In the dynamic world of entrepreneurship, making sound decisions is crucial. We’ve gathered seven techniques from CEOs and Founders, offering their seasoned insights from conducting pre-mortem analysis to applying the ‘5 Whys’ method. Discover how these leaders enhance their decision-making skills with these practical strategies.
- Conduct Pre-Mortem Analysis
- Utilize a Decision Matrix
- Perform Regular Decision Audits
- Implement a Risk Assessment Framework
- Consider Multiple Perspectives
- Use Scenario Planning
- Apply the 5 Whys Method
Conduct Pre-Mortem Analysis
As the founder of Leverage, I’ve found that using a “pre-mortem” analysis is a fantastic way to improve decision-making. It’s helped us catch potential problems early and plan better.
Here’s how it works: Before making a big decision, I get the team together and we imagine that our decision has completely failed. Then we brainstorm all the reasons why it might have gone wrong. This way, we can spot risks and challenges that we might not have thought about.
For example, when we were considering a new technology platform for Leverage, we did a pre-mortem session. We thought about issues like integration problems, training needs, and unexpected costs. This helped us prepare better by setting aside an extra budget for training and choosing a platform with strong customer support.
Another time, when we planned to expand our services, the pre-mortem made us realize that our team might get overwhelmed. So we decided to expand gradually and hire more staff to support the new services.
Using pre-mortem analysis has really helped us at Leverage. It gets everyone thinking critically and voicing their concerns, which obviously leads to better decisions. I highly recommend it to any entrepreneur looking to improve their decision-making.
Rhett Stubbendeck, CEO & Co-Founder, Leverage Planning
Utilize a Decision Matrix
The technique I’ve found effective in improving decision-making skills is using a decision matrix. This simple yet powerful tool helps clarify choices by weighing various factors against one another. When faced with a decision, I list out all potential options and the criteria that matter most for each choice. I then score each option based on how well it meets those criteria.
This process has allowed me to accelerate 90% to 95% of decisions, focusing on options that won’t jeopardize the company’s future. The visual representation of data helps eliminate emotional bias and brings clarity to the options at hand. As a tech entrepreneur, making decisions grounded in data rather than gut feelings has proved invaluable. This method fosters a disciplined approach to decision-making while ensuring that I remain mindful of long-term impacts. By incorporating this strategy, I’ve strengthened my ability to make informed, strategic choices that drive my business forward.
Valentin Radu, CEO & Founder, Blogger, Speaker, Podcaster, Omniconvert
Perform Regular Decision Audits
One technique that has greatly improved my decision-making is implementing regular “decision audits.” Every quarter, I review past decisions with my team, analyzing which ones led to the desired outcomes and which didn’t. We delve into the reasoning behind each decision, evaluating the data and assumptions we relied on. This practice helps us identify biases and areas for improvement, making our future decision-making more data-driven and reflective. This systematic review process has significantly sharpened my ability to make sound, effective decisions.
Dinesh Agarwal, Founder, CEO, RecurPost
Implement a Risk Assessment Framework
As a founder in the cybersecurity industry, I’ve found that one of the most effective techniques for improving decision-making skills is implementing a structured risk assessment framework. This approach involves systematically identifying potential risks, evaluating their likelihood and potential impact, and then prioritizing responses based on a cost-benefit analysis. By adopting this methodology, entrepreneurs can make more informed decisions by considering a wide range of factors and potential outcomes, rather than relying solely on intuition or incomplete information.
Applying this technique has significantly enhanced my ability to navigate complex business challenges, particularly in the fast-paced and ever-evolving cybersecurity landscape. It allows for a more objective evaluation of opportunities and threats, helping to mitigate potential biases that can cloud judgment. By regularly practicing and refining this technique, entrepreneurs can develop a more disciplined and analytical mindset, leading to better outcomes and increased confidence in their decision-making abilities.
Christian Espinosa, Founder and CEO, Blue Goat Cyber
Consider Multiple Perspectives
One of the most effective techniques for improving decision-making skills is to slow down and consider multiple perspectives. It’s easy to get caught up in the fast pace of startup life and make snap judgments, but taking a step back to gather input from others and examine issues from different angles leads to better outcomes.
I’ve seen many founders realize mid-project that they overlooked a key factor or made incorrect assumptions in their initial planning. By making a habit of consulting their team, bouncing ideas off mentors, and purposefully playing devil’s advocate with themselves, entrepreneurs can uncover blind spots. A thoughtful decision-making process may take more time upfront but prevents costly mistakes down the road. Slowing down helps entrepreneurs see the full picture.
Gert Kulla, CEO, RedBat.Agency
Use Scenario Planning
One good way for businesses to improve their decision-making is to use scenario planning. This method involves picturing different possible futures and planning how to handle each. It lets business owners plan for different outcomes to minimize risks and take advantage of opportunities as they arise.
We always use scenario planning at Fuel Logic, especially when entering new areas or using new technologies. For example, when we thought about expanding our delivery services across the country, we made several scenarios, including both the best- and worst-case scenarios for the economy, buyer demand, and the logistics of the supply chain. When the pandemic hit in 2020, this planning was very helpful. We were able to respond quickly and effectively because we had already thought about what would happen if the supply chain broke down or buyer demand changed.
This method not only helps people make better decisions by giving them a structured way to think about different outcomes but also makes business processes more flexible and resilient. By regularly updating scenarios based on new data and trends, entrepreneurs can stay on top of changes in their industry and make better, more strategic choices that fit both short-term needs and long-term goals.
Eliot Vancil, CEO, Fuel Logic
Apply the 5 Whys Method
The “5 Whys” Method:
From my experience heading a recruiting firm, one effective technique that entrepreneurs can adopt to improve their decision-making skills is the use of the “5 Whys” method. This technique involves asking “why” five times to drill down to the root cause of a problem, which can lead to more effective decisions.
During the initial years of running my recruiting firm, we faced a persistent issue with high turnover rates among our junior recruiters. Initially, our team thought it was due to the competitive nature of the industry, but the problem persisted despite several initiatives aimed at improving job satisfaction. To tackle this issue, I introduced the “5 Whys” method in a team meeting. I gathered my team, and we started asking “why” the turnover was high:
1. Why are recruiters leaving?
Because they feel overwhelmed and unsupported.
2. Why do they feel overwhelmed?
Because they have a heavy workload and limited training.
3. Why is the workload heavy?
Because we have taken on more clients than we can adequately manage.
4. Why have we taken on so many clients?
Because we were trying to increase revenue quickly.
5. Why were we trying to increase revenue quickly?
Because we were concerned about meeting quarterly targets.
We discovered through this process that our focus on short-term revenue was overshadowing the critical need for employee support and development. With this insight, we implemented more robust training programs and reassessed our client acquisition strategy to ensure that we were not overburdening our team.
As a result, turnover rates decreased significantly, and employee morale improved. This experience taught us the importance of understanding the underlying issues rather than just addressing symptoms. Implementing the “5 Whys” not only enhanced our decision-making process but also fostered a culture of openness and continuous improvement within the firm.
Joe Coletta, Founder & CEO, 180 Engineering