Making business decisions is tricky. It’s one reason why many people who dream of one day being the boss don’t ever get around to starting their own small business. Calling the shots means taking responsibility for consequences, both good and bad.
If you’ve ever been involved in the upper hierarchy of an organization, you’ll have a sense of what it’s like to make decisions in this scenario. You’re dealing with a multitude of moving parts that interact with and affect each other.
Yet somehow, successful entrepreneurs manage to do this daily. What sets them apart from the majority of owners who eventually fail and give up on a venture? It’s the skill of decision-making, and you can train to improve your judgment under similar circumstances.
Stress reduction helps
When confronted with a stressful situation, most of us enter ‘fight or flight’ mode. This impairs our ability to make decisions. Studies have shown that increased time pressure, for instance, leads people to make more risky choices and feel less confident about them.
Even the average person will have some experience dealing with such scenarios. Thus, it’s natural for a novice entrepreneur to resort to a tactic we’ve all tried to use in the past: finding ways to reduce stress.
Some aspects of business don’t have to be handled directly by the owner. You can delegate tax-related concerns to your personal accountant or allow marketing professionals to have more creative control over the upcoming campaign. The truth is, your input isn’t always required for desirable results, especially if you’ve learned to trust and manage the performance of your team.
Decision-making is the differentiator
This approach may work when you’re an employee or even a middle manager. But at the apex of an organization, you’ll find that some level of stress is inherent to the job. It can’t be eliminated, avoided, or delegated to others.
Research in this field also presents the counter-intuitive findings that not all stress compromises our judgment. There are situations where you could never really obtain perfect information, which is especially common in business. Having to deal with stress forces you to work within those limitations, adopt a simpler mode of processing, and focus on critical issues.
In the long term, entrepreneurs who can sustain success aren’t the ones who avoid stressful situations or complex decisions. They might employ such tactics when it’s feasible, but more importantly, they have developed decision-making as a skill.
Training to improve
Studies have shown marked differences between novice and experienced entrepreneurs in how they make decisions. Different business scenarios call for adaptability in terms of cognitive processing. Yet novices consistently resort to analytical decision-making regardless of context.
On the other hand, expert entrepreneurs are more likely to recognize the nature of the decision task at hand. They can switch cognitive modes accordingly. This allows them to draw from experience and use heuristics to facilitate decisions, for example.
Often, this knowledge is built up haphazardly over the years, through a lot of trial and error. It’s a process that tends to weed out the novices who fail to adapt and consequently make bad decisions that lead to business failure.
Recognizing decision-making as a skill allows you to avoid that randomness. You’re not at the mercy of time and circumstance because you can take steps to train yourself even before critical junctures arise.
The exercise of an organizational pre-mortem, for instance, allows you to envision factors that could lead to failure and come up with solutions before an actual crisis might arise. Other types of training can help you manage the perception of stress, which is what really determines the impact of the stress response. Work on these things, and you can get expert decision-making without having to survive years of stressful scenarios.