You make business decisions every single day. Every once in a while, a decision comes along with the potential to be a game changer for your organization.
Maybe your company is considering mergers and acquisitions. Maybe you’re trying to decide whether to expand operations, enter a new joint venture, build new facilities or invest in a new large-scale research and development project.
The last thing you want to do is make these decisions on the fly using nothing more than gut instinct—even when the decisions have to be made relatively quickly, said Allan Gray, director of Purdue University’s Center for Food and Agricultural Business.
“Even when big decisions require us to be quick to avoid being left behind, it’s critical that we still have discipline to give our businesses the best chances for success,” he said. “It’s fairly common to make a decision and then wonder how that conclusion was reached. That’s a scenario we want to avoid as much as possible.”
As Gray admits, the pressure to perform, grow and manage day-to-day activities can make decision discipline a challenge. But ultimately, it’s that discipline that can help organizations maximize the potential to capture the upside of growth opportunities and minimize risk.
So what does decision discipline look like? It looks like taking the time—even when there isn’t much—to figure out the true objective of the decision at hand, identify all of the alternative approaches to achieving those objectives and performing careful analysis of each alternative.
“One of the most important parts of careful analysis is to have the discipline to clearly document all of the assumptions made during the analysis,” Gray said. “This ensures that when we choose an alternative and move forward, we know the critical variables or assumptions that make the decision a good one.”
Don’t get trapped
Part of making strategic and disciplined decisions also stems from avoiding a variety of common psychological traps, or built-in flaws in our thinking, said Nicole Widmar, associate professor of agricultural economics.
“Understanding what these traps are and how they affect decision making is critical to understanding how people arrive at their conclusions,” she said.
John Hammond, Ralph Keeney and Howard Raiffa cover the topic of decision traps at length in their Harvard Business Review article, “The Hidden Traps in Decision Making.” Some common traps include:
- Status Quo – The decision maker is biased toward options similar to the current situation.
- Framing – When options are presented in ways that can change perspective.
- Anchoring – The decision maker gives disproportionate weight to the first information received.
- Confirming Evidence – The decision maker seeks out biased advice or information that supports a particular option.
“These are just a few examples of psychological traps decision makers fall into in the business world,” Widmar said. “Being aware that traps exist and considering them throughout the decision process can help decision makers stay disciplined and choose to pursue the most sound of the options for their businesses.”
Strategic Decision Making
Disciplined decision making doesn’t come easy. It’s something that has to be practiced. The Center for Food and Agricultural Business offers the Strategic Decision Making professional development program specifically to help you learn to make the best possible decisions to move your company in a successful direction. One of the ways the program facilitates that is through optional confidential personal case studies. Bring a big decision your organization is facing and immediately apply classroom concepts, tools and decision frameworks to your individual needs. Faculty will be available for one-on-one feedback.
The 2018 program runs June 12-14 on the university’s West Lafayette campus. In addition to Gray and Widmar, presenters are Mike Boehlje, professor emeritus of agricultural economics and Nathan Thompson, assistant professor of agricultural economics. Learn more and register.