How to make better business decisions
Thu 19 February 2015 - 4:22 pmEditor's Choice | Featured | Growing | Hot Tips | Opinion | Small Business | Strategy
How many business failures can be tracked back to a poor business decision?
With a background in business psychology, I’ve assessed the business decision making process of thousands of people over the past 17 years and have found that the best decision makers have a combination of the following three factors:
1) Cognitive Capacity – The intellect to weigh up the relevant facts correctly, to problem solve and to arrive at the best solution;
2) Commercial Acumen – The ability to understand the commercial forces at play and make the most commercially astute decision; and
3) Timing – The balance between the decisiveness and patience to commit to action at the right time.
Traditional thinking dictates that the first is hard wired and the other two can be learned with experience, mentoring and development. However, the latest advancements in neuroplasticity and neuro-leadership have shown us that it is possible to actually shift our cognitive capacity to make better decisions both in and out of the office.
The centre point here is the battle between your prefrontal cortex (PFC) and your limbic system. Your PFC is responsible for your complex reasoning such as problem solving, memory, learning and decision making, while your limbic system is the centre of your emotional responses.
Now, when you’re limbic system gets activated [i.e. when your stressed, annoyed or anxious], it gets really loud, really fast. This absorbs all your cognitive energy and leaves next to nothing for the poor old PFC. As a result, your decision making is significantly compromised in these moments. These are the times when we say something we shouldn’t have said or do something we shouldn’t have done! Think of that angry email, or the angry text. This is not you at your best.
As a result, if we want to consistently make the best decisions in our business we need to make sure that we’re giving the PFC the clear air that it needs to work at its best.
The following three steps highlight actions which we can do daily to achieve this:
STEP 1: Make big decisions early in the day
Our PFC tires easily throughout the day so if you know that there is an important, complex or difficult decision coming up, make the call early when you are well rested with a fully functioning PFC.
The second element that scrambles our PFC is the multi-tasking way in which we try to manage our day. The human brain works best when it’s dedicated to a single task with laser beam focus. You can’t achieve this with phones ringing, staff interruptions and one eye on the inbox. To unlock your cognitive potential, allocate the time and the space, get out of the traffic and see how much sharper your decision making becomes.
STEP 2: Manage your limbic threats
Regardless of your personality, experience or capability we all encounter events and stimuli that activate our limbic system every day. Learning to identify these triggers and manage them differently allows to take control, make considered decisions and avoid emotional decision making. David Rock has established the SCARF model to help people identify the 5 most common threats and ways to manage these so this is a useful reference point.
STEP 3: Be mindful
Mindfulness is a hot topic right now and the evidence is compelling. By monitoring the brain function of high powered executives, neuroscientists at Oxford University have shown that busy people don’t switch off. They run from one caffeine and adrenaline fuelled event to the next. The outcome is what they call an ‘illusion of effectiveness’ where said executive thinks that their decision making and creativity is outstanding, however when objectively tested, it’s significantly less impressive.
Practical mindfulness techniques allow our brain to switch off and get back to neutral, re-boot and re-charge. Being present is the key here rather than being distracted by the past or the future.
While mindfulness meditation has proven to be highly effective, there are other practical ways for you to be mindful and it starts with switching off your technology. The incessant assault of data is our biggest barrier so find the strength to holster your weapon and be present with your partner, your kids, your colleagues and your friends. The outcome is superior decision making through better situational awareness and enhanced cognitive function.
Dov Frohman shows that the secret to success is daydreaming. Let’s face it, how are we going to come up with great ideas if we’re constantly running, tapping that iPhone screen and never have the time to really think or wonder.
So if you want to be a world leading business decision maker, change your work patterns to get the most out of your PFC, get on the front foot to manage your limbic threats and practice mindfulness to be at your best.
From here your commercial acumen and timing will develop faster and further to facilitate even better business decisions.
About the Author:
Christopher Paterson is the managing director of ALCHEMY Career Management, a firm which supports individuals to transition their career, assists companies adapting to organisational change and delivers Wellness@Work™ programs for any organisation wanting to help staff to be at their best. For more information, visit: http://www.alchemycm.com.au/