisions, whether it’s choosing my next destination, selecting accommodation options, or evaluating freelance projects.

When you can break down each decision into branches of possibilities and consider the implications of each choice, any brand can mitigate risks, maximize opportunities, and maintain alignment with their long-term goals regardless of what type of work environment they have.

The benefits of decision-making trees extend far beyond the realm of nomadic or remote life and are actually invaluable tools for any brand or business seeking to enhance their decision-making processes. When you adopt this structured approach, brands can systematically analyze options, identify potential risks and rewards, and make informed choices that align with their objectives and values.

Decision trees provide clarity in complex situations, empower teams to collaborate more effectively, and enable leaders to communicate decisions transparently.

Danielle Hu, Founder, The Wanderlover

Engage in Financial Forecasting

One technique I’ve found incredibly effective in enhancing decision-making skills, derived from my background in accounting and finance, is the strategic adoption of forward-looking financial analysis. This involves routinely setting aside time to analyze financial trends within the business and industry at large, not just to understand where the business stands but to forecast where it’s heading. For example, at Plushtone Advisory, we often conduct quarterly forecast reviews, which allow us to adjust our strategies quickly based on projected market changes and financial performance insights. 

Incorporating scenario planning is another key strategy. By regularly engaging in exercises that consider different future scenarios, you’re better prepared to make decisions in a swift and informed manner. For instance, we use this approach during our tax planning sessions, thinking through various tax implications under different financial contexts to strategize optimally for our clients. This not only prepares us for likely outcomes but also equips us to handle unexpected changes in tax laws or financial landscapes effectively.

Lastly, leveraging technology for data management and decision support systems significantly sharpens decision-making abilities. At Plushtone, implementing robust accounting software has been crucial. Tools like QuickBooks allow us to provide real-time financial data to clients, which supports immediate and accurate decision-making. This integration of technology ensures that both strategic and operational decisions are based on the most current and comprehensive data available, minimizing risks and enhancing overall business efficiency.

Sean Autry, CPA, Owner, PlushStone CPA

Apply Porter’s Five Forces Framework

If you’re about to make an important decision about your business, try Porter’s Five Forces. It’s a great framework for analyzing competitive forces that may impact your company. Consider

1) The threat of new entrants

2) Supplier bargaining power

3) Customer bargaining power

4) The threat of substitute products/services

5) Competition between existing firms

For a more holistic view, add the sixth force: a complementary product.

Run your idea through the filter of these five or six forces to gain insight into whether it’s a good or bad decision. Just imagine how each of these forces will react to your decision, and how their reactions will impact your business.

Dennis Consorte, Digital Marketing and Leadership Consultant for Startups, Snackable Solutions

Address Knowledge Gaps

Identify and address any knowledge gaps that might potentially be clouding your judgments. Interrogate whether your informational inputs comprehensively reflect every relevant variable before codifying any strategic choices.

If gaping data blind spots emerge, then pivot to rapid knowledge acquisition mode. Ingest studies, enlist subject matter experts, or even conduct proprietary research rather than forging ahead semi-informed. This pause forces you to confront uncomfortable uncertainties while illuminating unforeseen risks and opportunities previously obscured.

Rather delay major decisions until you have the full context than just recklessly extrapolating beyond your knowledge limits.

Brooke Paulin, Owner, Biohacker Supply

Delegate for Better Decisions

Delegation is an indispensable decision-making enabler. With a globally distributed workforce spanning account managers and a legion of contractors, shirking assignments would catalyze utter pandemonium for me without due delegation.

The sheer volume of clients we serve necessitates triaging which duties warrant my personal oversight versus which can be capably offloaded. As a leader, your fingerprints should be all over key strategic initiatives, but the minutiae of day-to-day production, well, that’s where deputizing sparks exponential leverage.

By entrusting your capable lieutenants to steer the proverbial ship, you can liberate invaluable headspace. Letting go of smaller tactics frees your mental bandwidth for higher-order decision quandaries such as product roadmaps, operational optimizations, and growth trajectories. The art lies in judiciously assigning according to individual competencies while establishing proper guardrails.

Jason Smit, CEO, Contentellect

Evaluate Past Decision Processes

Review and evaluate all the big decisions you’ve made to date—they usually hold a lot of answers. But don’t get caught up in the thinking trap that tells you just because the outcome was good, your process was correct. And here’s what I mean by that. Let’s say you made a decision that had a 70% chance of achieving your desired outcome. 

If it doesn’t work out, it’s easy to fall into the trap of thinking the decision was flawed. However, choosing the alternative with only a 30% chance of success would generally have been a worse decision, even if, in this instance, it might have worked out better by sheer luck. Life is filled with uncertainties, and decisions often involve a degree of risk—essentially, they are bets on what you believe will be the most likely path to success. 

To put it simply, focus on the process that led you to your decisions. Ask yourself how you arrived at your decision—what information did you have, what assumptions did you make, and what factors did you consider? Reflect on whether you might have missed any critical information or whether there were biases that influenced your thinking. This introspection helps you refine your decision-making process by identifying patterns in your thinking that could be improved.

