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8 Stepping Stones to Smart Decision-Making

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OK, here’s another fact of life we all must face—when there’s a decision to make—should you have a slice of carrot cake, or should you skip dessert—or maybe there’s something on the table that’s more important than splurging on dessert? Leaders of Freelance solopreneur entities may have an important business decision to examine. To complicate your task, there is also the matter of determining which data resources will give your decision-making process the best support?

It’s often the case that some information that would be useful will not be available to you, for some reason or another. For example, despite the considerable amount of website and social media engagement data that’s at your fingertips, along with your company financial records and perhaps also industry reports, some that may have been generated by heavyweights like Accenture or McKinsey, you may nevertheless struggle to interpret and utilize certain information. There is often data you don’t have and sometimes also data whose relevance you don’t understand.

In fact, there is also data that indicates that misunderstanding how to leverage data can lead to mistrust of data. Doubting your data can cause you to regret certain of your decisions, because you fear that you may have misinterpreted the data and that your possible miscalculation might spoil the decision outcome. You may fear that a previous decision made failed to deliver the desired outcome because you either didn’t interpret the data appropriately or you relied on the wrong metrics.

A 2023 study found that those called upon to make decisions, especially impactful business decisions, rather frequently feel overwhelmed, and perhaps even unqualified, to sort through and recognize which data will be helpful to the decision-making process and that the phenomenon is hurting the quality of their business performance. According to The Decision Dilemma, a 2023 study by Oracle and Seth Stephens-Davidowitz, the New York Times bestselling author of Don’t Trust Your Gut: Using Data to Get What You Really Want in Life (2022), it is common to feel regret caused by the possibility of having made an unfortunate decision. Study outcomes showed that 85% of participating business leaders admitted questioning certain decisions they made over the previous 12 months. Furthermore, the 72% of participants who admitted that the sheer volume of data is overwhelming, along with the 35% of participants who were unable to determine which data or data sources were either relevant or accurate, caused most in the study to lose trust in data. Moreover, that lack of trust has at times prevented them from making a decision.

The 14,000+ employees and business leaders across 17 countries who participated revealed that business owners and leaders are struggling to make decisions in their (personal and) professional lives at a time when they are expected to make more decisions than ever before: 74 % of respondents reported that the number of decisions they make every day has increased by 10x over the last three years. Additionally, 85 % of respondents feel unable to make good decisions. That feeling of inadequacy has a negative impact on their quality of life, from causing them to experience anxiety (36%), to miss business opportunities (33%) and contributing to unnecessary spending (29%). As a result, 93% of respondents reported that they’ve changed how they make decisions.

As a leader, knowing what should factor into making the best decision you can is crucial. How might company expenses, products and/or services, your company brand, or customers be impacted? You might not have access to all the information you’d like, but you are most likely aware of a number of key factors that will give some indication of the outcome of your decision. To that end, I share with you decision-making suggestions compiled by members of the Inc. Magazine Leadership Forum, a group of founders and C-Suite business leaders who understand that decision-making without complete information is an everyday occurrence, making the availability of a framework to guide your process essential

SEE THE BIG PICTURE AND PICK A DIRECTION

Decision-makers are encouraged to keep the big picture of your organization and what you’d like the decision to bring about as you predict potential outcomes and assess risks that help you to weigh possible losses before deciding which actions you’ll take (strategy development). This approach ensures that your decision will align with long-term organization goals and promote its growth.

Remember also that in many cases, making almost any decision is better than not making a decision and that making no decision is a decision by default. Choosing against making a decision is not a synonym for caution. Pick a direction, commit to it and then do all that you can do to make it work. Your final result may not be 100 % perfect but it may suffice and, best of all, can take you a step closer to your ultimate goal.

