How to analyze your business decisions | Rebecca Brizi | Skillshare

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How to analyze your business decisions

teacher avatar Rebecca Brizi, Strategy and Business Growth

Watch this class and thousands more

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

16 Lessons (58m)
    • 1. Course Intro What Is A Decision

      3:50
    • 2. Decision Types

      6:11
    • 3. Decision Stages

      3:09
    • 4. Starting the Framework

      4:47
    • 5. Gains: Happiness

      4:47
    • 6. Gains: Growth

      3:19
    • 7. Gains Cash

      4:30
    • 8. Gains Options

      4:03
    • 9. Interlude

      3:30
    • 10. Losses Money

      3:09
    • 11. Losses Quality

      3:24
    • 12. Losses Time

      2:44
    • 13. Bringing it all together

      4:10
    • 14. Implement

      1:41
    • 15. What is Decision Making

      3:17
    • 16. Outro

      1:43
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About This Class

A lot of business talent comes down to a single skill: Making Good Decisions. 

If you run or manage a business, you are making a dozen decisions an hour, big and small, major and minor.

The problem is, it's easy to make decisions, but it's impossible to know if they are good until after the fact!  How can you make decision making more than guesswork?

Good Decision Making & Problem Solving are essential to business success.

You have to:

  • Know how each decision might change¬†your whole business

  • Understand what you can and can not control

  • Evaluate your options to pick the best one

This course is a step by step guide in Problem Solving with simplicity. You will learn a simple decision making framework that you can apply in a multitude of scenarios. Every decision means a change, and a change means that something will be gained and something will be lost. This framework makes it easy to find out what is changing and know you are making the right decision about it.

If you are running a business, managing a business, or directing a business team, you are responsible for strategic decisions and their success (or failure).

Course Structure

The intro section will provide a detailed guide to what constitutes Decision Making, including the types of decision a business encounters.

We will then dive into the three areas of effective decision making in

  1. Pre Game - understanding your current position

  2. Gains - understanding the upsides to your decision options

  3. Losses - understanding the downsides to your decision options

Meet Your Teacher

Teacher Profile Image

Rebecca Brizi

Strategy and Business Growth

Teacher

Hello and welcome to my profile page.

I'm Rebecca G Brizi, a business consultant, avid reader, and dedicated drinker of coffee. Mainly: I'm a strong believer in how systems and plans make you better at your job. Because when you don't have to worry about "what comes next", you can use all the energy for growing your business.

My courses are all premised on this theory. This is material I use to consult with my clients and to run my own business. You will find courses for freelancers and courses for small businesses, and courses that apply to both.

A bit about my background: I spent eleven years working in a software company, joining at the initial startup phase and moving the company through a product change, to establishing a new market and subsidiar... See full profile

