Making Decisions That Matter

“What matters most?”

It’s the question we are all wrestling with constantly, in just about every aspect of personal and professional life. We all have to make choices. There is simply never enough time, money, or people to do everything.

We all want to pick the “right” things to pursue and invest in… but evaluating what those things are, and weighing them against each other, can get tricky fast. Think about the last budgeting exercise at your company. Was it easy and straightforward to set your priorities? And to get others to agree with them?

Part of the reason why it can be so hard to make investment decisions is due to the challenge of identifying, understanding, and weighing unlike options. As human beings and groups, we tend to do pretty well at comparing tangible, like-for-like options. It gets much harder to assess and properly weigh choices where the consequences and implications are less known and tangible.

Adding to the complexity of group decision-making is the reality that we all carry our own perspectives and biases into every prioritization discussion. Right or wrong, there are some things that I’m more likely to care about and value. Everyone has their soft spots and their blind spots.

There’s an old Indian parable about some blind men who encounter an elephant for the first time. They each feel a different part of the animal and pronounce what they think they have found. The man who feels its trunk declares it to be a snake, the one who feels its side proclaims it a wall, and the one who touches its leg thinks it a tree trunk. In a way, this is how we all enter into a prioritization conversation, influenced by our subjective experiences towards a certain judgment that feels obvious to us… but far from obvious to others.

It’s easy to get lost in this! To help your team make better and clearer choices, it helps to break the things you are evaluating into categories. In my experience, whatever your business, there are three big types of possible priorities.

The known and proven investments

The first and most obvious category: That which is both explicit and known. There are always things that any organization is considering doing that fall in this bucket.

Say you are considering adding a new product onto your online platform. You regularly extend your product line with new services like this, so there is a clear playbook for how to do it, how much it will cost, and so on. And because you have a lot of history with this type of investment, you are also likely to have solid data on how much return you can expect to see, or how many new customers you can acquire. It’s a safe bet that this one would follow a similar pattern.

Or say you are running a call center. You look at average call time and want to bring it down, so you invest in a new system for handling calls, or hire more customer service reps. It’s a direct response to a clear need, one that is highly likely to have a solid ROI.

If you were a city planner, this would be the equivalent of building a new road to a busy area. It feels like the safest and most obvious use of funds. It is unlikely to transform your city, but you can expect it to make a lot of people happier and to make things run faster.

To generalize a bit, the personalities that gravitate most to this type of opportunity are analytical, data-led, manager types. Finance people love these types of investments because they feel safer and seem to offer proven returns.

The unknown, but potentially transformative, investments

Of course, some things are more speculative and unknown. They exist at the edge of the horizon or beyond, offering plenty of potential but few certainties. These are the “What if?” things that could lead either to expensive and pointless exploration or groundbreaking new avenues for the business.

These are the new opportunities, offerings, or process changes that have never been tried before. We can’t know if they will work, and if so, what they might yield us… but we know that there could be some kind of larger impact. Some examples could include considering whether to expand into an overseas market, or to enter into a new partnership agreement, or to switch your factories over from one production methodology to another. In all these cases, while you can certainly find some data and facts to help guide your choice, you are essentially taking a leap into the unknown.

This is the equivalent of building a new road to a high-potential but undeveloped area. There is a real chance the road could end up unused, but it could also spur the development of a whole new community.

Who cares most about these opportunities? Risk-takers of all sorts, but particularly entrepreneurs and innovators. They want to go into unknown territory, putting themselves and their companies in line for new and unexpected benefits by trying something brand new.

The risk-minimizing investments

Finally, you have things that we all know are necessary to do eventually, but no one really is sure when. These are the maintenance- and insurance-type needs.

Every business has to answer some of “what could go wrong?” questions. “Is our enterprise security system strong enough?” “Is it time to upgrade our servers?” “What is our legal risk profile?”

To continue the city planner analogy, this is the equivalent of investing to repair and strengthen your roads and bridges. No one is going to be excited by this, and they may well be upset that you are spending budget on it… but what happens if you don’t and something goes wrong? Yes, you can defer spending on these items, but wait too long and you may end up regretting it.

The most insistent voices for these items are often domain experts that care deeply about risk, like lawyers or technologists. They will want the company to invest in its infrastructure, systems, and protections.

Putting it together: Making decisions that matter

Understanding the categories, and classing your opportunities within them, is certainly helpful. If you want to overcome the cycle of subjective decision-making driven by personal bias, and help your team make better choices, however, you need to do more. You have to determine your collective philosophy, the overall mindset you will have on risk and opportunity as an organization.

The “collective” part matters; this has to be something that is shared by all. Without achieving this level of common understanding, you will be forced to make each decision in a vacuum. You will spend more energy and time in unproductive arguments and have a harder time making the hard choices needed to execute your strategy. Essentially, you need to figure out the hard part once together, so that every subsequent decision becomes easier.

Defining your philosophy starts by examining your goals, context, and history. If you are a startup, for instance, most of your investment should likely be in the “unknown but potentially transformative” category. Why would you be pursuing small incremental opportunities or worrying too much about risk factors? The whole point of your business is to try to do something new with high potential.

Or imagine that you were a big company recovering from a recent security breach, however. Then, you might choose to invest very heavily in risk mitigation, recognizing that you cannot afford another issue.

These are extreme examples; your own risk and reward profile will likely be more complex and nuanced. There are likely places and times where you need to be more conservative and others when you need to push for more growth. Examine what those are and try to create clear criteria that everyone on the team understands.

Finally, accept that any attempt at prioritization involves risk and uncertainty. The single biggest mistake you can make isn’t to make the wrong choice but rather to make no choice because you are paralyzed by the possibility of failure.

You can minimize and mitigate risk, but you can’t do away with it. Similarly, you can reduce the extent to which personal bias influences your decisions but you can’t remove it entirely. The best you can do is create a decision-making philosophy that makes sense to the team, creates a sense of clarity when examining hard choices, and helps identify investments that align to your strategy and goals. If you can accomplish that, you’ve gone a long way to helping your team making better decisions together!