BREAK AWAY FROM FEAR AND FOCUS ON GROWTH

Alas, it is inevitable that many decision-makers are imprisoned by the fear of negative outcomes. Avoiding risk is an essential ingredient in every decision-making process, but risk management should not be an expression of fear, because fear limits opportunities. Letting go of fear allows you to recognize and pursue opportunities, especially when the quest for opportunity is leavened by appropriate risk assessment and management.

Psychologists have proposed numerous strategies to help side-step fear (which is usually exaggerated or even irrational). Identifying the worst-case scenario of your decision outcomes, which is an element of scenario-planning, is perhaps one of the best remedies. Prepare for the worst and hope for the best!

CONFIRM FACTS AND AVOID CONFIRMATION BIAS

Separate facts from interpretation that’s tainted by confirmation bias. Also known as wishful thinking, confirmation bias lulls you into interpreting information in a way that conforms with what you expect or would like to happen; you may be inclined to ignore or discredit information that does not support your preferred outcome.

That said, don’t be afraid to be guided by the outcomes of previous decisions, whether or not they produced the preferred outcome. Trust your track record and do the best you can with the available data and the resources that are in hand. Once you’ve done your homework and objectively examined the available information, have faith that it may be preferable to take a chance and own a mistake than to play it safe and lose out on creative, innovate decision.

You can escape the blinders of confirmation bias by asking yourself the tough questions. It will be wise to confirm that your company has the necessary resources, for example, market share, revenue, expertise and/or relationships to implement certain decisions. If your resources appear to be lackluster, you may need to launch a remedial plan—an interim decision— before embarking on a decision-making process to launch a major initiative.

ACKNOWLEDGE YOUR ASSUMPTIONS

Consider initiating your decision-making process by creating a list to catalogue the decision options that are available to you. It’s very basic, but it’s helpful to know what your options are. You can also rank what appear to be the best options by next listing the potential benefits associated with each direction available. You want to be able to confirm that your assumptions reflect the best picture formed with current data and also to acknowledge that which you are unable to know.

Assumptions are like the scaffolding used on a building but they are tricky because they are vulnerable to confirmation bias—magical thinking you want to avoid. Yet, assumptions in decision-making are necessary because you need a few “givens” to depend on—the size of your customer base, the performance of your best-selling services, the impact of your major competitors, for example. The danger is when your assumptions remain invisible. Unexamined beliefs about people, processes, or systems can silently distort judgment and create blind spots. 

ASSESS WHAT IS UNKNOWN

How wonderful it would be to know what you don’t know—or at least recognize that there are happenings about which you haven’t got a clue. Another useful contribution to successful decision-making is to brainstorm about the unknowns. How can you figure out how to know what you don’t know? When compiling and analyzing data, you may not realize that it’s primarily a collection of vanity metrics. If you invest an hour, or a day or a week, to think about the unknowns, you’ll have a better chance of coming to the table with a true understanding of what factors are in play for your decision. Keep a piece of paper and a pencil handy and write down what comes to mind when you least expect it.

DETERMINE WHAT CAN BE ADJUSTED

Catalogue what must be right about the outcome of your decision and what can be adjusted later. As noted above, pick a direction, assess the likely risks and fix what needs some adjustment. When information is incomplete, and that’s often the case, you might decide to follow a strategy that has wiggle-room for a reversible choice or two. Sometimes, time matters—either you are compelled to make a decision to save yourself a peck of trouble, or you want to catch a good opportunity and you may be holding enough cards to catch the wave and ride it. Momentum matters—but it has to be paired with flexibility so that the right adjustments can be made in response to unexpected developments or if new information becomes available.

PROTECT CUSTOMER EXPERIENCE

Because information may be incomplete or inscrutable, you will likely be well-served to let protecting (or enhancing) the quality of your customer experience be your decision-making guiding star. In a fast-changing business environment, you’ll rarely have all the answers to questions that would clarify your understanding and affirm the path you should take. If your decision preserves customer trust and, if possible, enables you to keep the business to rather quickly and efficiently adapt to marketplace fluctuations, you can more easily make adjustments if there is push-back from your customers. Depending on the decision you must make, it could make sense to get some input from customers to learn how they might feel about changes that would be visible or impactful to them.