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Transcripts

1. Course Intro What Is A Decision: What is a decision? It's a bit of a loaded word. A lot of things qualify as decision. How many pens should I vie for the office this quarter all the way to? Should I have an office? Should I lease the space? Should we will be remote workers, different levels of impact, different levels of longevity in terms of how those each of those decisions affect the business? So this is true right across the board. You're making decisions every moment of the day for your business, in the broad and in the granular in the minuscule. So what do we mean when we talk about decision making frameworks for business? How does this apply? What do we mean when we talk about decisions in business? Well, in its simplest form, a decision is very simply, a course of action that is selected in response to or considering a group of alternatives that keep you the business on track towards its goals and objectives. So that's what a decision is, And the complexity that comes into a decision is understanding how a decision made today effects a lot of other actions that come after it. And a lot of things that are going to happen in the future, many of what you cannot predict. This is why we use frameworks for decision making. Because every decision, big or small, has a ripple effect in the bigger the decision. Then, of course, the stronger that ongoing effect. So making decisions with confidence becomes difficult because of all those unknowns, because of all the different things that are affected by each decision, sometimes not directly. And so it's not immediately obvious that that thing is going to be affected in this decision making course. We are going to first of all, determine what are the decisions that merit this level of evaluation and speculation. So we're going to define what a strategic decision is, and then I'm going to take you through this particular framework for making decisions. The core understanding here is that every single decision has to bring you again more. There was no reason to make the decision, but it will also always incur ah, loss of some sort. So the decision making framework that we will use in this course is about understanding. It's a way for you to understand, evaluate and even calculate those gains. Those losses, the impact they will have on your business and thus be able to make a decision with as much information at hand as possible. We've got a project on this course. Once we've understood what a strategic decision is, you're going to pick a strategic decision for your business really or fictional, and you will fill in the framework for that decision so you'll be able to come out with a understanding, a result, if you will, for how to make that decision going forward. Decision making is essential. It's a bit difficult to grasp in the sense that a decision is. I say it's a broad term. It's somewhat ethereal, and yet bad decision making is the number one cause for the erosion of value in a business so being deliberate about how decisions are made, one they're made and what the decision is and how to follow through on it. This will being delivered about this will make a difference to your business and to your performance. Follow the course to find out how to take control over that decision 2. Decision Types: pre gaming your decision making this means all the information you need before you really get into the framework. The first part of this is understanding what a strategic decision is. So this framework applies to decisions that have long lasting and reverberation impact There three types of decisions in business, strategic, tactical and operational. We're gonna focus on strategic. That's what you want to be working on on your project and considering for this course. Let me explain all three, though, so that you can identify the difference. But when you're confronted with a decision and really know where your decision in each situation, what category it falls into a strategic change is one that has long last an impact that reassigns resource is within your business and that affect other parts of the business. A strategic change will change what the company wants to achieve and how it intends to achieve it, and why those are the goals if a gold changes and there must be a change in reasoning. So also the wise a strategic decision might be something like, Do we operate in a whole new market? Do we launch a whole new product? Do we re brand. Do we create a new role internally that didn't exist before? It could also mean removing any of these things. So do we interrupt that product line? Do we remove ourselves from operating in that market? Do we restructure internally? Do we change our work chart completely? These are changes that are long lasting that affect many other parts of the business, that a change in one area is going to have consequences in other areas. That redirect resource is from one place to another that would update a business plan or a strategic plan. That's what a strategic change is. A tactical decision comes after that. It essentially changes how you achieve those strategic goals or those company goals, but it doesn't necessarily change the goals themselves. So a strategic decision might be Do we start content marketing at all? And then the tactical decision might be how do we build our our content calendar for a blawg? If that's what we've decided to do? Or how do we select which social media platforms to to be on etcetera? Vic Tactical will affect things like targets and measurements. Even KP eyes key performance indicators. It will affect how you reporting on the business because it effects the, uh, plans within your broader strategy. So how you're doing certain things and within that decision also, why that particular decision? So it's not necessarily changing the goals, but it is changing how you achieve those goals Now. All of that means that tactical decisions also influence multiple parts of the business. Potentially, they also are longer term, and they also effective resource is so tactical decisions really come in between and could require the application of this framework depending on the impact and how quickly you can readjust. The other idea with tactical decisions is that you can readjust them. There might be some lasting effects of each tactical change, but the tactical decision can be updated or changed more quickly and easily than a strategic won. The third type of decision is an operational decision. An operational decision looks at how we do things at a more granular level, really a day to day level. The operational decision is something like, Do we change our pen supplier from company A to company beat? That's not necessarily going to change the experience for all the employees. They're still gonna get their pens. It's depends that they want. They'll still be delivered at the timeline that the employees prefer etcetera. But the office manager of the person in charge of maintaining that vendor relationship is making a decision based on budget new offers. You know, maybe problems with the previous supplier. It is operational. It doesn't actually impact what the business is doing or how it's doing it. But it is still a change that is being made. An operational decision does not necessarily require an evaluation of the framework. Again. Look at how impactful the decision is to determine if this entire framework is really required. Now, having said that, a small anecdote I did have a client whose office manager specifically did use the framework for an operational decision. What she did in this case, Waas at her own desk and just with her own resource, is she didn't turn it into a big thing. Frankly, she did the framework on her own. It was an operational decision, so she did have the knowledge she could understand. All the consequences and the people affected really were mainly her in her role, so she didn't necessarily need well, the impact from other