Decision making is a process that means action taking. It is present in every aspect of our lives. We make personal and business decisions. Personal are related to our personal life and our family and business are related to our business or job. But, decision had an important part in executions and success of the executions – time frame of each decision.
In the previous post about entrepreneur visionary and opportunist, I write something about why opportunists never find their opportunities. The answer is because they are busy in seeking new opportunities because when they find real opportunities they never made a decision to use it.
Why Quick Decisions are Important?
We cannot expect to remain forever in the process of decision making. The end or the results of this process is a decision. The life of an entrepreneur and managing successful business need quick decisions, because there is the existence of dangers that the same decisions will be made from competition.
As most important reasons why you as an entrepreneur must make quick decisions I would mention following:
1. Quick Employment of Opportunities
If you find an opportunity, it will not have value for you or your business if you’re not employing it. Because of that you need quickly a decision how to use it and who will implement needed activities about that.
2. Quick Response of Customers Needs
You as an entrepreneur and your business exist because of your customers and their needs. If you find changes in their needs you cannot make decisions forever about how you can satisfy their new needs. Around your business always will be competitors that will wait for your passiveness. Because of that, there is a need of quick decisions.
3. Quick Response on Competitors Activities
As you continually accomplish different business activities, also your competitors didn’t sleep. Each of their step about a business, or market will need your contra step. Because of that you must quickly decide what will be your contra steps.
Speed Versus Quality
What is the affecting of speed of decision making on the quality of the decision?
The quality of the decision certainly depends on the speed of making it. So we can say that the decision quality is a function of speed of making it.
Quality decision = f(speed); higher speed means less quality and vice versa.
This is logical, but not only. One thing is certain, behind every good and quality decision is information on which we make that decision. Decisions are made by entrepreneurs and the speed depends on it. How much more information entrepreneur have it will be harder to make quick decisions. This is because the speed of decision making is a function of available information and an entrepreneur. So the previous equation will be:
Quality decision = f(available information, entrepreneur);
I will try briefly to enter in this secret about information and an entrepreneur as a basis for decision-making speed.
How much more information entrepreneur have it will be difficult to decide, it will take more time. Sometimes it will never have enough informations to deciding, and the speed of this process will be very slow and time can go to infinity, or in a situation not to decide, which in this case is not good. This is the case because they will spend their time on collecting needed informations. On the other hand, informations should be processed in a certain form through which entrepreneurs can discover easily and quickly some trends and some hidden trends that will be useful for deciding. So, for quality decisions entrepreneurs should have an optimal amount of information in a form that allows estimations. With this in mind our formula from above now looks like this:
Quality decision = f(f(optimal amount of information, form), entrepreneur)
If they want to draw some quality conclusions from the informations presented in an appropriate form they will need to have a certain ability to recognize trends in such an incomplete information. I say incomplete information, because our goal is to make a quickly quality decision. Therefore, it is necessary entrepreneurs and managers to have analytical skills. So, quality decision in a small interval of time will be represented by the following formula:
Quality decision = f(f(optimal amount of information, form), analytical skills of the entrepreneur)
Analytical Skills as a Basis for Quick Decisions
As you can see an analytical skill is the ability of an entrepreneur based on incomplete informations to draw conclusions and to make quality decisions. It is believed that successful entrepreneurs make a quick decision and their own thinking for the correctness of the decision is 70%.
The characteristic of analytical people is to look into a group of information where they will find something interesting that other average persons cannot see nothing. Knowledge is a requirement to an entrepreneur to be analytical.