About/Contact Info I am a business consultant for a leading North American business and [+/-] technology services company and have an MBA specializing in management.
"DecisionMaker is meant to help you come to a decision whenever there are multiple reasons both for and against. If all of the benefits of the decision outweight all of its detriments by a factor of at least two-to-one, then your decision is a no-brainer. However, if not, it's probably a good idea to reflect on all of the pros and cons before proceeding with the decision. In that way, the DecisionMaker helps you think about all of the implications of your decision and helps to put things into perspective."
Use the tool on the go to help you decide whether you should consider buying a second vehicle, hiring a new employee, moving to a different city, and so on. Feedback is welcome.
The most profitable companies are the ones which fully understand their markets and their competitors. According to the CEO Refresher, there are six ways to deliver customer value by becoming more market-focused:
Develop a sense of purpose around creating superior customer value and communicating this purpose to your entire organization. This approach also requires you to reward and encourage your employees to think in such ways.
Understand your customers better than they even understand themselves. Do this by conducting market research on what these customers want and need, either expressed or unexpressed, and by distilling and disseminating this research throughout your organization.
Understand the short- and long-term strengths, weaknesses and capabilities of your current and potential competitors. To do this, the authors state that you need to distill your competitors' strategies and tactics into meaningful evaluations.
What this means is that you must assess their capabilities within the competitive environment, and then determine how this will impact the competitiveness of your own organization. As with the previous step, you again share your findings with your organization.
Use a collaborative approach to develop and evaluate new products and services to meet the needs of your customers. Two recommended ways of doing this are by internal cross-functional training and by external "value-creation" partnerships with suppliers or channel partners. The goal here is to be profitable in creating customer value via collaborative methods such as these.
Develop your decision-making to focus on the long-term relationships you will be building with your customers. To do this, you must establish clear criteria for emphasizing the long-term, profit-oriented decision making. The article gives a great example with Toyota's shift in the early-1980s in wanting to be number one in market share to number one in satisfaction. The results for the company - in both categories - have been tremendous.
Finally, there must be strong leadership from the top. The CEO must develop a shared vision of strengthening the company's market culture that demonstrates commitment and involvement right from the top. This is demonstrated by the actions and behaviour of the CEO, and from how the organization rewards employees who share in the vision.
If you've read Seymour Schulich's recent book, Get Smarter, you will have surely read the section in which Schulich, a self-made billionaire and philanthropist, outlines how he deals with making difficult choices in life. He calls this approach the "Decision-maker."
Schulich's Decision-maker is essentially a weighted list of the pros and cons of a specific decision. However, don't let its bare bones nature deceive you -- its very simplicity goes to show how the most complex decisions we face don't need to be over-analyzed.
The approach involves giving each listed pro and con a score from zero to ten, depending on how important the pro or con is to you. For the pros, the higher the score given, the more important the factor in the decision; however, for the cons the reverse is true. Here, the higher the score, the bigger the drawback of this particular con factor. If the total of the pros is at least double the total of the cons, then you should proceed with the decision in question; if not, the decision is likely a bad one.
Schulich himself states that the decision maker is "designed not to allow one or two factors to sway a major life decision" disproportionately. Additionally, Schulich has stated that he's used this decision-making method for over fifty years and it has served him very well thus far.
I've put together a spreadsheet which you can use to try out this decision-making method. Does this look like something that you too can benefit from?
Escalation of commitment is the irrational continuance in a project or plan due to time, money, and energy which has previously been "sunk" into the project. In business, it occurs when managers and other decision-makers are reluctant to back out of a doomed project simply because they have invested heavily in its success. While this sort of resilience can often be an admirable characteristic of a leader, it can also often cause the organization distress and leave the firm's employees and other project stakeholders frustrated and demoralized; not to mention the excessive costs which the company would incur trying to make the project work.
At its root, this phenomenon occurs simply and innocently enough - when a project or a proposal's success suddenly appears unattainable or unfeasible, managers often think that by adding "just a few more people" to the project, or throwing a few more dollars at it will help get things off the ground. For whatever reason, be it that the project is their own brainchild, or that they are simply too stubborn to let go, they are too immersed in the original project plan and and are thus reluctant to back away and look for new alternatives. This type of attitude costs these leaders and their organizations much time, money and energy which could better be spent on other options.
So how then, does one avoid escalation of commitment? First, when you receive information which suggests that your current course of action is now a poor one, you must ask yourself "What personal rewards can I gain from this course of action?" Make sure you keep the outcome of the doomed action plan in mind, and not just the process of proceeding with the plan itself. Secondly, you should set threshold limits which, if no longer can be met, should signal you to change your course of action at once.
Finally, you should be aware of the idea of sunk costs. Realize that this money is essentially water under the bridge; don't hang on to ideas and action plans which have little chance of success just because lots of money has already been invested into it.
Schulich himself states that the decision maker is "designed not to allow one or two factors to sway a major life decision" disproportionately. Additionally, Schulich has stated that he's used this decision-making method for over fifty years and it has served him very well thus far.
Loading