people in the business that by doing the framework, what she actually decided And yes, it was in changing pen supplier was that she could save some money, consolidate some of their vendor relations, save some money over here, in fact, diminished the administrative burden of man it part of their facilities management and open up time, which opened up budget and long story short. She ended up creating a whole new role in the business that had no negative financial impact at all. So there are cases in which you apply the framework, even to your operational decisions. And all of a sudden all sorts of new opportunities are revealed to you all that to say that we're focusing in this course on or were considering this course, the strategic decision, the strategic impact, and that's what I encourage you to do in your project. But once you're familiar with the framework and it comes easily to you and more naturally to you, apply it in other areas and you will find benefits there. It will reveal unknowns to you that you can use to your advantage 3. Decision Stages: the entire process of decision making happens in four stages. The first stage is to define the situation, to find the problem that requires a solution that requires a decision. So understanding what is the decision really being made about so diagnosing the problem, so to speak? The second is to consider the alternatives. Now what's key here is to know that they're always more than two alternatives, so there's never just two options to choose from. You should always have a minimum of three because you've got Option one option to in status quo. But looking at all the different options available, and when you really diagnose the problem accurately, you will see that there are multiple options on the table. The third stage is evaluation those alternatives evaluating those options and then the fourth stage is implementing the chosen change. Implementing the decision made. This course focuses on Part three the evaluation stage. So we are starting from the point that you have identified a problem or a change point, something that is requiring a big a big decision that you have considered some alternatives and that you have those alternatives ready to be evaluated now as I say with those alternatives, Think about what is causing the change and then brainstorm ideas. And as I say, status quo is always one option, so that that can go into your list of alternatives. What we're going to focus on in this course is that third point. How do you evaluate those alternatives available to you? You can think of this course as your training for running a decision making meeting. One thing that is very important in this is where possible. Use many minds. You want to make this somewhat of a brainstorming exercise. You want to bring different views into the room. If you run a company with employees, pick some key employees that are maybe impacted in different ways or have different responsibilities on their shoulders so that you're getting a broad spectrum of views and bring all of those people into the room to be part of the exercise. When you do go through this in your business, if you are a solo preneurs, find that mentor, maybe a consultant or a group of trusted friends or advisers. If you're in a mastermind group, for example, and use those people to help you work through this framework. So use the course today as you're training for making decisions. And, of course, the project that you have that you will do as you go through the course is going to be your practice and how you run those evaluations across each decision. So understanding where we're operating, operating in the stage three of decision making the evaluation Know what your problem is that you want to solve or no, the change element that we're looking at, what the decision is and, uh and we will focus on evaluation. 4. Starting the Framework: we have established what a strategic decision is. We understand where in the decision making process, we are operation and you have picked a decision four year class projects. This might be a decision that your business is actively facing or you believe will be facing in the near future. It might be a complete hypothetical or invented situation that you're using for this project. It might even be a decision that you had to make in your business in the past, and you are reexamining that now with this framework to see what new information that teaches you any of those options is fine. Just pick a strategic decision. What we will do in the framework is examined the gains and the losses. So every single decision must incur gain, or there's no reason to make the decision. Every single decision automatically brings a loss, and that's just the way things are. What the framework does is put all the potential gains in older potential losses into specific categories. Anything that you gain or lose will fit into one of these categories. So in examining the categories, you will be able to examine all the potential gains and losses and compare different options with one another. That's what we're about to start doing. So before we get started, grab a piece of paper. This can be real or virtual. Depending on your preference, I want you to draw a horizontal line across the top like you're drawing a table. But then there's only one column over on the side and you split that one single column, The smaller column in half. Okay, so you end up having something that looks like this for each gain and loss, this is going to be your playground. This is the document you're working on. So you have a larger section that allows for pros and then to smaller cells which are just quantitative. Those air just going to be numbers. You're gonna need seven of these worksheets. What goes into this table for each of the gains and losses? The pro section is going to be your analysis of the gain or loss. We will go through these each one by one to understand how to look at all those gains and losses. But you want a qualitative section, a prose section of what you're writing out, what could happen in all the quants consequences. The two smaller cells are going to be a quantitative analysis. Those are numbers. You're gonna work on a scale of 1 to 3, possibly 1 to 5 more on that in a second, and you're going to look at the impact that this is going to have on your business and the likelihood that this will occur. So while we can say this decision could bring about a gain in revenue, let's say, But we're not sure the likelihood of that happening is is there but not the certainty, so you can put a scale number of how likely that is to happen. 123 Maybe it's a two. Maybe it's the one. It's unlikely, but it could. It's improbable, but not impossible, etcetera. So likelihood and impact again. We'll examine this for every single one of the categories that will go through a quick word on the scale. 