ACCEPT MISTAKES AND COURSE-CORRECT

It is not unusual for Freelancers and other business leaders to be called upon to make impactful decisions quickly and with only partial, maybe even questionable, information. You must learn to accept that mistakes will be made. Impact comes from being able to identify, own and modify decisions as new information surfaces. The real mistake is to hold on to bad decisions because they were already made.

You rarely have complete information, so effective leaders learn to make timely, confident decisions using their experience, industry knowledge, understanding of the broader environment, and awareness of the competitive landscape—then quickly course-correct if new information shows the decision should be adjusted.

Thanks for reading,

Kim

Image: Adobe Stock, generated with AI

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On Considering a Business Partnership

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It’s often said that two heads are better than one. If you’d like to achieve an important goal or solve a problem that’s disturbing your life, help may materialize as a friend who suggests a solution that overcomes the obstacle. Now if the advice you need concerns a business venture, your answer could be found in the person of a business partner who’s willing to join you in the venture and bring resources that help jumpstart the success you envision.

Freelance professionals and other business owners may reap significant benefits from a partnership; a wisely chosen business partner will bring resources to your company that, depending on the products and/or services sold, can position the entity to take on big budget, high profile projects, introduce more clients, expand the products or services the company provides and/or improve access to capital that enables the business to scale and expand.

Partnership planning

Forrester, a global market research company with headquarters in London, UK and Cambridge, MA, in 2019 conducted a study that revealed companies worldwide use business partnerships to “drive competitive advantage.” Results indicated that 77% of companies view partnerships as “central to their business strategies and initiatives.” Those encouraging results could apply to your company, too, if you set things up right.

Because a partnership is a long-term, game-changing strategy, it’s essential that you discuss the idea with your accountant and business attorney before making any moves. There are different types of partnerships you can create, any of which might benefit your company. If the possibility of a partnership comes to mind, consider your vision for the business. Where is it now, in terms of profitability, number of clients and shrewd competitors? What do you want the business to look like in five years and what are you willing to do and spend to make it happen?

The insights and recommendations of your advisers, who are familiar with company finances and other important factors, will help you decide the type of partnership that has the greatest potential to fulfill your business goals. Involve whoever appears to be a strong candidate to join you in meetings with your advisers to talk specifics. It will make sense to ask your business attorney to draft a written partnership agreement for the new entity, whether or not your state requires that such a document must be filed with your Secretary of State or Attorney General.

Below are two standard partnership formats; the specifics of your choice will be included in the agreement, as will the ownership percentage of each partner. Keep in mind that partner contributions to the business may take various forms. Capital contributions can be made as cash, property, equipment, or intellectual property. The value of each partner’s contribution will impact the percentage of his/her ownership stake.

  • General partnership: where two or more individuals own and manage the business. GPs share equal responsibility and decision-making rights for the business, will receive the agreed-upon share of profits generated and will incur the agreed-upon liability for losses and debts. The liabilities, contributions and responsibilities of partners are typically equal unless stated otherwise. Profits and losses are shared equally, unless stated otherwise.
  • Limited partnership: limits the amount of financial liability for partners who join the entity as an investment opportunity. While there must be at least one general partner, there may be several limited partners, whose function is to bring additional operating capital to the entity. LPs receive profits and are also responsible for debts or losses, in accordance with the size of their contribution. They are not involved in the day-to-day management of the business, nor do they have decision-making power. LPs, often called “silent partners,” serve solely as investors in the business, with the funds they contribute being the extent of their liability.

The partner dance: who zigs, who zags

The person(s) you invite into your business is/are determined by the role the partnership will play in the company. Do you want a co-worker to help you operate the business and also add money and/or other resources? Or do you want more money to invest in the entity while you remain at the helm, developing and executing goals and strategies designed to advance business goals? As noted, you’ll begin by discussing your vision with advisers.

