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How to Make Good Business Decisions

When making decisions, you’re often choosing between different options and trying to assess which option is the best option. One framework for assessing those options is via the “decision onion.” The benefit of using this framework is that it forces you to consider many aspects of the decision.


For smaller decisions, this is likely overkill, but it can help you work through your bigger decisions.


Starting at the middle, run your option through the different layers to see how it performs.


Relevance:


How does this align with the mission?


Here you compare your option with the bigger picture. Is there fundamental alignment between this decision and the mission of your organization or self?


Remember that missions give purpose to your work, and communicate to the world why you do what you do.


If the decision you are agonizing over is irrelevant, it could be a waste of your time and energy.


Benefits:


How does this contribute to key outcomes?


Key outcomes are measurable benefits from making the decision. These could be things like increased number of clients, reduced costs, or more publicity. Ideally you want to choose an option that leads to these benefits, or at the very least doesn’t negatively impact these goals.


Ethics:


If this decision got publicity, would I be okay to be associated?


After assessing how a decision helps you reach your mission and goals, it is important to consider the ethics. Companies have long-suffered from only focusing on results and failing to calculate the impact on reputation.


I’m not going to suggest what is right or wrong in this portion, despite my own beliefs. Instead, I encourage you to look at the decision in the light of publicity, as it will often highlight your own innate sense of what is good. If you feel tempted to hide your decision, it probably deserves further consideration.


Habits:


Would I make this decision every time this situation occurs?


The sum total of our decisions creates our character, so I want you to get comfortable with the patterns you are creating.


I think of this a little bit like how precedence is handled in the court system. People use past experience to inform future decisions, and it becomes easier and easier to make the same decision over time. Before you set yourself down that path, consider whether you are creating good habits.


Tolerance:


If the worst happens, can I deal with the consequences?


The final layer of good decision making is preparing for failure. Making decisions exposes you to risk, regardless of how methodical or experienced you are. By contemplating these negative outcomes, you can assess the level of risk you are taking on, as well as prepare yourself to deal with it.


Summary


By running your decision through all of the layers, you can test how effective your solution will be as well as prepare yourself for any negative consequences. This can give you the confidence to make decisions and move yourself and your organization forward.


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