1 to 3 is preferable because it leaves very little space for interpretation, and that's what you want. You will use the quantitative. You will use the numbers to compare different peoples considerations so you don't want things that are way Teoh. Two divers also once you start getting into 1252 and four kind of gray areas. You don't really know how people are interpreting those numbers anymore. So 123 is recommended, depending on how you work in your business or you just need a broader expanse, 1 to 5 is fine. What I like to do is actually use 123 but permit outliers so I might have a 123 but then also allow minus five and plus 10 for example. So if things are, if the impact is just going to be massive and undoubted, and there is no way to overstate this impact than it doesn't deserve a three it deserves, a plus 10 really needs to stand out. So that's another option. You can be creative with your scales, so long as everybody is applying the scale in the same way. If you're doing this with a team of people, they all have to understand how that scale works. So it's worth putting a bit of foot into the scale and describing the scale that you're using for those numbers to your team. If you're doing this with the team for the class project, in this course, you're probably doing this on your own. So again, 123 probably works fine. But while you're going through, if there are big out liars, allow yourself to use those big outstanding numbers. The important thing is that the scale is comparable across all categories, so so long as you're using the same criteria, this framework will work. 5. Gains: Happiness: The first area in which your business can gain from a decision is in the category of happiness. Happiness is all about people. Things are not happy. People are happy in happiness really translates into productivity, employee loyalty and output. So we use happiness to say What makes your people want to continue to be your people? What makes people want to work for you with you, even if you are a solo print or what makes you want to work in your business and on your business? Happy employees are productive employees. They make for happy customers. They make for Boesch a work so understand what makes your people happy. What brings happiness into the workplace? This needs to be a concrete definition. This isn't some of serial form of happiness. How do you recognize happiness in your workplace? Is it with productivity? Is it about people interacting more? Is it about people asking more questions? Are they bringing new ideas to the table? How do you recognize that your workforce is happy? How would you describe a happy workforce if you had to describe it to 1/3 person? Be very specific about this. Ask yourself what makes your people happy? Is it perhaps more responsibility in the workplace if they feel that they are being given more because they're trusted? And do you like their output? And they are making a positive difference. Does that make them happy? Is it more training? Do they want to learn how to do more things or keep up with changes in their environment or industry? Or just feel that general sense of advancement because they're bringing in new skills is more training the thing that makes your people happy? Is it a raise Braised never makes anybody unhappy. So straight up a raise in salary, new benefits is a holiday time, etcetera. The perks? Does that make your people happy? Is it working environment? And again, be specific. How do you describe that? What does it mean? Does it mean a working environment that is physically comfortable that is aesthetically pleasing? Does it mean open plan office closed offices? Does it mean having coffee breaks regularly doesn't mean free doughnuts on the Friday What makes a happy working environment or what sort of working environment makes your people happy? How do you calculate happiness? How do you recognize happiness in your employees in the general working environment in all the people you have to interact with in your business. That is how you can know if you gain. And happiness is, if you are able to describe it now, think about with this decision is the regain and happiness and if so, in the pro section, I want you to describe how this decision brings an increase in happiness and how you recognize it. You are using words to describe a picture. These things will happen, which will make my people happier. And I will know that they'll be happier because I was of these reactions or these behaviors these things that I will be able to see and describe and recognize objectively right that out in prose, right, the whole story. That's why we have a big section for pros. This is your qualitative analysis again. If this is something you're doing for your business, do it as a team, have different people or teams of people right out what that gain and happiness looks like . Then we have to look at impact. So this is where we're using your numerical scale. 123 That's what we'll stick with throughout the course. What is the impact? Will this bring an increase in happiness? And, for example, is it a big increase? It is. A small increase isn't an increase in happiness just because it improves maybe the lighting in the office. So it's a nice thing, but the impact is actually going to be fairly low. So it's a one. It's not a zero. It's a one. This is That's how we're calculating the impact it'll have or actually do. We work in a dungeon right now, and there is no light. So having natural light is gonna have a huge impact on its A three. Then look at the likelihood. Do we know for sure that making this decision is going to bring about these things that increase happiness if we know it for sure, that likely here is a three, if we don't know. But we think maybe the likelihood is either one or two. How likely is this to occur? And if we know that it's not gonna happen, then it's zero. It sort of cancels itself out so that gain is non existent. So you want numbers in the two cells for the impact that this gain and happiness is going to have a positive impact. We're looking at gains. So how this is going to make people how this is going to make people happier and how the fact that people are happier is going to change business in a good way and then the likelihood that this will occur so pros number number. 6. Gains: Growth: the second area in which you can recognize a gain is in growth. Does your business grow from this decision? Is that gain that occurs with this decision? What does growth mean? Well, again? It is particular to each business. But to really understand what it means for you, go back to your strategic plan, Go back to your business plan, go back to the promises that you've made to your investors. If you have them or your annual goals. For example, how do you calculate and recognize growth in your business? What does it mean for your business to be growing Now again, you have to be able to describe this in very concrete terms that are either yes or no. These things are either happening or they're not. They're not subjective, and they're not ethereal. We can point to them, calculate them, measure them. So what does growth mean for you and your business? Does it mean more clients doesn't mean more business from current clients? Does it mean higher revenue? Does it mean larger profit margins? Does it mean new markets, new products? What does growth means specifically in your business? Does it mean more employees does it mean new capabilities? Does it mean increase in resource is all sorts of different things that growth can mean? That has to be the growth that matters to your business. It has to be the way that you recognize that your business is growing so back to your prose section of this particular gain right out how this decision impacts growth, how it brings about growth, what that growth is. What does it mean for your business to be growing? How would you describe that to an external person so that they could also recognize it and say yes, very clearly, you are growing based on these criteria. What is growth for your business? So describe that how this decision does, in fact, increase growth and what that means one of the consequences of that growth. What story does that tell you? What does that allow your business to dio describe the growth in that larger box? This is your qualitative analysis of how this decision brings about growth and what growth means to you. And now we're backed to the quantitative, the impact and the likelihood. So we know that this decision, if it increases growth if it gives us a gain and growth, it will look like this. What is the impact? Is this going to contribute to growth directly? Indirectly is it's going to allow for growth but not actually bringing about itself. What is the impact that this level of growth will have on other parts of the business? So how much will this decision, in fact, bring growth? Is it a sure thing? Is it going to naturally put us into a better position than we were before the decision? And then, of course, the likelihood with this decision, we I believe that this growth will occur. We have no certainty of it. So it's