By Ruth Stokes
Whatever your business, nurturing clear, timely and effective decision-making has never been more crucial. Whether you’re focused on keeping costs down, allocating responsibility, resourcing or developing strategy, we live with the business decisions we make for a long time.
So how do you turn something few business owners feel comfortable with into a rock-solid core skill? Development specialist Alison Dawkins knows more than most about this crucial skill: through her organisation, 360 Training, she’s coached businesses, leaders and organisations — from the United Nations to the Institute of Directors — on making more informed, effective decisions and creating successful strategies.
We invited three business owners to take her special Business Sense Masterclass...
CASE 1: THE START-UP
Stephen Brennan is co-director of Brandy, a brand and design consultancy launched in September 2008. The business aims to offer a smarter, more creative and more cost-effective approach to brand communication. They need to keep overheads low, but are also looking at the best ways in which they might expand.
Stephen: If I had to say what sort of decision-maker I am, I would say I try to go on gut and heart. If I listened to my head I wouldn’t be doing it. I just don’t think I’m going to get anywhere like that.
Alison: So you’re a seize-the-day kind of guy. Do you accept the first option?
Stephen: I do probably accept the first option, and normally my business partner will rein me in and calm me down. And then I’ll see he’s probably actually right a lot of the time.
Alison: So do you tend to focus on the outcome, ignoring barriers?
Stephen: Yes, absolutely.
Alison: Intuition often gives a decision momentum. But you’ve got to back it up. Sometimes, energy is unfocused, but it’s energy so people think it’s good. Then there’s energy that’s very focused and very channelled, which gets you to where you need to be. Now that you’re responsible for a business, you owe it to each other to develop strong decision-making skills. So when you’re in a certain situation, rather than reaching straight down for your own decision-making tool, you think: ‘Actually, if I apply these thought processes, the decision I make will be robust’. When you set up the business, did you set goals?
Stephen: We did have certain goals I suppose — initially, to resign from our jobs and get the new business up and running in a day. But we ran into legal issues…
Alison: You didn’t expect that?
Stephen: Not at all! And suddenly we had to spend valuable money we’d put aside for the company on lawyers. Which was a nightmare.
Alison: So when you made the decision, did you do a best case/worse case scenario?
Alison: First of all I wouldn’t have left without a business in the bank — I would have bridged for a couple of weeks or months. You know that now.
Stephen: But I’ve resigned four times in my life without having jobs to go to and it’s always been the best thing I’ve done. It’s made me get the job I want. I just jump, then it’s sink or swim.
Alison: Because you’re obviously a guy who has a vision and a dream and belief and energy, and all of those things will help you to succeed in business. What you can’t do is turn off the white noise. If you like, prepare for the best; but you’ve got to prepare for the worst as well. You need to think things through. So let’s use, as an example, your decision to leave your former employer. What were the positives of that decision, and what might be the negatives? Say: ‘It makes us free so we can make new business calls, and gives us an opportunity to really focus on what we’re doing.’ But also say: ‘In reality, things might get legal. They might march us out of the building and refuse to pay us.’
Stephen: Interesting. So rather than just ignoring it, have a contingency plan.
Alison: That’s it. So what’s next?
Stephen: The decisions at the moment are about expansion, and people. There are two core directors, and we use freelancers to form teams for projects, but it would be of benefit to grow the team.
Stephen: Just to have more available skills all the time to build more of a company. I’m spending a lot of my time project-managing, yet I’m a designer. Then there’s also IT investment, and all that stuff. Another decision we made recently — or started to make — was to take on a bit of free work, just to build our portfolio. Now we’re getting lots of requests to do that free work, but since we’re not going to make any money that way, we’ve got to make a decision about when to stop doing it.
Alison: I think you need clear priorities. You need to sit down with your business partner and ask: ‘What is it we need to achieve?’ And make decisions about your priorities. Decide what’s important, and the order of importance, and then take these priorities one by one and make decisions on how to tackle them. That would be my recommendation for you. And I think because of your style you might sometimes suffer from what we call ‘fractured focus’, like a magpie. There are lots of shiny bits, and you want to bring them all back to the nest — but you need to look at which shiny bits are really going to help your business to grow and become stronger.
