My CEO Life

I have received the following question from Alain in Europe.

As a manager (thus as well as a CEO), the biggest part of your day is consumed by taking decisions. We can take decisions in different ways:

• by stupidity / lack of knowledge (very bad)
• by influence from others (bad)
• team decision (respect of others’ views)
• by “just the facts, facts, facts!”
• by gut feeling

The question is : how do you balance “facts, facts, facts!” and “gut feeling”, because obviously, they often are opposite to each other. When do you know when you have to just look at the facts, and when you should trust your feelings even if the facts tell a different story? I reckon that experience plays a big role, because your gut feeling builds upon past good and bad experience. Sometimes, though, you’re up to an all new situation and you can’t really look back at anything similar in your past, but again, your belly somehow tells you what to do…

Decision making (along with communication) is probably the most important skill a CEO can have. First and foremost, a CEO needs to be seen as decisive. If they are not, they will be seen as being weak and the employees will be unlikely to support the CEO when the going gets tough.

As important as being decisive is the speed of decision making. If the CEO is decisive but takes for ever to make a decision, the employees (and the business) will stagnate.

Finally, a CEO should be pushing decision making down through an organisation to line management and encouraging them to make rapid decisions. To do this, the CEO but accept that mistakes will be made and it is important to create an environment where mistakes are understoon and accepted.

Therefore the question that Alain is posing is one of how does a manager at any level make a rapid decision. For me, it has to be a balance between facts and gut feel. I disagree with Alain in that they are opposite to each other.

First, gut feel comes with experience and experience is often as good as facts. The one thing we need to be careful about when talking about facts is that the facts are only as good as the person who prepared them. Often data is left out, misinterpreted, not captured properly or just plain wrong. If this occurs, then the facts are actually not facts, but just numbers of a piece of paper. This is where gut feel is important, you need to be able to sniff out facts that make sense and those that don’t.

For me, i relied alot on gut feel. The reason was we were in a new industry and at an early stage of its growth. The facts were tenuous at best and if we just relied on them, we wouldnt have made too many decisions. I was also fortunate in that i had extensive experience in the industry and therefore had a feeling for what would / would not work.

The decision making approaches that i think are not good for a business are the first three he talk about. Firstly, if you make decisions based on gut feel and you have no knowledge of an industry, then you are dicing with death. You really need to work on your internal fact base before taking this approach.

If you are easily influenced by others, then get another job. A CEO needs to take the lead and often this means that people will not be happy with the outcome. Remember, people are often driven by their own agendas and not by those of the corporation.

Finally, team based decision making equates to LONG LONG meetings that don’t go anywhere. Everyone comes to a meeting with a point of view however the CEO is paid to lead and has to take those points of view on board but then needs to make a decision so that you can get on with business.

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