Complex Decision Making.

Small Business Owners must make decisions. Big decisions, small choices; all day, every day! While you can and should delegate most of the day-to-day decisions, as the CEO of your business you remain responsible for the big complex decisions that must be made. And often, there may not be an obvious or “right” answer.

What are the types of complex decisions the business owner is responsible for?

• • Vision and Mission
  • Goals and Objectives
  • Business Plans – for launch and annual Growth or Strategic Plans
  • Culture
  • Leadership
  • Management Team
  • Key Projects including implementations, research, systems development, etc.
  • Customer Service
  • Production Issues or Constraints
  • Financials
  • Branding & Marketing

How to make complex decisions:

Making big decisions can be daunting for small business owners, but following a structured approach can help ensure the best possible outcomes for the bigger decisions. And then over time, you develop the habit and ability to make big decisions more effectively.

This structure includes the Decision Matrix Analysis (also known as the Weighted Decision Matrix or Multi-Criteria Decision Analysis). This tool helps you systematically evaluate and compare different options based on a set of defined criteria, allowing for a more structured and objective decision-making process. (See the DCM steps below.)

Here are four recommended steps to help you make the big decisions:

1. Define the Decision Clearly
   • Clarify the Problem: Clearly articulate what decision needs to be made and why it is important. Understanding the problem in detail helps in focusing efforts and resources effectively (this does not mean over analyze!).
   • (DCM) Define Your Options: List all possible options you are considering.
2. Gather Relevant Information
   • Research: Collect all necessary data and information relevant to the decision. This might include market trends, financial reports, customer feedback, and competitive analysis.
   • Consult Experts: Seek advice from your team, partners, industry experts, mentors, business coach, CPAs, attorneys, or consultants who can provide valuable insights and perspectives.
   • Use SWOT analysis to help analyze the situation and determine criteria.
   • Sometimes, you must stop taking in information that will lead to further overwhelm and perhaps paralysis.
   • (DCM) Determine decision criteria (examples of criteria include cost, potential return on investment, ease of implementation, alignment with strengths, and risk mitigation.)
3. Identify and Evaluate Alternatives
   • Brainstorm Options: Generate a list of possible alternatives to address the problem. Encourage creative thinking to explore different scenarios and solutions.
   • Evaluate Pros and Cons: Assess the advantages and disadvantages of each alternative. Consider factors such as cost, feasibility, risk, and alignment with business goals.
   • Take it one step at a time. Prioritize the decisions. Break it down into small decision points if possible.
   • (DCM) Weight the Criteria: Assign a weight to each criterion based on its importance. The total of all weights should equal 1 (or 100% if using percentages).
   • (DCM) Rate Each Option: Rate each option against each criterion on a consistent scale (e.g., 1 to 5 or 1 to 10). (Calculate weighted scored if necessary.)
4. Make the Decision!
   • Weigh the Evidence: Compare the alternatives against the objectives and criteria established earlier.
   • Select the Best Option: Choose the option that best meets the objectives or solves the business problem and offers the greatest potential for success, and then make a final decision.
     If it’s a huge decision, “sleep on it”!
   • (DCM) Compare the total scores of all options. Calculate weighted scores first if necessary. The option with the highest score is generally the best choice, based on the criteria and weights assigned.
   • For highly complex decisions, consider breaking it down into small decision points if possible.
   • Accept that not all your decisions will be right; but hopefully most of them will.

Weighted Decision Matrix Analysis Example:

Here is an example of how to use a weighted decision matrix analysis to help you with complex decision-making in your small business. Assume you have three options for making a new business strategy: A, B, and C. The criteria you are using to evaluate your options are cost, potential Return-On-Investment (ROI), alignment with the strengths of the current business, and customer value. Here’s how you might set up and analyze your decision matrix:

Ratings (Scale 1-5):

Decision:

Option B has the highest weighted score (4.0), making it the best choice based on the defined criteria and their weighted importance.

Benefits of Using a Decision Matrix:

• Objectivity: Reduces bias by focusing on specific, weighted criteria.
• Clarity: Provides a clear visual comparison of options.
• Structured Approach: Offers a systematic method to evaluate complex decisions.

Conclusion:

A Decision Matrix Analysis helps you make informed, balanced decisions by considering multiple factors and their relative importance. This framework, combined with insights from your SWOT analysis, ensures a comprehensive approach to decision-making in your small business.

Some of the biggest decisions Business Owners may have to make include:

• Firing an employee (particularly someone who has been with you from the start, or a family member or friend).
• Hiring people that are better than us.
• Ending a small business partnership.
• Pivoting or significantly adjusting your business model.
• Ending a product or service line or closing a location.
• Selling the business.
• Shutting down the business.