Small companies must act quickly when an opportunity presents itself. Acting quickly, however, should not put the business at unnecessary risk. Our blogs on “Accelerating Growth and Impact” provide valuable insights for small but growing companies, especially in clean tech.
Why It Matters to Accelerate Decision Making
When an opportunity presents itself for a small business, it must act quickly before a competitor does. Speed of decision-making can also be a competitive advantage over larger companies, which tend to be more bureaucratic and slower to act.
Barriers and Risks for Small Business
Small businesses may be overly reliant on one key person for major decisions. If that person is unavailable or overwhelmed, then the decision might be stalled. Decision-making may be more distributed, but without an established decision-making process – leading to suboptimal results.
Small businesses are more likely to suffer major consequences as a result of bad decisions. They don’t have the deep pockets of their larger competitors to weather a setback.
Strategy 1: Focus your efforts
Decision making can be greatly accelerated if it’s based on a shared mission, vision, and values. The mission statement defines the purpose of the organization. The vision establishes near and longer-term goals. Values define the culture of the organization – Peter Drucker famously said that “Culture eats strategy for breakfast.” Together, mission, vision, and values are the North Stars of an organization.
With a clear mission, vision, and values, decision-making can be delegated throughout the organization. Absorbing these attributes allows lower-level employees to act confidently. These North Stars also act as a filter to quickly dispense with opportunities that don’t fit.
Leadership can free up time by delegating minor decisions, thereby leaving more time for the major ones. With more time available, major decisions are made more quickly and well.
Strategy 2: Prepare early
Most strategic opportunities and threats do not appear out of the blue. Preparing early is key to accelerating decisions and making good ones.
Major opportunities and challenges should be reviewed regularly with the team. A SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) provides a format for the analysis. Next is creating an action plan to deal with the top 3 of each. SWOT analysis should be part of annual strategic planning. In a fast-growing company or changing industry, the SWOT analysis might be carried out more frequently.
Action plans might include: (a) staying informed on key factors affecting your business, (b) updating competitor information, (c) gathering internal data for key decisions, (d) defining clear criteria for important decisions.
Strategy 3: 80% is (mostly) good enough
All decisions are not equally important, nor do they all have the same sense of urgency. Amazon divides decision-making into two groups: (a) Important and Irreversible, and (b) Less important and/or Reversible. Let’s take a look at how this affects decision-making.
Important & Irreversible
These decisions require special attention from top leadership, and an appropriate allocation of time and money. Define additional information needed and gather it. Identify key people who need to participate in the decision and encourage fast feedback. Set a timeline for intermediate steps and a final decision. You’ll then make a smart decision in a timely fashion.
CEO peer groups and coaching can be an important sounding board. The other members know you and your company and have your best interests at heart. They do not gain or lose from the feedback they provide and have broad experiences that differ from yours. They can therefore provide unbiased input from their unique perspectives.
Small companies are frequently led by a decisive, confident leader. This leader may feel that with their experience, they can make a high-quality decision based on gut instinct. This is a potential trap that can lead to disaster. I suggest putting in place a process to slow down important decisions and get feedback from others.
Sometimes it makes sense to delay (despite the focus of this paper!) Many important decisions are not time-critical and would benefit from giving the situation and options time to evolve.
Less Important and/or Reversible
Less important decisions can be delegated downward in the organization, thereby freeing up leadership time. This is also an opportunity to develop leadership and decision-making skills throughout the organization. Training and management support should be provided to enhance these skills.
Less important and reversible decisions do not require the same rigor as critical decisions. We do not need to wait for 100% information, nor for everyone to agree. It’s okay to make some mistakes and use them as an opportunity to learn.
Strategy 4: Continuous improvement
As with most things that we do repeatedly, decision making should improve over time. Improvement will happen only if we take the time to reflect and learn. After each major decision, take the time to assess what went well and what can be improved. In this way, the company develops better and faster decision-making capabilities, leading to improved results.
I suggest Covey’s Time Management matrix as a tool for continuous improvement. The matrix provides opportunities to define decision-making activities by urgency and importance. Small company leaders should focus their time on quadrants 1 and 2.
1. High importance & high urgency decisions require management. These include facing crises and important deadlines.
2. High importance & low urgency decisions require leadership focus. Key activities are planning and preparation.
3. Low importance & high urgency decisions should be delegated. These non-critical decisions provide an opportunity for leadership development.
4. Low importance & low urgency decisions should be eliminated. These can be identified by relying on the North Stars of mission, vision, and values.
Download our version of the Covey Time Management matrix, modified for decision-making.
First Steps to Accelerate Decision Making
These steps should be started early to prepare for making good decisions.
1. Provide training and practice opportunities for all employees, consistent with their role and future prospects.
2. Key leaders should complete the Covey Time Management Matrix mentioned above. They can use this framework to prioritize their decision-making time.
3. Perform a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to identify key decisions that are expected in the next 2 years.
4. Establish action plans to initiate activity on key opportunities and threats.
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