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Thursday, August 9, 2012

Indecision can kill your business


One of the most difficult problems to tackle is deciding between multiple options.  Complicating the decision may be playing one option against others in an attempt to optimize the outcome.  For example, suppose you have multiple investor groups with different term sheets for your financing.  You may want all of the investors in the next round.  Maybe you want to negotiate on the valuation or other terms to improve the deal(s).  The desire to improve your economic benefit is part of your fiduciary responsibility, but failing to end the selection and negotiating dilemma and close on something is counterproductive.  In fact, it may just make the investors angry and they will not return at any price.

The same arguments fit with indecisions for your suppliers, new hires, possible fires, and events that are important to running the company.  The in ability to decide a direction and implement the actions can leave the company in a middle ground of no man’s land.  You cannot move forward or backward, resulting in maintaining the status quo. 

There is no problem with maintaining the status quo, unless it results in hindering real progress.  The lack of progress often has a negative effect since your team likely figured out a decision would have resulted in a benefit and enhances your business.  I have been guilty of suffering in the middle ground and having problems with direction.  The inability to decide is a larger problem than one might expect.  When looking at choices, it is always possible one of the choices can do harm even if it looks fantastic.  This is the law of “Unintended Consequences.”  I have mentioned it before in a previous blog.

It turns out that most of the indecision stems from a fear of picking the wrong thing or getting the wrong deal terms.  The problem comes in making decisions on whether to buy or sell a stock, maybe whether to trade up in value on your home or car, or whether to change jobs.  Often many unknown factors contribute to the increase in risk of the decision.  The economy could turn up and my stock would have done better.  I held the stock and the company did something bad causing the share price to tank leaving me with a loss.  I took the investment from a group and now they are agitating on my Board.  UNCERTAINTY is the issue causing conflicts in the decision process and uncertainty is usually going to be present.

You can lay out all the factors of plus and minus that may define the choices.  An analysis will help with the decision process.  Your primary concern is to drain the risk of the decision to a minimum and then CHOOSE!  You may be wrong or right in the choice.  Usually, the negative is fixable and the positive needs minor adjustment to make it even better.  No matter what, it is often better to decide on something than sit in limbo.  The decision process is critical to you, your team, and your company.  Get as much intelligence as possible, perform your thoughtful analysis, and then decide.  By the way, a real decision option is that you will maintain the status quo, but at least you decided!