Once it’s decided whether a GP or LP arrangement is applicable, you’ll consider appropriate candidates to approach. In their 2015 book Rocket Fuel, authors Gino Wickman and Mark Winters stress the importance of having both a visionary and integrator — two different people — in order to successfully scale companies. The authors say, “When these two people share their natural talents and innate skill sets, they have the power to reach new heights for virtually any company or organization.”

Restaurants, in particular, typically follow an alternative partnership model, known as “front of the house” and “back of the house.” The front of the house partner is the extrovert who takes on customer-facing responsibilities—greeting customers, acting as the public face of the operation and talking to restaurant viewers and media representatives and, based on those functions, oversees marketing and brand management, for example. The back of the house partner oversees kitchen prep and clean-up, inventory management, accounting/finance and operations functions. Note that the format recommended by Wickman and Winters, as well as the restaurant model, are actually operating agreements and are used by GPs and not LPs.

Your partnership operating agreement should be committed to writing, so that the responsibilities of each partner, accompanied by job descriptions that clearly assign the related tasks, are spelled out. Below are questions that will help aspiring partners get to know one another better and perhaps anticipate how the new team will function, for example, when developing goals, implementing strategies and making decisions.

  • What motivates an aspiring partner?
    It’s only natural to begin the conversation by explaining your reasons for seeking a partner. However, you may learn more by listening to the candidate discuss his/her preferences, expectations, perceived strengths and weaknesses and needs—you want to avoid making assumptions about others’ goals and intentions. Furthermore, make sure you’re on the same page about issues like work ethic, business growth or expansion, willingness to take on risk (see below) and spending money.
  • How will you handle risk?
    Risk is present in all business ventures and we all have our way of approaching risk in its various guises. Partnerships will have a greater chance to succeed if those involved share a similar attitude toward risk. It may be possible to limit the possibility of taking on excessive risk in the partnership agreement, but it’s best to know if one partner is primarily risk-averse or a gambler and consider those characteristics when choosing the partner(s).
  • Agree on performance evaluations (KPIs)
    Unfortunately, many entrepreneurs create or join partnerships that don’t deliver. Quantifying expectations that will define success upfront gives partners the ability to objectively assess and track business performance. If the needle isn’t moving, partners can then decide on a course correction. It may be useful to include in the partnership agreement required performance assessments that make renewal of the partnership contingent upon achieving certain KPI milestones.

Characteristics of the right partner

Partnerships, like all relationships, are primarily built on trust. With that in mind, below are practical considerations to help you recognize a potential partner. Obviously, you want to partner with someone who is honest, committed, works hard and smart and is easy to get along with. Characteristics and conditions that you may want to look for as you consider a potential partner include:

  1. Trustworthy

As noted, trust is the foundation of the partnership. If you can’t trust your partner, nothing else will matter. The challenge lies in trying to assess trustworthiness when you don’t have a pre-existing relationship. Evaluating trustworthiness often comes down to the feeling you get when interviewing a prospective partner and examining his/her business track record. You’ll need to have several conversations with any potential partner — discussing experiences, beliefs, vision, background and other situational factors.

You may as well want to have conversations with people who know the candidate personally and professionally. Be sensitive to the way other people talk about your prospective partner—do they seem to feel positive and enthusiastic, or do they seem guarded or even indifferent?

A candidate’s business track record will also tell a story. Scrutinize candidate resumes and evaluate the financial performance of businesses they’ve owned or worked for in the previously. Were these companies and/or departments better off when the candidate left? Were there any questionable decisions that act as red flags?

2. Compatible

You’ll spend a lot of time with your business partner. You don’t have to be best friends, but you’ll need to forge a good working relationship, enabled to identify and prioritize goals and get things done. There must be a healthy dynamic that allows you to function as a team for the betterment of the business. Evaluating potential compatibility often comes down to a gut feeling.

