Practice Triage in Making Business Decisions
Decisions are the fuel that propels companies forward. Good leaders know how to make quick decisions based on limited data. As a CEO, I’ve learned to triage decisions by sorting them into three categories based on their potential business impact:
Here’s how to treat each type of decision based on its level of importance:
1. Insignificant choices present a chance for improving skills.
Certain decisions, on their own, won’t affect the business overall in a considerable way. Yet the process of making such decisions provides an opportunity for CEOs to coach and encourage the growth of employees.
When anyone brings you a decision that will not materially affect the business, make him or her take a position. (Don't let employees who are experts in a certain area and probably closer to the issue than you are blithely dump responsibility for the whole decision on your desk.)
Question this person: Has he or she considered all factors? If the issue can be quantified, has this person run the numbers and made reasonable assumptions? What is the worst case?
Does this employee's potential decision take into account the interests of all company stakeholders: customers, employees and shareholders?
Once it's clear that an employee has made a well-reasoned decision, don't change it, even if your solution would have been different. A different choice isn’t necessarily better, and you want employees to build confidence in their decision-making abilities. The better employees become at decision making, the more time leaders have to spend on the significant and difficult calls.
2. Easy but significant choices require executive input.
Sometimes the pros and cons of various options are clear, but it’s important to get the decision right because it will affect the entire business.
These types of decisions require executive feedback and ultimately buy-in to get them right. If the decision affects multiple groups, engage all the appropriate executives to find out which decision they would make. These executives might have additional information or ideas that will help with making a better decision. This process either leads to a consensus choice or a new option to consider.
Training your executive team to make good decisions is a key component for building an organization that can support rapid growth. If you find yourself constantly making decisions that are different from the solutions proposed by your executive team, there is a problem.
3. Difficult and significant calls require risk assessment.
Certain decisions will make a difference to business operations but the options are complicated and it isn’t clear that you're even considering all of them. Such decisions require the CEO’s active involvement. It's crucial to gather input from the executive team, but ultimately the CEO has to make the final decision.
These decisions should be tackled according to their level of risk, as follows:
Low risk. Some decisions, though difficult and significant, are low risk because they are relatively easy to reverse. CEOs should make these decisions quickly to keep the organization moving. Some CEOs get hung up on difficult and significant decisions, dragging their feet and causing the organization to lose valuable momentum.
No one wants a bad decision to result from a deliberation process that's too quick but in most cases a speedy determination can keep the organization functioning at top efficiency. If the other smart people in the organization don’t agree on a course of action, it is probably close to a 50-50 call. Just pick one option and move on.
High risk. Difficult, significant and risky decisions (for instance, moving forward with a major acquisition) are almost impossible to reverse and therefore carry tremendous risk to the organization and the future of the CEO and the rest of the executive team. These decisions require careful analysis and thorough discussion. There is no secret formula for making them, but just best practices. Seek outside advice, assign a devil’s advocate and conduct an official postmortem.
Relying on triage in business decision making should maximize quality and speed while freeing the CEO and other leaders to focus on the most important ones.