Making smart decisions in your business

I write this blog on my last working day of 2021, as Christmas fever is ramping up almost as much as the Omicron variant, the final pieces of Sellotape are being stuck to gift wrap and again, we stand on the edge of a new year where very little in business life can be certain.

Most of you will have spent some time building a plan for 2022. Our Business Shed members have spent the last couple of months doing just that, so they can start the year with intent and focus. Your plan might not be quite as in-depth. Perhaps today’s equivalent ‘back of a cigarette packet’ approach would be something scribbled on the back of a pack of vitamin D supplements?

But however conscientious your planning has been for next year we know that things will change. New opportunities can present themselves at any moment – and whether that is due to adversity or serendipity, business owners need to be able to decide what works for their business, their goals and their brand in the smartest way they can.

Do you have a method for analysing new ideas? For really thinking through possible solutions to business challenges as they present themselves?

I attended a fabulous seminar in October by Kendra Macdonald, author of Hack the Buyer Brain, where she outlined  some of the 300-odd cognitive biases that happen to us daily. Just that fact alone makes me fear for ever making a sound decision ever again, but it did get me thinking about how business owners can mitigate some of these biases when evaluating ideas and making decisions.

So, cognitive bias fans, here’s the rundown of some of my favourites (and please do go back to the original source for proper information, that is one decision you won’t regret):

Straight in at number one, confirmation bias, the firm favourite of brains everywhere. We find information that matches a belief we already have and ignore contrary information. So, we decide not to use LinkedIn, because LinkedIn is boring, and overlook the fact that LinkedIn is wall-to-wall ideal clients for our business.

Next up, ambiguity bias. We choose things where we know the outcome. Anything where the possible outcomes or benefits are unclear, we avoid. So let me be clear. In case you were wondering if you should stop reading this blog, it will end in 611 words and point you to a useful decision evaluation tool. So now you know.

Then, in at three, the anecdotal fallacy. We use an isolated experience or personal experience to confirm a decision, conveniently ignoring any sound argument that might appear. Why? Because Aunt Marjorie told me, so it must be right.

And finally, a late entry at number four, loss aversion. We instinctively avoid loss at the expense of gaining. So, you decide not to join that network group because you calculate all the time you will lose in your month, versus a vague notion that you might get more clients. And anyway, Aunt Marjorie said it was rubbish, so there.

So as the Top of the Pops music fades away, what does that tell us?

That we sometimes are crap at making good decisions and evaluating ideas.

But there is a simple approach to help us do it better. I designed the Decision Radar to help clients look at possible solutions to a business challenge and feel confident that there had been some level of due diligence on the process and help highlight some of the cognitive bias that we would otherwise get away with. I will outline the principle of the Radar:

From your strategic plan or back of the Vit D pack, pull out the key, headline goal you want to achieve this year. This could be a financial goal, a launch, writing a book… whatever it is, this is your first metric. Write it on a Post-It.

Then, on a second Post-It, write down your brand mission. The ultimate goal you are aiming to achieve. It might not be to change the world, but it will be along those kind of lines.

On a third, write your brand values – the approach and attitude you and your team take to everything.

And on the final Post-It, write your key stakeholder. The group that is most important to your business. I would suggest your audience (clients, prospects et al) but you decide (without bias, if possible).

These four Post-Its are the touch stones for every options analysis you will need to take. You have a challenge and have shortlisted five ideas that could provide the solution. For each idea, offer it up against each Post-It and rank it from 0  to 3, where 0 means it delivers nothing to that metric, or works against it, and 3 means that idea is really working hard.

One you have done this with all your ideas, a picture emerges about which potential solutions are delivering what for your business. An idea might be scoring highly against the audience – great – but if it is low scoring against your business goals, maybe not so much.

And of course, you can add in more metrics (Post-Its) to factor in other ways to evaluate your ideas.

This process takes minutes to do, but can help up double check our ‘gut feel’ for an idea and help rein-in the worst excesses of our bias-ridden brains. Get the process in your business muscle, so it is second nature to do this evaluation – so whatever 2022 flings at us, whether opportunity or knock-back, we can forge forward with confidence we have the right solution to benefit our business.

The Decision Radar is a downloadable tool in the Tool Shed, our complimentary membership area of the Allotment. If you are a member, hop over, download it and make it part of your strategic tool kit. If you are not yet a member, do sign up here, the Tool Shed is packed with useful resources to run and grow your business.

Here’s to 2022. In true Allotment style, may your ground remain fertile, your seedlings strong and here’s hoping your hose never springs a leak.