a two or it's a one or were very certain. We are certain that this decision will impact these areas of business, which will give us direct growth, though it's so it's a three. So the likelihood of this decision, in fact impacting your growth, giving you a gain in growth that goes into your numerical cell. So again, pros section and then your impact, which is a number scale 123 and then your likelihood, which is also a number on a scale from 1 to 3 7. Gains Cash: cash. Does this decision mean a gain in cash? This is not the same as growth. When we're talking about cash, I'm not talking about revenue and increase in revenue. I am not talking about an increased profit margin. I am talking about cash in hand. Liquidity Readily available cash? No. In many cases, decisions, in fact, incur an immediate loss in cash because often a decision requires an investment, a purchase of some kind or hiring or investment in the business in order to bring about this change. So that is part of what we will consider in the losses as well. But you also have to think about gain. Is there a gain in cash? No. Cash is important to consider on its own specifically, so you don't confuse it with revenue or profit because cash is short term, not necessarily long term. And this is the analysis that you want to do when you are doing this. Pros Review of your gain in cash. So, first of all, is it an immediate gain in cash? Or is it cash that you gain in the future? Isn't a a non going gain in cash? Does this mean continuous cash in your pocket or is it a gain in cash right now? But it's not continuous. It's not ongoing. So it means cash right now. But not tomorrow, necessarily. Also, what does it mean to have a gain in cash? Is this actually extra cash or are you saving cash somewhere else? So it just means that you're not spending it elsewhere. So again, it does mean that you have more cash than you would otherwise have. But you see how that is not impacting growth at all. If it's actually just saving something that you otherwise would be, spending doesn't impact growth. It just means a bit of extra cash right now. That was not at that. It does not have to be allocated elsewhere. For all these reasons, cash is its own consideration. So consider this. Does this this decision bring about a gain in cash? If so, is it extra cash or is it cash that it's simply out re allocated from somewhere else to simply be in my bank account? And for my possession? Is it a continuous increase in cash or gain in cash? Or is does it just mean right now I am getting a bit more money or saving money over there . So that's your prose section. Is there a gain in cash again? What does it mean? How do I prove that? How sure am I? How much cash and where does that that cash sit? What is the difference that's being made again? Is it a saving or an increase? What does that cash mean for me? And then you looked at you. Look at the impact of that cash. If you have that extra cash, does that just mean more savings? Does that mean more operational expense opportunities? Does that mean that you pay off a debt somewhere? So look at that impact. If that cash ends up just being cash that sits there, the impact is actually quite low. It's a nice toe. Have we all like the idea of having more cash than we had before? But if it is not required, if it's not actually making an active impact on my business, either as a current, an immediate investment or to pay off debt than the impact might be quite low, that's not necessarily a bad thing. You just need to acknowledge it and then of course, you look at the likelihood that in fact, there is this gain in cash, so same as before. How probable is this to occur and make your decision on your scale of 1 to 3. Now an extra thing to note about the cash game once you've gone through all of your games. If cash reigns supreme, if cash is the Onley game or cash is the most assured gain and your other gains have a very low likelihood in very low impact that could be a red flag. Still go through your losses. Still, do the whole framework and consider things as a whole. But if cash is your only gain, that's something you want to examine in greater detail. And this is where the impact of that cash really makes a difference. Because cash, more often than not, a short term revenue is longer term. Profit margins are an ongoing benefit. Cash? Not necessarily. So So the impact of that cash, which is described from the pros by the pro sectional, the things that bring about that cash game and how you recognize it, what it means to your business. You want to look at that so If cash is your only gain, consider if this decision really brings about a positive, long standing impact on your business. 8. Gains Options: the fourth area of potential gains is gains in options. What capabilities do you have now that you did not have before? What options are available to you that were not available before? Ah, quick word To contrast, the options gain to the growth game, so growth is about your goals. How your business measures growth specifically, options is not necessarily about growth. It just means new possibilities that were not available to you before it might be brand new ideas that you hadn't even considered. It might be the ability to do things that you couldn't do before. It might just be a wider selection of options available to you. So not necessarily a bunch of you don't necessarily want to pursue all of those options, but it means that you have more to choose from. So the gain and options means a gain in capabilities in in alternatives. In new directions, you can take the company. It would increase or diminish your goals. It might fundamentally change your goals. Eso It's not strictly about growth. Necessarily, options is another word that in of itself doesn't mean anything concrete. The right option isn't necessarily something that you can pick up and hold in your hand, so you have to be very specific in your description. Here again, think of the imagery of painting a picture, creating a description that anybody who hears the description would automatically recognize . So how do you examine a growth in options? Look at this alternative for this decision that you are examining and ask yourself with this decision being made, what can I do afterwards that I cannot do currently that I could not do before and very importantly, describe why and how. So you tell the whole story about what is happening that is causing the increase in options , what that increasing options is, what it looks like, how you recognize it and how you describe it. So again, in your prose section we are talking about, we're creating an elaboration of what that increase that gain and options is. Tell a full story. Then, as always, look at the impact of the increase in options. So again, here's where options a little different from the other gains. Happiness is an obvious advantage. More happiness means better things. More growth means Beshir things, more cash, always in of itself on upside. But then you contextualize it. Options is not by default a positive word. So with the pros, that's why the pro section is so important. And then you really have to do some analysis for this impact for this quantitative assessment of how it will impact your business. This again is where I would allow if, when I'm doing this internally, I allow for negative numbers because the impact might might in fact be negative. So it's a way to say the options. There is an increasing options, but it's not necessarily a good thing. You could also just say Onley put a number in here if it is in fact, a positive gain. That's another way of reviewing the increasing options, because again we are looking at gains thes are upsides to making this decision. So what is the impact that it will have on your business? Now again, it doesn't necessarily mean that it directly impacts growth. It might, in fact, reassigned. Resource is from one place elsewhere, etcetera. But it means that complex Italy overall and over time this gain allows for options that weren't available before, which means that you can pursue things that you could not pursue before. It might still mean that there's an outgoing of cash or etcetera at this stage. So anyway, all that to say, be mindful of the impact. Is it a positive impact? How is this a gain? How is this a positive contribution to the business? And then, of course, the likelihood is always How likely is this to occur? This gain and options, how sure are we that it is going to come about? 