Join Mike Figliuolo for an in-depth discussion in this video Reducing decision-making risk, part of Decision-Making Strategies.
- You face risk in all decision making, and a goal of yours should be to reduce that risk as much as is reasonable. There are three primary methods for reducing risk. First, involve more people in the decision-making process. They're going to give you additional information and offer perspectives you may not have thought of. Additionally, by involving them early, you're reducing execution risk on the back end. You're getting people to buy into the decision now so when it comes time to execute, they're on board.
The second way to reduce risk is take more time. Today, the future may be completely uncertain. A month from now, maybe you've resolved some of those sources of ambiguity. A year from now, you have even better information as to the environment you're going to make your decision in. The third way to reduce decision-making risk is break big decisions into smaller decisions. If you're trying to decide whether to relaunch the entire company website, perhaps you break that decision down and you make a smaller decision today of launching a pilot website, gather some additional information, and then make the bigger decision down the road.
Now there's a balance between gathering information and making a decision in a timely manner because gathering information takes time and money. And yes, you're reducing uncertainty by doing so. But remember, there's always new sources of uncertainty entering the equation, so find that balance between having enough information to make your decision. So as you look at ultimately reducing decision-making risk, remember, involve more people, take more time in making the decision, and break those bigger decisions into smaller ones.
- Define types of decision-making styles.
- Explain the benefits of participatory decision-making.
- Identify when to use a consensus-based decision-making style.
- List the components of an RACI matrix.
- Describe how to reduce decision-making risk.
- Implement a decision-making cycle.