Shalom Lamm, the million-dollar real estate investor and CEO of Operation Benjamin, a Jewish organization that repatriates dead soldiers with their true Jewish heritage on burial sites, knows a lot about business decisions. One doesn’t become a millionaire like Lamm if they can’t make simple business decisions.
The decision-making process involves identifying a goal, getting the relevant and necessary information, and weighing the alternatives in order to make a decision.
The big question for many companies is whether to follow a step-by-step process for business decision making or whether to go by a seat of their pants intuition approach.
Henry Ford of Ford Motors and the late Steve Jobs of Apple are said to be part of the seat of their pants intuition approach.
It’s said that when Henry Ford experienced intense competition from Chevrolet, which introduced a 6 cylinder engine in 1929, Ford took a few engineers into his former Edison Works lab and demanded that they produce a V8 Engine for production use at an affordable price, Ford was told the engineers proclaimed it impossible.
Ford, having made up his mind that it must be done stated so and walked out. A couple of years later, Ford had a V8 engine that was at the peak of performance for a significant discount over any other V8 engine.
Similarly, Steve Jobs was an intuitive type of guy. Jobs had many run-ins with Apple
employees that did not cooperate with his vision. Perhaps Steve made Apple what it is today, one of the most profitable companies in the world, but at what cost.
The Modern 6-Step Decision Making Process
Today, Shalom Lamm knows that most companies forgo the intuitive style of decision-making and instead have a more formal decision-making process.
One prominent author called this the 6-step decision-making process.
1. Identifying the end goal
2. Gathering all necessary information and identifying all known alternatives
3. Comparing all alternatives and whittling them down via different criteria
4. Make the decision
5. Execute the decision
6. Having a post decision making analysis process
There are pitfalls to a formal decision-making process and these must be avoided, otherwise, the decision process gets bogged down.
One of these pitfalls is relying on a single source for information. A great point of view is missed if there is not enough information to make a decision.
On the other hand, there can be what is called information overkill. In the case of the recent 1.9 billion dollars, the COVID_19 plan was part of a huge overall plan, and the total bill was 5,000 pages in length. And it’s a sure bet that 99 percent of the Senators and Representatives didn’t read the entire plan. They relied primarily on summaries.
Similarly in business, having a glut of information may be as dangerous as having too little. There are other key elements such as placing too much emphasis on the wrong solution or placing too much faith in an option that hasn’t proven itself, but a formal decision making process is a very good thing for businesses.
There are important decisions to be made when it comes time to sell your business as well according to ExitAdviser. What documents do you need? What is a business sale agreement? Who you decide to take advice from and utilize when selling your business can affect the rest of your life, and possibly your families as well, so it is important to do your research properly to have a smooth, care free experiance.