Being able to make smart business decisions quickly and effectively is a critical leadership quality. But short of a crystal ball, what tools can midsize companies use to make sure that day-to-day decisions keep them ahead of the competition?
It starts with a clear vision that informs a strategy that individuals can use in their daily decision-making, and then monitoring ongoing performance so that everyone in the organization understands how his or her role contributes.
Here are the steps you need to take:
- Create a vision. “One of the most important things any business leader can do is to communicate a clear vision of the future,” says Chris Ewing, EVP, Head of Strategic Execution and Six Sigma at Regions Bank. “Whether you own your own company or operate a subspecialty within a larger organization, you need to ask yourself where you want to be in three years, five years, or ten years.” This vision should incorporate not only business goals, but the values that the organization wants to retain and build upon as well.
- Incorporate strategy. If vision represents the destination, then strategy is the path you choose to get there. “Strategies are the three or four things you must do to achieve vision,” Ewing explains. “As you move from vision to strategy, you must come to understand your core competencies.” He suggests using SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis to determine what opportunities your strengths create and what threats emerge from your weaknesses. This evaluation will help you look inward to capitalize on core strengths, as well as outward, to assess the organization’s competency relative to its competitive environment.
- Quantify your objectives. While many goals seem qualitative on the surface – think product quality or customer satisfaction – each of these can and should be measured quantitatively in terms of dollars and cents. “So many times companies don’t quantify the cost of poor quality,” Ewing explains by way of example. “They don’t quantify what it costs if they have to do things twice, if they have to do re-work, have to re-deliver a product, or make a service call. Once you start measuring that, it becomes more important to you and your associates. It becomes a quantifiable activity that you can actually manage downward.” This is known as Management by Fact (MBF), which leads to decisions that are more informed and less susceptible to emotion and bias.
- Measure Performance. Quantifiable goals are useful only if you can track your progress toward them. The old adage, “you can’t manage what you can’t measure” applies here. Thanks to cloud computing and other modern technologies, it has become relatively easy and inexpensive to develop real-time reporting in the form of dashboards tailored to provide the right information to the right people. This in turn allows organizations to aggregate information to make clear how front-line decisions affect overall performance. With current and past performance readily available, managers can anticipate problems based on developing trends or industry seasonality, and pivot as necessary.
- Understand cause and effect. When you combine a strong vision with quantifiable goals and measurable performance, you can inform every member of the organization about just how their actions affect the company as a whole. This in turn gives them the information they need to make decisions quickly, simply by asking themselves if they take the organization closer to its goals. “When you are able to demonstrate the link between individual roles and responsibilities to the organizational strategy or goals, everybody feels more relevant, and they’re empowered to be more effective,” Ewing says.
Smart, timely decisions aren’t the result of luck, intuition, or expectations. Rather, they are the product of preparation achieved through an ingrained cultural understanding of your company’s goals and values along with rigorous measurements of performance and results. These are the tools that will make every member of your organization an informed decision-maker.