3. Complementary skills

While compatibility is important, you don’t want to bring on a business partner who has an identical skill set. This won’t move the needle much for your business. Ideally, you find someone who has complementary skills. For example, if you’re good at innovation and product development, you might want a founder who has more experience with sales and marketing. Think back of the house, front of the house and also visionary and integrator.

4. The right network

Networking is a huge part of launching and growing a business. A venture in its early stages especially is highly dependent on a robust network of relationships to get the word out about the new venture. Even as the business grows, a healthy network will open doors for new opportunities.

Many will say that the network should be large, but I recommend quality over quantity. Having relationships with a select number of influential professional and/or personal contacts who will advocate for you and recommend or refer you to potentially good opportunities, as I see it, is much more effective than an extensive network that’s filled with people who cannot or will not make a phone call on your behalf or anything else to further your cause.

Apply this principle to your search for a partner. On your qualifications list should be the quality, or if you prefer the quantity, of his/her network. A partnership should give you/the business instant access to new, beneficial relationships . Between your network and theirs, you should notice an instant increase in revenue potential.

5. Problem-solving skills

As you know, running a business is all about recognizing, solving and, ideally, avoiding problems. That points to the need to find a resourceful and responsible person who has enough business operating experience to have become a skilled problem-solver. As you interview candidates, ask each one to describe a couple of business problems that s/he has faced and how (or if!) the issue was resolved.

It is very instructive to grasp how a partner is likely to respond when there’s a problem to confront. Did your candidate ignore the problem, hoping that over time the issue would resolve on its own, or did s/he quickly jump in to fix things, perhaps before understanding the root cause and whether an effective response could be made by your team, or if it would be wiser to rally the support of fellow business owners?

Depending on the situation, either response could be appropriate. Getting a sense of the Emotional Intelligence, judgment and strategic thinking style of a prospective partner will give you a strong indication of that person’s suitability to become a good partner for you.

Thanks for reading,

Kim

Image: Diane Arbus, ©The Estate of Diane Arbus LLC. Cathleen and Colleen Wade at age seven (Roselle, NJ 1967)

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Smart Choices and Good Decisions

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When you face a big decision whose outcome may significantly impact your business or life, what steps do you take, what routine do you follow, to help yourself do the right thing? Big decisions, especially, involve consequences and their after-effect can reverberate over the long-term. The decisions you make, delay, or avoid shape the path of your personal and/or professional life and for that reason, the ability to make effective decisions is a survival skill.

Business owners and leaders are called upon to make many decisions; most are routine, and some are high stakes, positioned to have significant impact on the direction and/or fate of the venture. It is therefore worthwhile to do whatever possible to develop skills and practices that support your decision-making proficiency. Below are practices that, unlike the whims of fortune, are within your control and can guide you along the path to decision-making success.

1. See the big picture

As you get ready to make the decision, be clear about what you expect the preferred outcome will mean for you and/or the business. Good decisions require awareness; the decision-making process fares best when you are attentive to the context in which it will be made, meaning key internal and external factors that can assist or impede your ability to choose the right path. Influencing factors are likely to include the competitive and economic climate in which your venture operates and in larger organizations, the level of support that stakeholders have for the initiative you are trying to advance.

2. Review desired outcomes

“Begin with the end in mind,” advises Stephen Covey, author of the phenomenal bestselling book The 7 Habits of Highly Effective People (1989). Your decision-making process has a better chance of seeing a happy ending when the decision is motivated by a realistic purpose that you can clearly articulate and defend. It is essential that you understand what you want to achieve and why. It is also useful to decide the criteria you’ll use to define success. Before you commit to a decision, create a mental picture of what your company (or life) will look like once that proposed choice is in place—in the near term and 12 months later.

