Decide or Else: Making tough calls under pressure

April 10, 2013 /LinkedIn/ – Last summer, fifty business leaders from around the world came to Stanford to talk about about the art of decision-making. Top executives in consumer retail, manufacturing, financial services and other industries, they each had a long track record of making great calls at critical moments. It was a chance to distill the experience and savvy of a diverse group of strong leaders.

We came up with this set of principles for making sound decisions under pressure:

1. Remove the rose-colored glasses: A good cost-benefit appraisal can be trickier than you think. Why? Because most of us tend to underestimate costs and overestimate benefits – and to be generally optimistic about our ability to make things happen. Our analyses inevitably bend toward the outcomes we’re hopingfor.

Good decision-makers are wary of wishful thinking. Get a second or third opinion from skeptics you trust — the advisors who’ll push back and make you defend your assessments.

2. Wield the red pen ruthlessly: When it comes to picking ideas, separate the elephants from the ants. Cross off everything but the top few priorities, and make sure you haven’t fallen in love with pet projects and ‘hobbies’ whose time may have passed. When it’s clear a pet project is ailing, hurry up and get out the rifle (so to speak). As I covered in a recent post, a few, clear, simple goals are more likely to yield results than complex “perfect decisions” that can bog down an organization.

3. Don’t fall in love with percentages: Everyone likes a tenfold return, but you’re not going to be noticed by the Wall Street Journal for turning $10,000 into $100,000. A mere doubling of $500 million into $1 billion, however, could be worth spilling some ink over. In many business decisions, it’s the long-term return that matters, and the highest absolute benefit wins over the highest percentage benefit.

4. Don’t delay the decision: Time is rarely on your side. I’ve yet to hear an executive say he made a tough call too soon. The same goes for making personnel decisions: if you’re not looking for ways to promote or keep current team members, it may be time to think about replacing them.

5. Feel the fear and do it anyway: Be careful about letting your feelings warp your perception of the situation. Fear can make you freeze up; but in almost every case, it’s better to make a call and deal with consequences than to leave things in limbo. Look the circumstances squarely in the face. As Winston Churchill said, “courage is the first of human qualities because it is the quality which guarantees all others.”

6. What would Kant do? It should go without saying that you want your decision to be an ethical one. So if your ethical compass needs a bit more calibrating, remember Immanuel Kant. His “categorical imperative” is a useful thought experiment to help you decide if you’re doing the right thing. It’s a bit like “The Golden Rule” on steroids: what if everyone in the world, in your shoes, always made the same choice you’re about to make? If that’s a world you’d want to live in, you’re okay in Kant’s book.

7. But can you execute it? Good decisions can become great ones if you execute them well. So for every one of your options, think about whether it’ll be easy to explain to your team and your organization, or if it’s likely to be lost in translation. Will people be enthusiastic about making it happen? If not, maybe the idea’s not as good as it looked on paper.

8. Think forward: Don’t relive past decisions – good or bad. Circumstances change, people change, and you change. Dwelling on past glories or failures is dangerous and unproductive.

9. Borrow wisdom: You’re probably not the first person to face a given predicament, so seek out anyone who might have been there before. Mentors have seen a lot of things – find a good one if you can. And make a habit of reading about how past leaders made momentous choices.

Many of us have come to rely on our instincts to cut through the jungle of choices we face every day. Be careful, though: good intuition is not the same as good decision-making.

In business, intuition works, but only in conjunction with calculation. Like a chess master, you should pick your move after weighing the outcomes. Then make it, implement it, and start thinking about the next one.

By Joel Peterson