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Small Business Decision Making : Does Your Business have the BEST opportunity to succeed?

Decision-making is a fine art in small business.

Getting the right balance between strategic, tactical and operational decisions will have your business powering forward. Finding the right balance takes thoughtful experimentation, learning and adjustment. Knowing the symptoms that emerge when your decision-making is out of kilter will have you finding the right balance sooner.

The first step to finding the right balance is to go back to basics and examine the 3 levels of decision-making. It will help you determine which areas need more and less effort to release the potential in your business.

The 3 Levels of Decision-making

There are 3 levels of decision-making that need to take place in a business for it to operate at its full potential. The three levels are:

  • Strategic
  • Tactical
  • Operational

The E-myth Revisited (see footnote) is renown for referring to these three levels as 'The Leader', 'The Business Manager' and 'The Technician'. The three levels are not new to business and have been around a lot longer than the E-myth, yet they continue to be one of the central challenges in running a business.

Many of the problems we face as business owners are the result of not having the right mix between the levels.

Get that mix right and your will discover you will have far more choice and flexibility in the:

  • Hours you work
  • Type of work you do
  • Type of people you employ
  • Quality of your work
  • Clients you service
  • Profitability of your business

Getting the mix of decision-making right is one of the key factors that will determine your ability to operate proactively rather than reactively in the business.

Looking at the 3 Levels in Detail

Strategic Decisions - 'What?'

Strategic decisions deal with the big picture of your business. The focus of strategic decisions is typically external to the business and usually future oriented. Strategic decision-making creates the forward thrust in the business.

It includes decisions about:

  • What business are you in?
  • What is your vision for the business?
  • What's your business' identity?
  • What do you stand for?
  • Which direction is the business headed?
  • How will the business compete?

Corporations often capture their overall business strategy in a "Statement of Intent" and it's an excellent term for describing what strategic decision-making is. Too often people confuse strategic decisions with tactical decisions and fail to really examine the big picture. It can lead to stagnation in the business and an inability to move forward.

Tactical Decisions - 'How?'

Tactical decisions involve the establishment of key initiatives to achieve the overall strategy. For example, if you have decided to be the Number 1 provider in your market (a strategic decision) then you will develop tactics (e.g. implement a marketing system, increase number of therapists) to achieve that outcome. In a small business you may have 4 or 5 key tactics that you are going to use to achieve your overall strategy.

Again this layer of decision-making can sometimes be overlooked yet it is the glue that creates a strong connection between your long-term vision and your day-to-day activities. Tactical decision-making is the domain of 'mission' statements.

Think in terms of the battlefields from which the term has emerged. The overall strategy, that is, what the army is there to do, is to win the war. Then you have a number of 'missions' you send troops on, preferably diplomatic ones, the cumulative effect of which is intended to win the war.

Operational Decisions - 'How will we deploy resources?'

Operational decisions determine how activities actually get done. They are the 'grass roots' decisions about who is going to do what and when. It includes:

  • How will we spend our money this month?
  • How will we service that client?
  • What is our procedure for delivering an order?
  • Who will be doing quality control?

If you are making decisions involving processes and procedures they are usually operational decisions. Operational decisions are often made in 'real time' and are the result of needing to make quick adjustments or change to achieve the desired outcome.

Is this working 'on' or 'in' your business?

By now the phrase "working 'on' rather than 'in' your business" has possibly come to mind. It's a phrase that is bantered around a lot but not always well understood. The strongest indicator of you working 'on' your business is that planning activities are being done. If you're in the process of meeting a client's needs or business administration then you are working 'in' the business. Now here's the interesting bit: Planning happens at all three levels of decision-making, so there is the opportunity to work 'on' your business at all three levels. Not only that, it needs to happen at all three levels. Why?

Do any of the following statements sound familiar to you?

  • "I work hard but I just don't seem to get anywhere"
  • "I feel like I've got to constantly spoon feed staff to keep them going"
  • "No one is as passionate about my business as I am"
  • "I want to get more balance in my life but just can't walk away from the business"
  • "It's getting hard to get out of bed in the morning"

Each of these statements describes a symptom of what occurs when strategic decision-making is lacking. They deal with issues of motivation and direction. Maybe some of these statements are also familiar?

  • "We've always been a bit haphazard with sales, so I'm sure there are opportunities we've missed"
  • "So many opportunities, so little time!"
  • "We come up with great ideas but have trouble seeing them through to implementation"

This is what happens when the business lacks tactical and operational decision-making. The big picture creativity needs to be grounded in day-to-day doing.

Find Your Balance

The right 'mix' of decision-making for your business will depend on context. If you want to improve your business then start experimenting, on paper, with the levels of decision-making that don't come naturally to you or you think are lacking. Some interesting insights usually come up that can have you seeing your business in a fresh light.

*Reference: The E-myth Revisited, Michael Gerber, 1995 HarperCollins.

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