I remember vividly starting businesses and finding that as we gained traction we would start to get customers asking for more and more things.  Often these requests were out of scope for the business.  That is, if we followed the business plan, we should be saying no.  However, in the chase for revenues, we often said yes without understanding the real cost of saying “yes”.  It is often the case that only once you have committed do you realise that you have just lost the business some money.

The same can be said for internal issues.  Often employees have requests and, as managers, we often find it hard to say “no”.  The problem is that these requests often put stresses and strains on the business.

Therefore one of the arts of management is not in when to say “no” but when to say “yes”.  I try to start off with the view that the answer is “no” and before i say “yes”, i look at what is the real impact of saying yes.  Will we end up better off over time or will be just end up in incurring more costs and potentially for little or no return.  Customers and employees often have short memories.

When saying “no” you are not being mean, you are just keeping the business focused on what really matters.

This approach has a number of ripple effects on a business. 

Firstly, the image of the manager will be tarnished.  They will be seen as weak and not able to address important issues head on.  Secondly, the other employees will be looking over their shoulder and wondering if they are going to find out at any moment that they dont have a job.  Thirdly, in tough times, working on a great culture is very important but this approach does not bring a team together, it drives them apart.  Finally, the  employees who did find out that they may not have a job in the future are likely to start looking for a new role and will not be that effective in the short term.

The approach that the manager should take is to have a one on one discussion with each of the effected people before the meeting and to let them know that the changes are occuring.  The manager should then be very clear about whether the effected people have a job at the end of the period.  If not, they should be offered a package.  Finally, the manager should allow the effected people not to attend the meeting as this will save them from embarassment when their colleagues find out the changes.

Tough time require management to get tough and face issues head on.  Hiding behind emails and power points is not the way to approach tough decisions.

McCain & Palin

I thought i would follow up my entry the other day (The Art of Decision Making) with some more thoughts on the topic.  In particular I was listening to a podcast about John McCain and his selection of Sarah Palin for his Vice President running mate.  In McCain’s case, Sarah Palin was a selection that almost no one saw coming.  She has little experience and evidently the decision made by McCain was based on minimal research and appears driven by political requirements.

So what does someone’s decision making processes tell you about the person and your confidence in the person to do their job?

As discussed before there are a number of different decision making styles.   Some of which can be defined as – fact based decision making, gut feel decision making, and consensus decision making. 

Now people who rely solely on facts to make decisions, can be seen as diligent, thoughtful, analytical and so on.  They can also been seen as hiding behind the numbers, out of touch with the business, indecisive (if all the facts are not there) and more of manager than a leader. (An important distinction)

People who rely on gut feel can often be seen as in touch with the business, on top things, a leader with a clear vision.  However, gut feel decisions can also be seen as reckless, hopeful, and totalitarian.

Finally, people who rely on consensus for decision making can be seen as inclusive, seeking other points of view and team building however they can also be seen as indecisive, lacking leadership, and avoiding responsibility.

Of course no one leader displays just one of these traits however they will probably have a dominant trait.  For example, i am more of a gut feel decision maker with facts and consensus as secondary traits.  The real issue is how fast the decisions are made and the size of the decisions.

Firstly, most people want rapid decision making.  It doesnt matter what style you adopt, i believe that more often than not you need to make decisions fast.  Now this is where the gut feel approach has preference over the fact or consensus approach as you are able to sum up a situation and make a decision quickly.  If you adopt the other approaches, you are likely to end up in long decision making cycles and more likely, lots of very long decisions as all opinions are heard and considered.  Long term this is not good for a business.

Secondly, if the decision is large and important, then you probably need to lean towards fact based approach.  If the decision needs lots of peope to implement, then you may need to adopt a more consencus approach.  However most decisions dont fall into these categories and therefore a gut feel based approach is probably more appropriate. 

Thererfore looking at John McCain’s choice, you can not help but conclude that he has taken a gut feel based approach to a decisin that really should have been a little more fact based and consensus driven.  Given he is 72, do you really want someone with almost no experience a heart beat away from the most powerful job in the world?  And more importantly, if he takes this sort of decision making approach to the selection of a potential President, what approach will he take when it comes to financial, foreign policy and domestic policy issues?  Will they be based on gut feel to?

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.