Alison: As with most new business start-ups, Stephen’s intuition, energy and optimism get the ideas going. But he’s in danger of losing focus as a result, and needs to develop a much more measured decision-making style. Even in leaving his other job, he just didn’t anticipate or even account for some of the negatives that came as a result. When you’re making a decision it’s important to think, ‘I’m making the decision for these reasons, but what could go wrong? Could I perhaps perceive the pitfalls and stop them happening in the first place? Or, if they do happen, what am I going to do?’ They were all ready to go, then something happened they weren’t expecting, and it set them back in terms of investment and money. He says he learns by failing... but why not anticipate failing, and learn by anticipating failure rather than waiting to fail?
Stephen: I learned that it’s often not about the decision itself, but about prioritising what decisions I have to make — then making a plan based on those priorities and following it. I’m ruled by intuition, but when I make a decision I need to pause, and look at it in a different way: think through any negatives, then how we would tackle them should they arise; and any evidence to back up our decision. Taking 24 hours to think isn’t going to make a huge difference.
CASE 2: EXPANSION
Sophie Coats runs a business selling jewellery and shawls. She has a partner, but nine months in, it’s unclear how they should share responsibilities. They are now looking to expand overseas.
Alison: Tell me a bit about your decision-making style.
Sophie: It’s mostly instinctive. I have a good eye, and I know what sells. Sometimes I’m wrong — usually because it’s a colour I like, but it doesn’t sell well in England. It’d sell well in France, or Italy or somewhere...
Alison: Do such setbacks alter how you make decisions?
Sophie: Well, I now have a business partner, so we buy together and moderate each other.
Alison: What decisions are on your business horizon?
Sophie: The big one is how to break into the Continent.
Alison: What makes you think there’s a market there?
Sophie: I sell to Spanish, Italian and German people in the UK. Friends have worn things abroad and had comments on them. We’ve been expensive, with the strong pound, but now we’re more attractively priced... but I don’t know the market. So it’s whether or not we’d use a PR agent, or just promote the website.
Alison: So you’ve decided to do it — now it’s just how?
Alison: Based on what you think, feel, or know?
Sophie: Think and feel.
Alison: Your decision-making is very intuitive. You have experience — but there seems to be some woolliness. If you’re thinking about expanding into Europe, instinct isn’t good enough. You say you’ve got European customers, but you’ve never operated in those markets. You need to do solid research. It may confirm what you feel, but it’s crucial to back up your intuition with facts.
Sophie: I can do research, but it’s not my favourite thing. In all honesty, I have no idea if shopping in France, Germany or Italy is as internet-driven as here.
Alison: Is that something your partner could do?
Sophie: That’s actually another decision that’s difficult: how best to split the responsibilities between us. I suspect at the moment we’re slightly doubling up.
Alison: In a partnership, there’s a list of responsibilities that need to be fulfilled to run the business. Probably 80 per cent of those you both like doing; and 20 per cent you wish you had the funds for somebody else to do — but as a growing business, you’ve got to do it. So both make sure you wear every personality ‘hat’ for all decisions — working from all the different angles. That includes the researcher’s hat! What if you put the black ‘Pessimist’ hat on for a minute? What do you see?
Sophie: A PR agency’s fees may be too high. Also, it’s fine to do PR, but it’s sales that matter. You can get nice press coverage, but if it doesn’t generate sales, so what?
Alison: Have you looked at sales of these items in these markets? Have you done any benchmarking?
Alison: You need to. You’ve got this far on optimism, but momentum in the wrong direction could de-rail the business. You both need to sit down and have a white hat/black hat meeting about next steps. Then you’ll have answers, rather than just a friend and intuition.
Alison: When it comes to decision-making, Sophie tends to rely on intuition and optimism — that’s got her to where she is now. With her experience of fashion, this intuition is based on experience and understanding. But now she’s moving into an area she doesn’t have experience or understanding of, so intuition isn’t enough to develop a strategy for the business. She needs to be more logical, analytical, and really challenge herself to explore the ‘why nots’ as well as the ‘whys’. She’s succeeded using her preferred decision-making style, but if she wants to grow her business there’s a danger she’ll sign up for things that fail, because she just hasn’t done her research. It’s not something she enjoys, and nor does her partner. So they’ve developed roles, but ignored that aspect. If they’re serious about the business, there’s got to be a strong case for every decision, not just intuition.
