This topic offers you and your team the first steps in a practical technique for reducing the risks associated with decision-making.

Impact on profit: 

• Reduce the risk of loss due to unexpected events
• Make the best use of opportunities
• Cover all the risks and opportunities, not just the obvious ones
• Profit is the result of getting more decisions right than wrong 

Definitions

Quality decision — for the purpose of this topic, a quality decision is defined as a decision reached after taking your time to consider all likely consequences.

Decision trap — refers to the natural instinct to react to an issue by immediately deciding what to do about it.

Unpredicted chain reactions can ruin the best of the best

How often have we made a decision and discovered too late that it was a mistake? Or that it could have produced much better results if some slight changes had been made.

The difference between a poor decision and a good one can be millions of dollars. Even small decisions can lead to losses running into thousands. There is no system that guarantees every decision is the best one. But, there are systems that reduce the risk.   

When a successful company goes to the wall it often turns out that one fateful decision was the catalyst for the collapse, setting off a chain reaction. At the time it might have seemed a simple decision. There is a theory that the collapse of major banks in USA can be traced back several years to a government decision that seemed like a good idea at the time.

Regrets have their source in our natural powers to be decisive

We humans have developed amazing systems that can absorb and analyse enormous amounts of information in split seconds and act on it immediately. An armed thief asking for your car keys will take your attention by what he says and his general appearance but your actions will be driven by the rapid, unconscious analysis of the threat at a much deeper level.

Our natural instinct is to do something as soon as we become aware that there is a threat, danger or opportunity.

If faced with a dangerous and angry animal did our ancestors call a meeting to analyse the facts? Or apply the Vroom and Yetton decision making model? (V and Y will be covered in later topics).

The natural way of making decisions is to take in the information and decide what to do. Most times it works well enough but in business and in important personal decisions it can be a vicious trap. There is a better way. It takes more time but gets much better results.

The quality decision crossroad

The first step towards avoiding the decision trap is to answer 2 questions:

1.    “Is there a risk that your decision could lead to negative consequences that you would regret?”
2.    “Is there likely to be an important difference between an ordinary decision and a very astute decision?”

If the answer to BOTH questions is NO, don’t waste time. Do whatever your instincts recommend. Do what comes naturally.

If the answer to either question is YES, it is time to pause and think. It means that the quality of the decision is important and that means NOT doing what comes naturally. It means going against your natural instincts.

Making a quality decision means making the following firm commitment:

“I am determined that I will not even think about what I am going to do - yet.”

Avoid the trap in 3 easy steps

In order to make the 3 steps meaningful and clear, an imaginary problem will be used as an example. The time context is important so please note it carefully.

Here is the imaginary problem that is demanding your attention:

Imagine it is 1 May 2009. The March 08 catering result was a shocker – a big loss. Dishonesty seems to be indicated. Something has to be done about it.

Step 1. Ask the quality decision questions. This situation obviously calls for a quality decision.

Step 2. Imagine you have moved 4 weeks into the future. Your imagination tells you that you are in your office and the calendar is showing 31 May 2009.
 
Step 3. In your imagination you are sifting through all the reports and other evidence to see if the decisions you made early in January have been successful. You are feeling very pleased with yourself as you go through the evidence. It looks as though your decisions were excellent. Why does it look so good?

Each piece of evidence that is making you proud of your decisions is called a 'General Outcome'. (It can include a risk that you are trying to avoid).

Exercise to Step 3

1. Think about what things you would regard as being 'General Outcomes' in the above example.

2. In the quiz below, answer true or false to whether you would regard the thing as a General Outcome. (Feedback is provided on each suggestion). Click the 'launch' button to begin the quiz.

Summary

It is important to recognize when a quality decision is needed. Even the most astute business people sometimes make decisions that they regret later. In many cases the negative consequences could have been avoided. This process helps you reduce the risk of negative consequences.

Imagine how you would feel if you were confident that every decision made in your club was the best possible decision. Imagine the peace of mind that would bring.

The process of thinking “General Outcomes” sets the foundation stone firmly in place for all of the more advanced systems for improving decisions.  The decision making principles recommended by some of the leading business writers in the world sit on this foundation.

The voyage towards decisions that are winners is an exciting one that will be made easy for those who develop the Outcomes mindset.

Profitable Action

Businesses are successful because most of their decisions are successful. Avoiding costly errors is one way of increasing profit.

1. Download Outcomes Worksheet for printing (Word document).
   
2. Use the Outcomes Worksheet next time a decision is needed.
3. Make a commitment to try it at every opportunity for a few weeks and see how differently you start to see each problem.
4. Turn the strategy of thinking “general outcomes” into a profitable habit.

The Final Challenge For This Topic - How Well Have We Explained It?

Is the ClubAction Program Good Value for You? The Benefits and Features