The Context 

The #1 job of an executive is to make great decisions. However, there is research to support that most CEOs make the wrong decision over 60% of the time. There is plenty of data to make this seem intuitively true. Consider the fact that 90% of all startups fail, only 4% of those that make it ever pass $1 million in revenue, only 4% of those ever make it past $5 million, and then many of those still end up on the list of company bankruptcies. However, this decision making figure should come as a surprise considering the #1 job of a company executive is to make good decisions. So why is this?

Part of the challenge is the complexity of the modern business and the uncertainty of modern markets. Often companies don’t track the most relevant data and metrics. In addition, many executives are far removed from the frontline activities with customers and the information they receive is filtered and/or delayed in timing. Often when relaying information, it is curated to what team members believe the management wants to hear, fearing a kill-the-messenger type retaliation. Even when management does receive accurate information there is often a delay in receiving and aggregating or information that results in fewer viable solutions still being available to choose from. The challenge of making good decisions is compounded when you have both poor information and delayed timing. For minor decisions mistakes will take a toll in the long run, but errant major decisions could be a death knell for the organization in a much nearer term.

The Continuum 

What separates the bad from the good executives is that the poor decision makers wait until the last minute (when fewer options remain viable) while the good executives make decisions in a timely manner before their number of options run out and they are limited to just one “choice”. What further separates the great decision makers is that they make the decision early as well and they also follow a methodology for evaluating options (along with the help of others).

Great decision makers know not to make critical decisions in isolation. Optimal outcomes happen when you have the right people and the right process for evaluating your potential solutions. Additionally, these leaders are willing to evaluate the data and feedback from their chosen decision, accept when they picked a less than optimal choice, and course correct to a better path going forward as needed. In the end, these executives win big with their teams and their companies!

The Formula 

The following step-by-step method will help ensure you have many of the right people involved and go through a solid methodology for evaluating your options to arrive at the optimal decision for your company’s most critical challenges. Obviously, you can thin slice or gut feel your way through many basic decisions. But when the stakes are high, here is a way to go.

Step 1. Investigate the Existing Process/Policy/Opportunity Related to the Decision Issue: To begin your analysis, gather as much information as you can around how your company handles the situation currently. What are you doing about it, what is working, what is not working, and why decide now to do something different or new? Gather information on how other companies handle this decision issue and what stands out about their solutions.

Step 2. Interview Customers: By customers this really means anyone who will be directly affected by the decision or those who will receive the outputs of the decision solution. This is especially important if they are actual customers of your business and not simply an internal customer receiving outputs from some internal department process. Insights from customers are crucial for generating viable options to evaluate in either case.

Step 3. Interview Vendors: By vendors is meant anyone who contributes inputs to the current or proposed solution. Don’t stop at interviewing customers. Take the time to interview and gain insights from suppliers, vendors, and anyone who has a vested interest in the outcome of the decision based on their contribution to its success.

Step 4. Complete Solution Criteria Model: List out the following aspects of the decision issue:  uncertainties, what can’t we know about the potential problem space; assumptions, what we believe is true about the problem space; prerequisites, what must we decide or implement before implementing the chosen solution; obligatory, what must be included in the chosen solution; optional, what are the nice-to-haves in the chosen solution; and robustness, how adaptable does the chosen solution need to be to handle unintended consequences or manage other outcomes in case we are wrong.

Step 5. Convene 3-5 People Maximum to Consider and Weigh Options: Put together a team of people to refine options and compare them. This will often be the leadership team but could equally include persons responsible to implement the chosen solution, customers of the proposed outcome, and/or persons accountable for the business result. Sometimes you may even choose an objective outsider. Ranking the options can be done in several ways based on pros and cons or weighted scoring: simple ROI, rank ordering, pairwise comparison of each option head-to-head, a point system based on the criteria model in the previous step, or some combination of the aforementioned based on the peculiars of the issue at hand.

Step 6. One Person Makes Decision: Ultimately one person should make the final decision. This is often the senior executive most responsible and accountable for the business outcome. This person should heavily weigh the results of the analysis coupled with the advice of those who will execute the chosen solution (they are frequently closest to the problem and more beholding to the solution).

Step 7. Evaluate Feedback After Implementation: Once you have implemented your chosen solution, be sure to evaluate feedback from as many areas as necessary. This is the most important reason to make sure critical decisions are made in a timely manner. Leave yourself time to evaluate your decision outcomes and change to one of the other options if needed. You can rinse and repeat steps 1-7 until you arrive at the optimal choice.

Step 8. Document Final Solution and Decision Makers: Make sure to record the details of how you arrived at your final choice. Include the options considered and the people involved. This will save a lot of time later if you ever have to revisit the issue or if someone starts to second guess the solution later. Clear documentation will save a lot of re-work.

This formula can be used by an individual when the stakes are not as high. The key point here is that no one builds a successful company in isolation. No individual person has all the answers or even knows all the questions to ask to arrive at the optimal decision for a complex problem. The research is clear that critical decisions are best made by having the right 3-5 people following the right methodology to generate, evaluate, and choose from among viable options. Incorporate the preceding formula into your next critical issue and see for yourself how great decisions are made consistently!


Having trouble making decisions quickly? We can help! If you’re interested in learning more about how a Coach can guide you and your leadership team toward a path of crushing your goals and scaling your business with confidence, please contact our team at align5 by clicking here. Or please take our Free Growth Assessment, which will evaluate the strength of your company based on four core business disciplines that must be in place before scaling successfully – People, Strategy, Execution and Cash.

Find us on Linkedin & Facebook with on-going content and resources to help you throughout your entrepreneurial journey.