Sophie: I hadn’t really thought about my decision-making before. I know I make decisions, but I hadn’t really thought about how. Though I know I’m quite an instinctive person, I think this Masterclass has really clarified what I need to do to create more structural ground under my intuitive thinking. It was particularly useful to know that I need to really do research, the nitty-gritty, and perhaps the less fun things. Then the decisions are more informed, as opposed to now, when we just think something is a great idea.
CASE 3: THE BOTTOM LINE
Laurent Lakatos runs Databiens.com, a database of residential properties in France and the UK, accessed by estate agents. The company’s main aim right now is to keep costs down and thrive. But it’s not always easy...
Alison: So, how do you think you make decisions?
Laurent: A lot of it is instinct, based on my background knowledge. I set a goal, and as each choice comes to me, I look at what’s closest to the goal, trying to keep that goal very clear!
Alison: Can you give me an example?
Laurent: OK: I’ve got a budget and I’ve got to stay within that. That budget is the number of people I can employ; or the amount of advertising I can have. If I need people, I have to compromise on advertising.
Alison: What is the thinking behind your business?
Laurent: I couldn’t believe people would spend that amount of money just to buy property. I’ve done economics, and knew the market would get harder; but I have a background in property and I’m good at computing, so I took the plunge and established the business a couple of years ago. There’s always risk, but my background gave me enough confidence.
Alison: So you use a mix of knowledge and courage...
Laurent: And I set myself goals. I make sure I always have a goal. If I don’t, I don’t know where I’m going.
Alison: You’re exactly right. I always encourage people, when they have a decision to make, to say: ‘Should we even be talking about this? Is this something that’s really going to influence our success, or something that’s got in the way?’ And that’s the value of your goal.
Laurent: Then again, I do worry that the thinking and research could make me miss out on something, in sales for example, when I need to push for it.
Alison: Have you missed out on opportunities like that?
Laurent: Not really. But in these past few months, with so many businesses closing, there’s a combination of knowledge and worry! A lot of worry...
Alison: So you need to build what I call your dashboard warning indicators — like when you’re in the car and a light starts flashing. Let’s decide what those lights are for you. What’s telling you things are not as they should be? What’s the first light to go on?
Laurent: Clients not paying, or paying very late.
Alison: So your challenge is to know at what stage to change direction — ‘At what stage do I reset that goal? At what stage do I say, let’s not pursue this for now?’ That’s what these dashboard warnings are for. Solvency is one — what else?
Laurent: New customers. We were getting five a month; now we’re getting two.
Alison: So maybe that light clicks on when there’s one. You’re very blended, very measured: it’s just warning lights are starting to come on, and you’ve got to think what you want to do about them. There’s perhaps a slight sense that maybe you delay the day. With our business, we say that if people don’t pay within 30 days, then we have problems, and that’s when action is taken. A lot of firms go under because they don’t stay on that.
Laurent: You’re right. That’s got to be a priority for me.
Alison: Laurent knows how to look at things from different perspectives. He’s an economist by training, but also knows the markets he’s operating in. He’s actually a very considered decision-maker. His key learning from the Masterclass was around dashboard indicators: he needed to know at what point to make serious decisions about things. He has goals, but when things start changing, he needs to pay attention sooner. I encouraged him to think about what his indicators were — if people stop paying or their terms go from 30 to 90 days, what effect is that going to have, and what is he going to do about it?
Laurent: Even if you are aware of how to make a decision, coming back to an expert who has studied the process in a mathematical way brings you back to the drawing board and gives you much more confidence in what you do. The ‘car dashboard’ was very helpful. It was not only an educational process but also a reassuring process. I think it’s good to know that you need warnings, and to be able to assess those warnings and to know when to act. It’s something you know you have to do, but it makes it more clear in your head — to take a problem, pinpoint it, make that a warning light, and to take care of it straight away. Also the fact that if you agree the warning signs beforehand, there can be no ambiguity about the course of action when they appear.
For more business advice and interviews, visit the RBS Business Sense website.
For the range of courses offered by Alison Dawkins and 360, visit 360 training.