9. Interlude: you now have a good view of all of the gains that this decision will bring to your business . You've got four sheets of paper or four different tables with a clear elaboration and description of what the gain is, how it impacts your business, how you will recognize it, and then the quantitative assessment for impact and likelihood. It's time to turn toe losses. As I mentioned in the introductory videos, every decision incurs a loss. Now, the point is that a loss is not by default and negative thing. If I purchase a new software solution, for example, there is an immediate loss in terms of outgoing money. If it's a subscription model, there is an ongoing loss in terms of outgoing money that doesn't make it a negative. It still means that I need to take into account the loss. So when you go into the losses, this is about having a full analysis of what you are investing into this decision or another way to look at it is what investments this decision requires doesn't mean that that loss is necessarily negative. So and sure, this next part of the course clearing your mind of the idea of a loss as a negative will think about that when we think about impact and when we elaborate on the loss. But just cause the loss isn't there doesn't automatically raise a red flag on Lee. How the loss impacts the business. Another important point about losses is timeframe. You must consider the time frame. If you make a decision today that incurs a loss today or tomorrow. You are fully aware of how that loss is happening, why it's happening. You've done an analysis of the upside. So what? The investment, the advantage that that investment brings. And you can context realize that and be, let's say, content with or a piece with or accepting of the loss again, the example of buying a software solution that shows that so I'm buying a software solution . I have a loss immediately because I'm paying money, but I have the software solution at the same time, so it old balances out in my head and in my heart. However, if I'm making a decision today that incurs a loss in the future six months from now, 12 months from now, that loss is going to weigh more heavily. Then if it happened today or tomorrow, the further in time, the losses from the moment that the decision was made than the heavier the loss fields. It's a little bit of psychology. It's kind of just the way the human brain works. It is much more difficult to accept a loss that is happening to you when you are so far removed from with the thought process that brought you to that loss or the acceptance of that loss or the rationalization of it, or potentially even the upside of that loss. So when you're examining the losses, bear that in mind further removed, the further removed in time. The loss occurs from when you make the decision than the harder it will be, too live with that loss. Now, this is true for you, the person making the decision. It is even more true for your employees, especially if they're not part of the decision. They will be affected by that loss further on in time, and they will not have been part of this whole analysis, so you can explain it to them and prepare them for the loss. But remember that it will be harder for them to to accept it as well. So throughout the losses, bear in mind the timeframe. How close in time does the loss occur to the decision being made? 10. Losses Money: the first category of losses is going to be the category of money. Now you'll remember in gains. We had two different categories for growth in cash in losses were putting money all together again. It's about it's about the way that you think about money when you're losing it as opposed to gaining it. And it's also about the way that your business thinks about money revenue versus cash. When it comes to losses, it's all just money. But that does mean at least three different considerations, which are cash flow, revenue and profits. Any other sorts of money measurements that your business has and requires also go into this analysis. But all businesses will have at least thes three cash flow revenue and profits. What is the loss in the money with this decision? Are you losing cash? And if so, is it happening now or later? Are you losing revenue? And if so, is it happening now or later? And are your profit margins decreasing? In addition to considering? Is this happening now or at a later date you want to consider? Is this loss a one off or is it ongoing? Does this mean lower profit margins forever. Does this mean lower revenue or a loss in revenue forever? Or does it mean for a short period and, of course, the same consideration with cash? Now, with cash, you would always hope that any loss would be a one off and close in time. But there are all sorts of circumstances in the world. You do have to ask yourself that question. So what is the loss in money in at least these three categories? If, as I say, your businesses other categories, then add those to this part of your examination. As always, you tell the story in the pros section of your table. What is the loss? What type of money, What application of money within your business or measurement of money within your business ? How much is the loss? You can certainly quantify a loss in in the money category. Is it happening now, or is it happening later? Isn't one offer on going and in both cases, what is causing the loss? Why is this loss happening? Does that loss in money mean a change to something else in your business? Would you have to reallocate money from one part of your business to another or other types of resource is these are all considerations that help with your impact analysis your quantitative analysis of the impact. So what is the impact of this loss of money? It could have a very low or no impact, depending on how much it is and what else that money is being used for. So the impact could be low or high. Determine what this loss of in money means for your business and set the impact. And then, of course, the likelihood. How likely is this loss and money to occur, especially based on what you've put in the pros? The likelihood that it is to happen now or later, or to be ongoing or one off so again, a number of from your scale in the likelihood box. 11. Losses Quality: your second area of los is quality. Now. If money was highly quantifiable, easy to put into a number, quality is the opposite extreme. It is a greatly vague, subjective term. What does quality mean? So the first thing you have to do is determine exactly that. What does quality mean for you? Think about things like in your product or service. What does quality mean when you promise quality? How do you describe that to a client? How do you point to something and say this is proof that we provide high quality in our product or service? Think about the way you communicate with the world. Lizzie. Your marketing areas, your customer experience. What does quality mean there? What does quality mean for the people that are interacting with your business? External to your business? Describe that exactly. Paint the picture so that everybody knows exactly what you mean by quality and internally as well. What does quality mean within the business? What is a quality working environment? What is quality in terms of how you onboard your impure employees, how you treat them, how you incentivize them? What does quality mean for you and your people in your business every single day. Have a concrete description of quality. Now examine what