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The Top 5 Reasons Why Companies Fail in Decision Making

Decision making is at the heart of organizational success. We’re all decision makers, both at work and in life. We make decisions all the time, subconscious ones, simple ones, and sometimes extremely hard ones. By making hard decisions, we get to exercise our normative power.  However, making decisions isn’t always fun and easy but rather a necessity in life.

Bad decisions can cause businesses to fail but at the same time businesses thrive from bad decisions. To make good decisions, experience is needed from poor ones. So, this means that we all have a handful of bad decisions in our back pocket. The really bad decisions that were later regretted, which led to lost opportunities, market share or even failure have a number of core commonalities. We decided to list some common traits of poor decisions based on our observations throughout the years.

So, what are the top five traits of poor decisions that cause businesses to fail?

The decisions that fail companies, that take them away from preset goals, lead to lost opportunities and cause serious stress, have the following five traits in common:

1. Lack of strategy

No decision can be a good one, if in making it, it is not aligned with your strategy. Companies without a clear and well-communicated strategy will typically not align themselves for success. Not knowing what you’re working towards or not having a clear definition of success results in most of us pulling in different directions. People end up making decisions based on assumptions and drawn conclusions on what needs to be done.

2. Unclear roles

The only thing worse than not knowing what someone else is doing is not knowing what you should be doing. Having unclear roles, leaves people struggling with their responsibility to decide. Some decisions are never made because one person is waiting for another, who in turn is waiting for someone else’s decision or input. Typically, people get stuck focusing on small tasks in order to feel productive, only to find out later they have wasted their time and end up duplicating their efforts.

3. Poor decision-making process

Acknowledging decision making as a process is a stepping stone for most companies. Many bad decisions come from an incomplete decision making process that failed to involve the necessary brainstorming phase or a thorough enough evaluation of the potential consequences of each alternative. People tend to over-think decisions, especially in the beginning, constantly studying new data, finally end up realizing that the opportunity is missed. It takes courage to be responsible and move forward with your decisions. Indecision is often worse than making the wrong decision because of wasted time and opportunities.

4. Lack of communication

Today’s work is mostly knowledge work, which is rarely done successfully in silos. Collaboration is essential for the communicating of a decision, its rational and implications, which is critical to the successful implementation of a decision. Involving others in the decision making process with the relevant knowledge, experience and expertise improves the quality of the decision. Without proper communication, some good decisions can turn out bad ones.

5. Information loss

Organizations today are very complex. Decision making in them is often slow and scattered into various tools, communication channels, emails and meetings. Decision makers rely on information they have at hand and end up making decisions based on insufficient information without knowing so. Most knowledge workers have suffered from information loss at least some point in their lives; lost email thread, forgotten meeting invitation etc. Thus, keeping all relevant decision makers in the loop is a challenge to tackle.

 

Decisions are fundamental tools that help companies face challenges, uncertainties, and opportunities.  The quality of the decisions will determine how successful and productive your company will end up being. The path to good decision making may be narrow and far from straight but keeping in mind the pitfalls can make any leader a more effective decision maker. There is no better time to explore and improve your decision making process so you can make better decisions in the future.

 

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