Why Good Businesses Still Struggle to Make Fast Decisions Essay

Running a business is frequently presented as an exercise in decision-making. What should we sell, who should we hire, where should we invest, whom should we target and when should we expand? Businesses do not fail because they lack ideas, they fail because they cannot make decisions in a timely manner.

A company can have the best people, the most advanced technology, an established customer base and a working product, but if the decision-making process in it is slow, it will waste resources and miss opportunities.

It does not always come down to poor management, as decision-making abilities in businesses tend to decline as complexity increases.

More Information Does Not Always Equal Better Decisions

There is more information available to businesses than ever before.

Sales reports, customer loyalty figures, website analytics, budget forecasts, marketing data and internal documentation have all proliferated. The information contained within them is valuable, but the more documents and figures one reviews before making a choice, the more difficult it is to reach a conclusion.

Having to consult a wealth of information before making a choice may turn a simple action into an unnecessarily complicated multi-step process.

An employee may be required to ask for permission from multiple sources before approving a minor purchase. A marketing executive may have to obtain approval from upper management to execute a clearly beneficial campaign. As a result, decisions that should be made based on readily available information are postponed until a point when they can no longer have a positive impact.

Good information should accelerate decision-making, not impede it.

Small Delays Can Add Up

A choice that is one day late is unlikely to appear as a glaring miss on a balance sheet.

A customer who is kept waiting for a response, a delayed advertising campaign, an accepted order that takes too long to arrive at a supplier, a postponed website update – all of these are easily rationalised as inconveniences.

However, when decisions that should take seconds to make happen on average several times a week, such delays eat into profits with every passing minute.

The impact is especially keenly felt by employees who find themselves tied up in endless approval chains or customers who are kept waiting despite having already been assured assistance.

Although rare, large-scale decision-making failures can be seen on financial statements, the more common occurrence is a gradual deterioration of performance as a result of delayed decisions.

Not All That Can Be Discussed Should Be Discussed

A meeting can be a powerful tool in decision-making, especially when the consequences of the choice are far-reaching or multiple areas of a business need to be taken into account.

However, meetings are not always appropriate, and a fast but incompetent decision is worse than a slightly slow but competent one.

Decisions that require consultation with others should be separated into those that require consensus and those that only need simple approval.

If a company wishes to enter a new market, it needs to have representatives in that market conduct research and perform a cost-benefit analysis. There is no need to consult a group of people over whether to replace a broken photocopier.

A business becomes faster when it recognises the difference between decisions that need to be made by a committee and those that only require the approval of the person in the best position to make it.

It is Not Always What Is Missing, But What Is Extra

The easiest way to slow down any decision-making process is to leave the person making a choice unsure of who is ultimately responsible for the result. If three people think that they have been given the authority to make a decision by a fourth, none of them will take responsibility for it.

Conversely, an employee who thinks they have authority over something when they do not will turn any choice into a discussion in an attempt to avoid the risk.

Unclear delegations lead to unnecessary consultations and unnecessary consultations lengthen the time required to make decisions.

Employees need to have a clear idea of what they can decide on their behalf, what they need to consult with peers or superiors about and what they are not authorised to take action on.

This rule becomes especially important as a business grows, as organisational principles that worked for a five-person company may not translate to a structure that involves dozens of workers. This phenomenon contributes to why larger businesses are frequently observed reworking the decision-making process in an attempt to improve it.

Technology Can Assist

Technology can be useful to businesses that want to speed up their decision-making processes as it makes information easier to access and removes many steps that used to be performed manually.

Many projects, tasks and approvals that used to be done over email or face-to-face meetings can now be done through project management software, spreadsheets, messaging services, dashboards and other instruments.

At the same time, a technology solution is rarely the right answer to a process-related question. If nobody is clearly responsible for making a decision, adding another layer of software will not make it any clearer. In fact, an overcomplicated suite of technological tools can make decision-making even slower, as employees will have to waste time figuring out what each piece of software is for.

Technology does not drive speed improvements, it facilitates them, and an understanding of what processes need to change is the most important part of deciding where a business should apply new technology.

Good Decisions Need a Deadline

There are choices that inherently require more time to be spent on them. Investments, large purchases, employment decisions and organisational shifts do not lend themselves to rushed decisions.

However, many smaller decisions become permanently postponed because they are not given a firm deadline.

A clearly defined, realistic but not unrealistic deadline is an excellent tool for improving decision-making, as it focuses the mind on the fact that an answer must be giveneventually.

Instead of spending time seeking more information, a person or a committee will determine what information is relevant to a choice and what is not, and make the decision on the basis of the former.

Learning from Experience

A business can improve its decision-making ability with the information it already possesses.

If recurring decisions that appear similar on the surface are made, it can streamline the process by creating a clearly defined set of rules under which decisions of this class should be made.

A company can set spending limits that allow employees to approve expenditures without seeking the opinion of upper management. A customer service representative can receive strict instructions on how to respond to the most common questions. A marketing campaign can be developed with a fixed set of rules for what to do if the results fall below expectations.

In essence, a business does not have to reinvent the wheel every time a similar choice must be made. Guidelines streamline the process of decision-making and allow a firm to operate consistently in spite of the inherent unpredictability of the markets in which it operates.

Making Decisions Faster Has Its Limitations

It is important to remember that speed is not the ultimate goal of decision-making. A company that prioritises it exclusively will find that employees become reluctant to make decisions without extensive consultation and reassurance that they will not be held responsible for things outside their control.

If employees are forced to make decisions without receiving the information they believe they need, they will seek to give themselves the easiest possible path to escape responsibility.

A good decision-making culture eliminates the need to ask these questions by providing employees with the information they need and giving them authority and assurance within reasonable limits.

Managers, in particular, must provide opportunities to learn from minor mistakes, as new hires or staff who have been given additional responsibilities will inevitably make some of them.

If they are constantly reminded of the consequences of poor choices, they will become so risk-averse that they will seek to avoid decision-making altogether. The most important thing to remember is that trust must be given before it can be earned.

A Business Does Not Need to Decide Everything Faster

The aim is not to create a company in which any choice is made in an instant, but to ensure that decisions are made in an appropriate amount of time. Fast but poorly made decisions can be just as detrimental as slow ones.

The most important difference is the ability to distinguish between decisions that require the involvement of many people and those that only need the input of one person.

A business can become faster by removing unnecessary steps, ensuring that decisions that do not need to be made by managers are made by employees and vice versa, avoiding unproductive discussions regarding decisions that only one person can make, providing the people who make choices with the information that they need and using technology to make processes simpler.

These changes do not always have an immediate effect, but over time, they enable employees to use their time more efficiently.

The decisions that an organisation makes are what define it, but its ability to operate swiftly and efficiently is what makes it successful.