A team of four works around a conference table.
Decision-making is a team effort. Once you have the right team, the next step is to find the right strategy. — Getty Images/shapecharge

Everyone wants to make the best and most informed decisions they can and when you’re a business owner, every choice carries much more weight. Here are five processes you can implement to make more effective decisions in your business.

The "5 Whys" technique

The 5 Whys technique was first developed by the founder of Toyota as a way to get to the root cause of any problem. Anytime an unexpected problem occurs, you ask “why” five times as a way to drill down and identify the real issue that needs to be tackled.

This sounds straightforward, but it can actually become quite challenging. The key seems to lie in asking the right questions from the start. Once you begin to identify problems, you can start brainstorming possible solutions.

To utilize this technique, you’ll start by assembling a team and choosing one person to act as a facilitator. From there, the team can discuss the problem and come up with your first “why” statement.

After each “why” take some time to discuss the reasons and give this exercise some serious thought. Be as specific as possible and look for fact-based reasons. Once you’ve identified the root problem, the team can start brainstorming solutions.

Decision trees

A decision tree analysis is a scientific model that organizations often use to help make decisions. This model involves outlining different possible solutions and alternatives until a final decision is finally reached. It’s typically outlined in the form of a flowchart.

A decision tree is a good way to list all the possible choices, as well as the risks and benefits to those choices. It can help businesses identify whether a possible decision is worth it.

After you identify a problem ... ask, “How could I be causing this problem?”

CATWOE

The CATWOE analysis is based on an acronym for a series of steps to help businesses identify problems and come up with possible solutions. Here is how you’ll use each of these elements in regards to problem-solving:

  • Customers: The first step is to identify whether this is a problem that has a direct impact on your customers. If so, it must be dealt with immediately to avoid any negative fallout.
  • Actors: This term refers to your business’s employees and suppliers, and any other individuals directly involved in the situation. What is the role that each of these individuals plays in the scenario?
  • Transformation process: Every business relies on many different processes to be successful. How does your current dilemma impact these processes, and what solutions need to be implemented to fix them?
  • Worldview: During this stage, you need to look at the long-term effects of your problem. What are the possible implications down the road if the issue isn’t resolved?
  • Owners: This point refers to the owner of the problem. Who needs to take ownership of this problem and how can they contribute to the solution?
  • Environmental constraints: This final point refers to anything that keeps you from implementing solutions. Identifying constraints will keep you grounded in reality and help you come up with a feasible way forward.

Reverse brainstorming

Reverse brainstorming turns your typical brainstorming sessions on their head. After you identify a problem, instead of asking yourself how to solve it, you’ll ask, “How could I be causing this problem?”

From there, you’ll make a list of “reverse” solutions. For instance, if you’re trying to improve customer satisfaction, you’ll make a list of all the ways you could be keeping your customers dissatisfied.

Once you're done brainstorming, you may realize that you’re already doing some of the things on your “reverse” list. You and your team can talk about each item and identify potential solutions you can implement.

Risk analysis

Companies are exposed to countless risks and if they aren’t identified early, they can become significant problems down the road. That’s why risk analysis is so important for businesses of all sizes.

It’s a useful tool anytime you’re planning a project, improving safety measures at work or doing any financial forecasting. The first step in risk analysis is identifying any possible threats your business faces and the likelihood that they’ll materialize.

Once you’ve identified the risks your business faces, you can start looking for ways to manage them. This can look like finding ways to avoid the risk altogether, sharing the risk or even just accepting it.

[Read more: Startup CEOs Share Their Best Business Decisions]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published October 09, 2020