How to Make Good Business Decisions

J.C. Baker

• Publisher: Business Expert Press
• Year: 2021
• Print ISBN: 9781637420645
• eBook ISBN: 9781637420652
• Topic: Business
• Subtopic: Decision Making
• Index: Business

How to Make Good Business Decisions is a book to assist people with thoughts surrounding essential aspects of finances and business.

Much of the decision-making for people derives from experiences and exposure. The ability to see multiple perspectives allows for a higher level of understanding, increasing common sense perception. The common belief for the concept of common sense is a general acceptance as a usual occurrence or stance among people. However, reality demonstrates that people view topics very differently. Technology and varying media outlets create many avenues for information leading to conflicting positions and confusion.

This book provides a straightforward method of removing distortions among education, business practices, finances, and ownership. There are countless variables, obstacles, and barriers inherent in life's journey, and operating with common sense will alleviate many issues.

However, exposure to information, experiences, and education redefines what is "common." Readers will learn how their thoughts, viewpoints, and focus shape their responses and navigation through important decision-making realities. This book serves as a tool for increasing decision-making.

CHAPTER 1

Introduction

How to Make Good Business Decisions is a book to assist people with thoughts surrounding essential aspects of a business. The premise of the book covers common sense or basic sense approaches to all decision-making matters. Conceptually, common or basic sense is simple. I submit that common sense is a complicated philosophy owing to the many layers of personal learning and influence. What is common to one individual can vary significantly to another person. This is undoubtedly the reality in business. A good business decision for a venture capital group is measured differently from that of a nonaccredited investor, even if the criteria for investing are similar. The venture group may weigh the impact on the entire portfolio of investments and other investments they are considering. A nonaccredited investor may weigh the ability to leverage a relationship or participate in an industry of interest.

Much of the decision making for people derives from experiences and external exposure. The ability to see multiple perspectives allows for a higher level of understanding, increasing the perception of common sense. The standard belief for the concept of common sense is a general acceptance as a usual occurrence or stance among a group of people. However, reality demonstrates that people view topics very differently. In today’s climate, there are many avenues for information leading to conflicting positions and confusion. This book provides a straightforward method of removing distortions among education, business practices, finances, and ownership. There are countless variables, obstacles, and barriers inherent in the journey of life, and operating with a strong philosophical base alleviates many issues. However, exposure to information, experiences, and education redefines what is “common” and constitutes good decision making. This work highlights how people’s thoughts, viewpoints, and focus shape their responses and navigation through important decision-making realities. This book serves as a tool for increasing the essential business acumen for all people.

The decision-making process is not an in-the-moment action but the culmination of continued thought over a life-span. Family dynamics, educational training, past experiences, personal characteristics, responsibility level, and outcome expectations are variables attached to decision making. These characteristics are the same for a person’s baseline for common- or basic sense. The aspects of decision making explored in this work are not connected to business ethics but to prevailing thoughts surrounding basic concepts. If a business owner seeks to make a budgetary decision for a company, this decision derives from the individual’s perspective about money, risk tolerance, impact to the company, retribution back to the decision maker, and the obligation to the company. Each one of these factors carries the weight of previous perspective programming for the individual.

Many business owners and division leaders experience failure due to the inability to make quick, simple, and sound decisions. The commonor basic sense aspects of decision making increase with repetition, information, knowledge, and understanding. Elements such as fear, ignorance, pressure, and hope are factors of poor decision making. Therefore, good decision making for business owners comes from intentional thought and decision practice. The sum of progress and growth extends from the ability to make and manage decisions at the fundamental level. Just as the case in athletics, acting, or the arts, the phrase perfect practice makes perfect applies to decision making. Decision making is a skill that has to be practiced, measured, and analyzed. The fundamentals of good decision making are a product of practice in a particular realm. As a Business Doctor and the CEO of a global consulting firm, I witness the errors and the genius of business owners around the world. One common aspect is that barriers, obstacles, and decision making intertwine the daily operations of companies and small businesses alike.

Fundamentally, making good decisions is the most critical element for sustainability and longevity. To speed up the process of good decision making is the product of common sense leaning on muscle memory from practice, problem recognition, and the understanding of the range of results. Making a future decision is directly connected to past programming. A healthy knowledge of previous choices, coupled with well-thought-of goals, sets the occasion for sound decision making. Recognizing how you think and how those thoughts connect to other aspects is a significant step in increasing decision-making skills.

Chapter 2, Train of Thought, begins the foundation for thought throughout the book. Aspects such as logic, linear reasoning, free thought, meta-cognition, and programmed thought are outlined. Challenging the basis of the origin of a person’s thinking process sets the occasion for understanding. Discovering the rationale as to how you process your thoughts and interpret experiences is necessary for viewing decisions in the proper perspective. Establishing a core concept, primary product, or generating ideas, processes, and services extend from how information and thoughts are processed. The train of thought is a natural course of thinking governing the overall decision making for a person.

Chapter 3, Straight A’s, explains how all aspects of accomplishment are the product of a process. The common-sense aspect to realize is how to recognize and execute the appropriate procedure for the situation. With an educational analogy, the imagery of process implementation assists with successful thinking. The following chapter Free T-Shirt, provides detailed insight into the concepts of opportunity cost and risk. In decision making, it is common to face “either this/or that” realities. It is also common for people to miss the trade-off associated with making choices. The financial analogy creates a picture of how the lack of forethought can be a substantial cost.

