Friday, June 10, 2011

Make Better Decisions, Get Ahead (Recession or not)

Only when the tide goes out do you discover who’s been swimming naked. – Warren Buffett

We saw plenty of companies and businesses go under when the Recession and its wave of crises hit.  Yet amid the chaos, we saw others survive and still others thrive.

What makes some companies sink and others become paralyzed, while still others choose the most “perilous” conditions to take their biggest risks?

The companies, and in fact, the individuals, that thrive during difficult times have in common: 1.) preparedness and 2.) smart decision-making skills and 3. the realization that the best time to make growth-driving decisions is when other companies are distracted, confused, or just plain scared.

Preparedness requires paying attention to facts, anticipating, and being ready for possibilities.  For example, healthcare legislation requires big changes and confuses many.  Leaders who value preparedness aren’t sticking their heads in the sand while they wait for the changes to come upon them.  They’re examining the facts, uncertain and shifting as those facts may be, and developing strategies to accommodate those changes.  They will certainly have to revise their strategies as they go, but they can do so more nimbly having prepared for the worst.

As for smart decision making, there’re lots of theories about minimizing flaws in decision making.  Anyone who’s read Blink knows how confirmation bias, anchoring, and loss aversion can influence decision makers.  Simply being aware of our human tendencies, however, isn’t enough to correct them.  What can we do then, to minimize the damage our human biases inflict, and maximize effective decision-making?

According to this article in the Harvard Business Review, the answer lies not in minimizing biases in your decisions – but in minimizing biases in the decisions of those around you.  Being a leader and helping others make smart decisions, in other words.

Once you’re prepared and skilled at decision making, the risks suddenly aren’t as risky.

Curious about your own decision-making skills?  Take this quick quiz for executive decision makers, provided by McKinsey & Company.

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