3. Consider different perspectives

Escape the trap of your inherent biases and invite different opinions to the decision-making. Start with the obvious—stakeholders and end-users who will live with the outcomes, along with those who will implement the decision. If you have a team, include its members in the process, for they surely bring to the table expertise and experiences that will enrich your understanding of the big picture, as well as factors that could influence its outcome. The unique viewpoints and wisdom of your team could possibly show you that don’t know what you don’t know!

4. Leverage relevant data and technology

In today’s digital age, there is every reason to turn to technology-supplied data to provide trustworthy insights that are grounded in objective information to guide your business decisions. Data-driven decisions are usually the most successful. You may have a history of making good decisions based on what your gut tells you, but you’ll be better served to allow (relevant) numbers to validate the power of your intuition.

There are numerous analytic values readily available to provide snapshots of company performance that decision-makers need to see. Your decision may benefit from a review and analysis of the number of qualified leads per month, industry benchmarks, annual sales of your products and services and/or the average dollar amount of new contracts signed per quarter.

5. Avoid analysis paralysis

While good data is essential, as is objective thinking and keeping the purpose of the decision in mind, it’s also important to realize when you have sufficient facts and figures to commit to a choice. It often makes sense to set a reasonable time frame for gathering information, and once you have enough in hand to make an informed choice, move forward.

Trust your judgment and remember that in most cases, all the information you’d like to have will not be available; nearly every decision is haunted by unknown factors. Boost your confidence by creating conditions that will promote effective decision-making when you align your decision with the vision, mission, guiding principles (values) and brand of your organization.

6. Overcome fear of failure

Risk is a factor in every decision because results are not always predictable. Along with good information, luck, timing and intuition are often credited with a decision’s success or failure. All leaders understand that unfortunately, not every decision will lead to a favorable outcome.

Instead of fearing failure, embrace it as a valuable learning experience when it occurs. Do a postmortem and analyze what went wrong; identify the root causes and determine how you can avoid similar pitfalls in the future. When the experience is applied correctly, failure strengthens resourcefulness and resilience and over time will eventually enhance your decision-making skills. A decision gone wrong is embarrassing and disappointing but push yourself to make lemonade from the lemons. You might find a way to fail-up!

7. Practice decision-making consistency

Consistency in decision-making is key to building trust and credibility among your team. If your choices waver based on mood or circumstance, it can create confusion and erode confidence. But you may instead find it helpful to revisit the same, or similar, criteria that were used for a decision whose outcome was especially positive.

If the approach you took, factors you considered and certain friends and mentors you consulted led to a successful outcome previously, those factors, adjusted to fit the question at hand, might be successfully applied to future decisions. Why not experiment? When you’re next faced with a big decision, apply some or all of the criteria you used to approach the question, choose and study the data and seek input from friends or family who have a history of giving you wise advice?

You may discover that it’s useful to evaluate, say, three to five qualifying questions first, then another three to five questions that are customized for your decision? A decision-making protocol that considers the same factors each time will bring objectivity, standardization and reliability to your priorities and judgment and help you avoid getting swept up in the emotional reactions of either reckless enthusiasm or panic.

8. Hone intuition through experience

Decision-making is often considered both an art and a science. It’s a competency that goes beyond algorithms and spreadsheets — it’s about accepting risk and seeking wisdom from data, lived experience, good advice and intuition. Furthermore, learning to recognize when it might be the most advantageous time to make a certain decision is another plus—- when you have the luxury of choosing the time to act, that is.

By adopting a big-picture perspective, leveraging diverse viewpoints and integrating data-driven insights, you will improve your decision-making skills. As you gain experience, your subconscious mind will develop a sense of pattern recognition, meaning you’ll remember what works and so you’ll do it again. Use this intuitive sense to guide you when data is unavailable or inconclusive.

Thanks for reading,

Kim

Image: Chess Grandmaster Pontus Carlsson (Colombia born, represents Sweden)) vs. International Master Espen Lie of Norway (R) in Malaga Spain, 2008