Assess the impacts to other projects, or business units, and functions, if you make a change to the decision. As soon as you know it’s going to be a bad decision, cut the losses. You may want to actually kill the project. If you’re seeing indicators, for example, of legislation going through, what actions can you take as far as your decision goes, as you start seeing that legislation move forward? Think through actions to take upon massive changes. Think through the actions you’ll take based upon those early warnings. So think through, if this scenario is going to happen, how can you predict it before that change comes to fruition. Lay out these contingencies and describe very clearly, early warning indicators. One simple piece of legislation can make something go from a great decision to a horrible one. Also look at some regulatory changes that could occur. How are they going to react when you make a change in the market? You need to consider scenarios of market changes, like a recession, and how that could impact the decision. Some of the scenarios you need to lay out will lay out multiple likely possibilities. That’s a requirement in this highly ambiguous environment. This means you have to build scenarios, and contingency plans. So as you’re looking at the executive decisions you’re going to make, be sure you think through what those long term risks are, and identify how you can mitigate them before they become catastrophic.Įxecutive decisions are typically made in a highly ambiguous environment. Finally, there was some mass layoffs involved, and those buildings had to be shut down. They didn’t value that internal call center, and correspondingly, this turned into being a bad decision. Ultimately, the decision didn’t pay off, because customers didn’t really care. This entailed thousands of associates being hired, several buildings were built, and it was a long term IT project. At one point, she decided to build an in-house, higher cost call center model, and the basis for that executive decision was that having an in-house model would provide better customer service to the customers of the company. Also, identify early warning triggers so you know if the decision is going in a bad direction.įor example, I know of an executive at a financial services firm, and they were in charge of operations. To the extent possible, quantify these risks and build contingency plans for each one. And if it’s not correct, the cost of being wrong can be much higher. Some executive decisions have long incubation times, to see if the decision was correct. Those risks can include competitive responses to the decision you make. Before you make an executive level decision, understand what those major risks are. Because when you do, you’ll have higher confidence in the short-term and long-term impacts of the decisions that you make.Įxecutive decisions typically carry a much higher level of risk. To make good executive decisions, make sure you consider those strategic, financial, and operational impacts. Some examples of true executive decisions include: Mergers and acquisitions, large-scale IT projects, going global with your organization, expanding the markets you operate in, and even layoffs or restructurings. What are the changes to your people, your processes, and even how you run your business based on the decision that you make? The third consideration is the operational impacts of the executive decision. You also need to look at the long-term impacts on revenues, costs, profitability, and even the company’s value. It’s not just the short-term financial impact that you have to look at. Second, consider the financial impacts of the executive decision. Look at how the decision affects your organization in the market, and what are your competitors going to do based on the decision that you make? First, you have to think through the strategic impacts of the decision you’re going to make. There are three major considerations that separate executive decision making from day-to-day or managerial decision making. Developing and honing your executive decisive making process is not only a key part of career growth but a necessity for the success of your business.
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