6 Keys to Faster, Smarter Business Decisions

Ok, I know I just said there were six keys, but I’m going to spill the beans and tell you in the first sentence that the ability to make faster, smarter business decisions comes down to just one thing… a dependable, repeatable process.

Data and Analysis

The first key is data. Whether you have a lot of data or not data, this is always the starting point. Begin by considering what you know and don’t know.

Notice we didn’t say “what you think,” “what someone said,” or “what you hope will happen”. Deal with the facts.

It might help to take a piece of paper, draw a line down the middle, and list what you know on one side. On the other side, list what you don’t know.

What you’re actually doing is also building a list of factors that you are considering as you set out to make this decision.

Strategic Alignment

The second key is strategically aligning everything to the business goals and objectives. If it doesn’t align with one of these objectives, it’s not a priority.

When you start viewing things through this lens, much of the noise will fall away.

This saves you a ton of time, energy, and resources on unnecessary, unimportant things. (you’re welcome)

Set Limits

Do you know your limits?

Here’s an exercise for you. Can you answer these questions?

What’s the financial loss you’re willing to absorb before you call something too high a risk? What’s the number of hours beyond which you are unwilling to have your business out of operation? What market share are you willing to lose because of a security breach or bad press from an employee? What delay are you willing to endure from supply chain issues? What intellectual property are you willing to lose due to lax security?

Go ahead, make your list. What you’re actually doing is documenting your risk appetite.

Knowing your limits will make decisions much easier.

The Three C’s: Connected, Contextual and Continuous

Every time you have a decision to make, ask yourself three questions:

  1. How is this connected to the rest of your business?
  2. What other factors should I be considering?
  3. Accept that factors are always changing, and you should update your initial analysis as more data is available. Yes, you get to change your mind if need be.

The Process

You’ve almost completed the process in the previous steps (did you see that coming?).

You’ve already collected the data and considered all the relevant factors. You already know your limits. And you’ve aligned this with your business goals and objectives. All that’s left to do is apply numbers to the risk you’ve described.

Assign a range to the risk. We’ll use 20% ranges for a 1-5 very high to very low scale. You can say 0% to 20% if it’s very low. A medium can be 40% to 60%.

Next, determine the likelihood that the risk event will actually occur. Is it 75%, 80%, 35%?

If the mathematical definition of risk is threat x likelihood, then all you have to do is multiply. (By the way, that is actually the definition of risk in the math of probability.) So, a moderate risk of between 40% to 60% and a likelihood of 80% is a risk range of 32%-48%. (.40 x .80 = .32 and .60 x .80 = .48)

The last step is to add your estimate of the impact. Remember those limits we discussed earlier? Here’s where they come in. If the negative event occurred, how long would your business be down, what would be the financial cost, and how would that affect your reputation?

Applying this process, putting numbers to the risk, and knowing your limits will make every business decision faster and smarter.

That’s it! The six keys to making faster, smarter decisions… otherwise known as quantitative analysis.

Ready to start making faster, smarter business decisions? No problem, that’s what I specialize in. Contact me, and we’ll discuss how you can get started building this capability for your organization. Whether you hire me or not, I’ll give you solid advice and actionable recommendations. Charlene@fismacs.com.

New Managing Risk Paper

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