Traditionally making smart decisions in business have been all about considering various alternatives, minimizing the risk involved with each course of action and making sure we pick the course of action that will maximize value for the business.
While these business objectives are still the same (nothing change as far as alternatives and risks) decision making is getting harder these days contrary to the expectations we have from the abundance of information and technology we have at our disposal today.
What is different today? There are two main reasons which are the major obstacles in decision making today and those are:
1. Too many choices
While having more than one alternative is critical for successful business decisions having too many alternatives / choices is to effective. In most cases evaluating too many alternatives takes more time than it is really required and often too many choices overload decision makers with a lot of info which is not really relevant.
In most situations we need good enough decisions and the saying ‘less is more’ is definitely true. Having a few relevant alternatives is key. Having more than you can handle is not effective and it just overwhelms you. In many cases out of too many choices not a single decision will be made because of too much vague information and creating uncertainty and lack of focus.
However, that’s not all, in addition to having too many choices and alternatives for action consider the second part:
2. Analysis paralysis
Business professionals today have many powerful analytical tools to analyze large amount of data and perform many different types of analysis in a matter of minutes. This is great for any business organization and helps us improve both efficiency and effectiveness making industries more productive and consumers getting more value.
The problem we frequently see is the “analysis paralysis” – the phenomenon of over analyzing data and information just because we are able to do it (we have the tools) without measuring the real benefits.
As a result, similar to the problems explained in the first issue above, the over-analysis leads to paralysis – decision cannot be made and no courses of action are being taken. The process of analysis paralysis is actually paralyzing the successful business decision.
What is the reason for this? By generating too much information, data, analysis, reports… the situation at hand seems too complicated even when that’s not the case. Imagine receiving hundreds of pages of information and trying to make a good decision – the information is overwhelming and the situation looks very complex even though that’s not generally the case.
What can be done? What should we do to avoid these unproductive issues and go back to making good decisions? The most important approach is taking relevancy into consideration.
When you need to decide in business and start to gather information during your research phase or you simply receive the information from an analyst ask yourself ‘what is really relevant for this decision?’ Before you jump into diving into details and data test the relevancy by simply defining what information you need in this case. If you are not sure about something think about the opportunity cost of all the activities involved.
The problems of too many choices and analysis paralysis are preventing you from being productive every single day. This is not true only for making those big business decisions but business professionals and managers face this issue on a daily basis. Improve your productivity by continuously doing the relevancy test.