is loss in quality that happens with this decision. The point is that a decision brings about change, certainly a strategic decision. When there is change, it means a reallocation of resources and a reallocation of attention where you are putting your focus that heightens the risk of a loss and quality elsewhere. Now again, remember I said that a loss is not by default bad. So even if you do recognize that there is a loss in quality somewhere, examine what that is before you determined by default that it's a bad thing that will have a negative impact. Right? All of this out in that pro section. What are the losses in quality? What part of your business how do you recognize them? And what does it mean for your business afterwards? So once the quality has dropped in that particular area, what does that part of the business look like? Now, Saddle goes into your prose again, is always how you recognize the loss in quality. Why it will happen. This is why you need to have this concrete description of what quality is what it means to lose quality, how you know that quality has been lost and what the end picture is. So if you could describe quality and then you know there's a decrease in quality, how do you read? Describe that part of your business after that decrease. That's why you have to examine this and determine 12 or three in your impact box. And then, of course, the likelihood. How likely is this loss in quality to occur? It's something that could occur, perhaps, but you think you can mitigate against it, so maybe you give it a low probability. But going through this exercise has allowed you to established that there is that risk and so we can do other things in this decision to mitigate that risk and try to reduce the probability or the likelihood of this loss in quality or there's nothing we can do about it . We know that this loss in quality is going to happen, and so it is a three again. This is where the pros and the impact are important because if the impact is low, that three is not quite so scary. So you're quantitative analysis again, in your likelihood 12. Losses Time: and the third category for loss is time. What does time mean in your business? That's the first thing to determine what are the deadlines that exist in your business for all parts of the business, the deadlines you come up against for old, different areas of running in managing your business. Where did the deadlines themselves come from? Are they your deadlines? Are they imposed externally? Are the client expectation deadlines? What happens if the deadlines are not met? So how set in stone? Our they understand how time works within your organization within your business and then where you see that time happening, Then you can examine what a loss in time means. So loss in time yes, can mean wasted time. But the point is that wasted time means a los an output or a change in output. Our deadlines being pushed further out. Does this reallocate hours, people hours. So the time that people are working on things to those have to be do those hours have to be allocated elsewhere. And what does that mean for those other projects? Everything still has to happen. So the time within which that is happening how are you losing time with this decision. Who loses the time? Is it your customers? Is it a deadline that impacts them? Is that your employees? Is there time being changed? Are they losing time and having tighter deadlines, longer deadlines? How does it affect them? And their work? Is it for business management? Is it investors who is impacted by this loss of time? Also, it's worth considering. Is this person or these people also impacted by the gains that come about with this decision? And, as always, is this happening now as a one off, or does this actually change deadlines going forward? Is this an ongoing loss of time or change in the way time is considered in your organization? So all of this goes into your prose section what time means within your company, how deadlines are determined, how important they are and how missing them affects your business, and then what the loss in time is as a result of this decision being made, How you recognize it, what it means, what are the consequences of that loss in time for everybody involved, as always, then a number in your impact. So again, we're thinking of what are those consequences Now we can quantitatively determine that and put a number here to say this is the impact of this loss in time And of course, the likelihood. So, with this decision, this is how sure we are that the this loss in time will in fact occur. So it's always pros number number. 13. Bringing it all together: Now you know all of your gains. You know all of your losses. How do you bring all of this together? How What do you do with all the analysis that you've done so far for your project? You might be doing this on your own, and that's fine in your working environment. As I said before, ideally, you have done this with a group of people, either all together in one room or you've split people out to work on this on their own and then come back to compare results. And that's where we're starting now with the comparison, compare and contrast. And you do that by looking at the numbers. So the first thing you want to do is look at all of the number evaluations. First of all, where are their large discrepancies? Where are you showing certain numbers and other people showing different numbers? Where have some people put one's versus threes in the same box in the same consideration? Look at those discrepancies and discuss. Why do some people think that this has an impact of one and others of three or vice versa and same thing with likelihood? So use the numbers to determine what to discuss first and to understand why you have such different points of view about those particular factors. Also, look at the middle ground. Do you have a lot of number twos? If you're using a 123 scale, two is right in the middle. If you've got a lot of twos, that might be a sign of this being a bad alternative, not by default. But you want to discuss those twos. Why is there so much middle of the ground? Is it because people are not committing one way or another? Is it because people generally don't have enough information to say? Or is it because everybody feels lukewarm about every single thing on this list if you're using a 1 to 5 scale than the threes or what you would look at? So the point is that middle number if you have a lot of those showing up discussed, those use the pros to have this discussion. So when you look at the numbers and then you want to qualify, why you've put certain numbers there and why somebody else has used a different number. That's when you have her back to the pros and now you're comparing what you have in that pro section. Are we considering gains in the same way? Why do we think they will have a different impact? Why do we think their likelihood is different? What drove you to put a certain number in there and somebody else to do a different number ? Well, that will be explained by what's in the pros. Have a lively discussion with this debate. Talk about why one thing rather than another ask a lot of questions. So as you're going through this instead of saying that So you put a one there, I put a three. You're wrong. Asked. Why did you put a three? Why do you think that is likely to happen? What do you think will bring about that circumstance? How do you describe the consequence of this? So ask a lot of questions to understand, relay all the points of view and to see where maybe somebody is considered something that you haven't always seeing it in a different light because of their position or their role in the company or the resources to which they have access. There are a lot of different things that come into a strategic decision, so allow for that discussion that accounts for all those different factors. Once you can take it as a whole, everybody agrees. Everybody's on the same page in terms of what has