Paul Carlson, Managing Partner, Law Firm Velocity

Combine Data Insights with Scenario Planning

One effective decision-making technique that I’ve applied from my extensive experiences at RCDM Studio, especially in digital marketing and integrating technology, involves a robust combination of data-driven insights and scenario planning. 

For example, when approaching any e-commerce or digital marketing campaign, I prioritize gathering and analyzing data from similar previous initiatives. This quantifiable approach, where we use metrics like user engagement and conversion rates, informs more data-centric decisions that align marketing strategies closer to what’s been proven effective.

Incorporating strategic foresight through scenario planning has also been pivotal. By envisioning various potential outcomes based on different decision paths, we effectively analyze risks and rewards without actual commitments. This was especially useful during digital launches for high-profile clients where potential impacts were wide-ranging. This method allows us to preemptively smooth out potential wrinkles and streamline decision-making processes.

Fostering a culture of continuous learning and feedback has significantly refined our decision-making. Each project at RCDM Studio concludes with a retrospective review session, allowing the team to discuss what decisions led to successful outcomes and what could be improved. 

This not only helps in enhancing current projects but also establishes a knowledge base that informs future decisions, making each choice more informed than the last. This iterative process has been crucial in maintaining our adaptability and sharpness in decision-making across varying project demands.

Richard Carey, Founder, RCDM Studio

Adopt User-Centric Development

In my experience in the health IT industry, particularly working with U.S. Department of Defense and private-sector clients, one powerful technique for improving decision-making skills is adopting a “User-Centric Development Process”. This approach places the end user at the forefront of every decision, which helps reduce the complexity in understanding what will truly benefit the user. 

At our company, when developing a new IT solution, we constantly involve end users in the testing phase to gather direct feedback. This real-time input significantly influences our decisions related to software adjustments and feature enhancement, ensuring the product not only meets but exceeds user expectations.

Implementing ‘scenario simulation’ has been another critical method. Before making significant decisions, we simulate various potential outcomes. For example, before choosing a software development outsourcing company, we run several scenario-based analyses on how different choices could impact our service delivery and data security. This method allows us to foresee potential pitfalls and make more informed, strategic decisions.

A “continuous feedback loop” from all stakeholders has proven indispensable. Regularly engaging with team members, clients, and end users throughout the project lifecycle allows us to refine our strategies effectively. For instance, after deploying a digital health record system, continuous feedback from healthcare professionals highlighted areas for improvement that we hadn’t initially considered, such as integration with other existing healthcare systems. 

Quick adaptations based on these insights significantly shortened our development cycles and enhanced user satisfaction. These strategic methods not only strengthen decision-making skills but also ensure that outcomes align closely with the company’s goals and user needs.

David Pumphrey, CEO, Riveraxe LLC

Practice Environmental Decision Mapping

One distinctive technique entrepreneurs can adopt to enhance decision-making skills is practicing “environmental decision mapping.” This approach involves visually mapping out decisions while considering their environmental impact at each stage of the process. 

By integrating environmental considerations into decision-making frameworks, entrepreneurs can prioritize sustainability and align their choices with the values of their plastic-free company. This technique encourages holistic thinking, prompting entrepreneurs to evaluate not only short-term gains but also long-term consequences for the environment. 

In terms of success, implementing environmental decision mapping has led to a 71% improvement in decision quality, measured by the alignment of decisions with our company’s sustainability goals. Additionally, this approach has resulted in a 57% increase in stakeholder satisfaction, as our environmentally conscious decisions resonate with customers, employees, and partners alike. 

By incorporating environmental considerations into decision-making processes, entrepreneurs can make more ethical, impactful choices that drive the success and sustainability of their businesses.

Chaitsi Ahuja, Founder and CEO, Brown Living

Implement Decision Deadlines

Set a deadline for key decisions. Entrepreneurs are some of the world’s busiest professionals, and sometimes, this leads to delayed decision-making and lagging results. A simple deadline-setting strategy can help mitigate this common problem.

For example, rather than having a decision loom overhead, a set deadline allows entrepreneurs to allocate the necessary time leading up to the target date to gather all the data, insights, and perspectives needed to make a well-rounded call. It also prevents the dreaded ‘analysis paralysis’ often brought on by overly flexible timelines. After all, decision-making isn’t about knowing all the facts; it’s about deciding the best course with the available information and despite inevitable uncertainty.

In addition to improving accountability, time management, and the quality of our decision-making, deadlines maintain momentum for further innovative efforts.

Shannon Ewan, CEO, ICAgile

Brett Farmiloe is the founder of Featured, a Q&A platform that connects brands with expert insights.

Decision-making skills stock image by Khongtham/Shutterstock

Related posts
CurrentTechnology

Methods to Check Database Corruption in SQL Server

6 Mins read
Database corruption in SQL Server, a Relational Database Management System, can pose a major threat to organizations’ functioning due to data loss…
CurrentTechnology

The Generative Generation: AI, Chatbots and Financial Compliance

5 Mins read
In March 2023, SEC Chairman Gary Gensler described AI (Artificial Intelligence) as “the most transformative technology of our time, on par with…
CurrentManage

Want Higher Profits and Morale in Your Business? Keep Your Employees

3 Mins read
Despite the existing data, many employers remain oblivious to the silent profit killer lurking within their companies: employee turnover. While attracting top…