As entrepreneurs we are responsible for making decisions, both big and small, that ultimately lay the path to success or failure. The question is how do we ensure that the decisions we make are correct? We are often told that the most powerful names in business such as Sir Richard Branson, Warren Buffet, and Oprah Winfrey, attribute their success to following their intuition. Sir Branson’s quote: “I rely far more on gut instinct than researching huge amounts of statistics.” is frequently used as justification for using ones instinct as the primary basis on which to form your decisions. While intuition or gut feel is certainly an important part of making decisions, it does need to be used with caution, and certainly shouldn’t be the only tool used when faced with a big decision.
A major risk with basing your decision solely on your intuition is that intuition is only reliable when considering decisions that fall within your area of knowledge or experience. Massimo Pigliucci, a philosophy professor at City University of New York, says: “Intuition is the result of your subconscious brain picking up on clues and hints and calculating the situation for you, and that’s based solely on experience.” The risk therefore is that by only using your intuition you may be basing your decision on incorrect, or incomplete information. Even Sir Branson, in his “4 Tips to Making Business Decisions” warns against letting your gut feel have too great an influence in the decision making process, saying: “…you mustn’t allow that first reaction to influence your ability to objectively weigh the cons as well as all the pros when they are presented.” So as an entrepreneur how do you make sure that you are making informed decisions?
There are numerous decisions tools out there that will help you in your decision making process. For those with a penchant for numbers, there are tools that will assist you in turning your qualitative information into quantitative data, which will enable you to compare different solutions. Some of the most popular of these are the Decision Matrix, or the ever-simple T-Chart.
On a more qualitative side, there are again numerous methods and tools that one can use to help ensure decisions are well thought out. One of my personal favorites comes from arguably one of South Africa’s greatest entrepreneurs and business leaders, Raymond Ackerman. At a lecture at UCT’s Graduate School of Business, Ackerman revealed that whenever he is faced with a difficult decision, he doesn’t solely rely on the decade’s worth of intuition he has accumulated, but he also turns to his 7 friends.
Ackerman’s “7 Friends” as he calls them, are the 7 questions he considers when contemplating a decision. They are:
What, Where, Why, When, Which, How, Whom
Certainly not ground breaking, the 7 Friends are ambiguous enough to stimulate thought, yet obvious enough to find relevance in any decision making situation. The idea is that by asking and contemplating each of the friends, you will ultimately view the problem from enough angles to make an informed, well thought out decision.
I recently used this technique to help me make a decision on whether or not I should cofound a new venture. The opportunity came about when a previous work associate of mine approached me wanting to start a business in the ethnic dry hair market in Africa. Already having a history in this market my initial reaction was to jump at the opportunity, I believed that I had all the experience and the contacts in the market to make it work. However something was nagging at me that made me hesitate. I used the 7 friends to look at the opportunity from a different perspective, and it helped me come to the conclusion that while I was “right” for the business opportunity, the opportunity wasn’t “right” for me. I can now look back on the decision and confidently say that had I not thought through the decision properly, and just jumped in based on my gut feel, I would have been making the wrong decision.
So while I am certainly an advocate of listening to your gut, I believe that using a tool or two can be incredibly valuable, and in some cases an absolute necessity, in ensuring that the decision making process is based on holistic and bias free judgment. Heck, if it works for Raymond Ackerman then surely it’s worth a try.