gained and lost and how that impacts the business. Then you can say, I know exactly how this decision is going to impact us. I know what the gains are. I know what the losses are in a making uninformed decision. Is it a final decision? No, no decision ever is final. You will come back and review it. Something else will happen further down the line that will change the decisions that you've made today. That's fine. Go back to all this evaluation that you've done here when something changes or you realize that you need to bring about another change. Start with all the work you did originally. So you've got all the pros. You can come back and look through that, and that can be your starting point for the next stage of the decision. Whatever that might occur. Three months, three years. If you keep this material, it still will give you a basis for discussion. So you're not starting from scratch every single time, and thus you have a decision 14. Implement: Congratulations. The decision making part of your efforts is over. That is the entire framework. However, your work is not over. Remember at the the stages of a decision video, Right at the beginning, we looked at the four stages of decisions. We have been focused on Stage three. This entire course, we've been stuck in stage three. Now comes stage four, which is implementation. Commit to the change. Commit to the decision. Remember that what you are doing, especially with a strategic decision, is going to be disruptive to multiple people. You want to communicate very clearly what the change is a note on communicating the change . It is not about walking into a room full of expectant people in saying we're changing everything. This is what's going to happen from now on. It is about walking into that room and saying This is what we expect from this business. These are our goals. The way we're going to achieve them is by doing these things. You can do that whole conversation and presentation without ever in fact, even using the word change, that's a challenge to you. But it is possible you're not talking about what was before and what is now you're just talking about what is now what is happening. Going forward. What's changing doesn't matter as much as what is going to happen and why. Why it matters why that will be an improvement for everybody. So that's a note on communicating the change. Be clear, however, about the losses and about the gains. Manage expectations for everybody involved. Let them know what is going to come in the immediate and further up the road. You've done the analysis, you know what to expect. Communicate that with your team and give them ways to communicate back to you as they go through this experience. 15. What is Decision Making: good decision making is essential to business success. What decision making is is very simply determining what is the course of the business, especially at the strategic level. You're making decisions about things that are going to change, how your business works and everything that happens next. The reason decision making is difficult is because it is a complex situation, meaning that there are a lot of moving parts and there are many. Many unknowns will be make a decision today. That decision is going to have ramifications across our business, some of which we will not have predicted. Nor do we know what the future holds. So we don't really know how that decision today is going to impact our future or be impacted by the future. These other reasons why decision making is difficult. What I have learned is that to make a sound decision and to keep control over that future, you have to focus that decision only on the things that you can in fact control. And the more you understand about that, then the easier it is to manage that unpredictability because you've got all the information and you can update that decision. I e. make the next decision much more easily now. I ran a small business and we had to make decisions all the time about the course of that business, everything from hiring decisions, markets to pursue, how to develop our product, how to manage our team, and so on and so forth. But where it really hit home was when I had a slightly more outside view, but I was still involved, and that was with my clients as a software company. Our clients were for the company. Still are, of course, large Corporates, for the most part, and we were selling an enterprise solution, meaning that my clients had to write business cases to present to their CFO or senior management in order to get approval to roll out this whole new enterprise product. I would help my clients right those business cases, I would get involved in doing that. I could give them the product expertise, the support expertise that they needed to fill in those business cases. So in other words, I got the opportunity to get very involved, certainly for a larger clients in more complex situations, and I could see how they were going to be judged their business cases on their decisions were going to be judged on so many things that we're effectively outside of their control. The decision making framework that I developed in response to that is bringing together best practices that already exists. And based on my experience, what I've learned in studying decision making and problem solving, as I say, the biggest practices that are out there into a simple framework that allows the decision maker you, in this case to focus on the things you can control. And because of that, because you've packaged everything you can control, it should make you more comfortable with the things that you can't. Because once you've got the framework in place and once you've got the approach in mind, you know how to consider all of those ramifications than it is also easier to adapt for those changes that you could not have predicted. We don't know what the future holds. We have to continuously make decisions, and because we don't know what the future holds, it is impossible to know all of the long term ramifications of that decision. But by focusing on the areas you can control and by knowing how to read those areas of business, how to interpret them, how to utilize that information. You can keep good control over your decisions. That's what this framework will do for you. 16. Outro: all right. My delightful and dedicated decision makers. Thank you for your time and for fallings old through this course. But of course, you have a project on this course. So take the decision that we determined right at the beginning of strategic decision riel fictional, invented hypothetical, a decision from the past. Whatever it is that you decided and go through this full framework for that particular decision, how has this analysis changed? The way you view the decision, how has the analysis changed the way you consider options for the decision. What do you know now that you did not know before or didn't expect before? How are you seeing your business differently? Has this highlighted areas of your business that you had not considered or underappreciated or didn't think would be affected by this decision? In particular? What is the new paradigm you can bring to this whole discussion and situation now that you've done the framework and how can you use the framework going forward? So go through the project, fill it in, go through. The analysis is I say, get somebody else involved talking about it out loud. Having that brainstorming element will be very helpful to the exercise as a whole. Don't be shy. And don't be a stranger. Send me any questions you have. I will be happy to address those and even add lectures as necessary to give more contacts to any part of this course. You can see my full profile here on skill share to see more about my background and experience as well as the other courses that I am teaching here again. I thank you for your time. I thank you for falling. May I hope to see you out of future course. And I hope to hear a lot about your project. Thank you and bye.