The H₂O chapter teaches the importance of flexibility, agility, and awareness. People struggle with every-day realities based on situations, surroundings, or circumstances. Having a mentality to adjust and the willingness to see varying perspectives bodes well for anyone seeking universal success regardless of climate. The Golden Rule chapter speaks to an enhanced version of how to interact with people. The common sense take-away is how to see each connected relationship from a different worldview increasing relational success. The price of low relationship building is more costly than any other tangible reality. Decision making increases once relational dynamics are understood and accepted.

The chapter entitled Mine or Yours outlines ownership and commitment. Commonly, boundaries of ownership are misconstrued and violated. The challenge in this chapter is to reflect on common thoughts surrounding ownership, governance, and responsibility. Following this is the chapter titled Interdependence. This chapter teaches the importance of understanding the universal law of interdependence among all things. It is common for people to believe that their efforts are individualized and primarily have a personal effect. An inclusive paradigm will lead to increased relational and personal success.

The final chapter, Why, is the culmination of how to measure every thought regarding decision making. The “why” of anything governs our position, perspectives, and perceptions. Asking this question surrounding all things increases understanding and wisdom, leading toward a more healthy and inclusive life.

Business owners and prospective owners face either life-changing or business-changing decisions daily. Working to get a business to market involves decisions in personal finances, career aspirations, family implications, and time management. Launching a new product includes decision making surrounding budget restraints, opportunity costs, employee welfare, branding considerations, and company sustainability. Each chapter contributes to the enhancement of increased decision making through intentional analysis of common sense.

CHAPTER 2

Train of Thought

Definition of Logic—The science of the formal principles of reasoning.

Synonyms—Intellection, reason, sense. (Dictionary.com)

Definition of Linear—Involving a single dimension. Of the first degree with respect to one or more variables.

Synonyms—Straight, direct. (Collins English Dictionary)

Definition of Meta-cognition—Higher-order thinking that enables understanding, analysis, and control of one’s cognitive processes, especially when engaged in learning.

Definition of Reason—Statement offered in explanation or justification. Rational ground or motive. Sufficient ground of explanation or of a logical defense. Thing that makes some fact intelligible.

Synonyms—Rationale, explanation. (Online Etymology Dictionary)

The definitions mentioned here create the framework for the goal of the book. Determining if a decision is a good or bad one stems from the perspective of what is logical, what are the reasons, and the string of actions leading up to the decision. The perception of a decision’s soundness connects to the rationale and the pre-thoughts of the decision maker. The initial challenge is to determine if people’s logic and justification are a product of individual creation, evolution, adaptation, or a planned purpose.

The train of thought exists as the linear thinking model a person employs in decision making. The train of thought does not begin during the moment of decision making but throughout time and connected with experiences, trauma, successes, comfort, and historical results. All these aspects contribute to the decision-making ability of a person, especially during intense decision-making scenarios. An individual’s consistent behaviors, personal bias, comfort, and the ramifications to the outcome combine creating the path for choice selection. A person must be conscious of their historical programming and current reality when making business decisions.

The historical programming comes from other related thinking patterns and should not be viewed as isolated choice making. A person’s train of thought interconnects with beliefs and views about their inherent and conscious decision-making style. Design thinking speaks to cognitive, strategic, and practical processes used in a multitude of contexts extended from natural to business operations. Divergent thinking is a method of thinking used to produce ideas by exploring many possible solutions in an uncoordinated manner. Design thinking is more calculated planning, while divergent thinking is an intentional creative process. Brainstorming includes aspects of both design and divergent thinking. The practice, procedure, method, tools, heuristics, and approach all provide the framework for identifying and solving problems needed for good decision making.¹

Weighing the benefits and the risks of a decision happens automatically in some cases and intentionally in others. The conscious decision-making process takes practice and purposeful integration into the train of thought. Ideation and meta-cognition serve as a precursor for good decision making and should be regarded as a premium in daily operations. Cognitive biases such as the hindsight bias, positive illusions, social exchange, and error management theory help bridge the paradox of why consistent variation in thinking style does not necessarily lead to similarly consistent differences in cognitive biases.² Different aspects of bias, unintentional thought, illusions, and thinking styles drive preferences of how to think compared to a person’s actual behaviors involving judgments and decisions.² This reality of decision making governs all choice execution, including business decisions.

The role of analytic thinking in comparison to a holistic thinking style compares linear view with worldviews. Holistic thinkers are more likely to perceive that multiple factors, instead of a single element, may contribute to the development of an event, encouraging them to consider both critical and less critical information. Analytic thinkers are affected mainly by the crucial factors in decision making, pointing the concentration of decision making to a focal point.³ An appointed leader or a business owner needs to demonstrate a sound knowledge of their thinking style to understand the ramifications of their decisions appropriately. Without mastery and comprehension of one’s thinking style, the consistency in decision making is lost, leaving the manifestation of decisions left to chance. Good decision making is not based on the outcome but the process to arrive at the result. The thinking process used determines the percentages of good decision making.

The thinking process of decision making should be revered over the “gut-feeling” or intuitiveness way of making decisions. People’s intuition is often incorrect, and it is often difficult for people to revise their thinking.⁴ This statement is not to say that instincts do not play a factor in decision making, but using an impulsive method of decision making as a primary tool leads to inconsistency and uncertainty. Good decision making is a perpetual act with reasoning to support the position. A business owner lives in the existence of trial and error because of the numerous variables inherent in the business climate. The thinking process prepares the business owner for the various obstacles allowing for a higher percentage of success in decision making. There are four principles common to many design-thinking approaches:

1. Observe and notice

2. Frame and reframe

3. Imagine and design

4. Make and experiment.⁴

The four principles provide a framework for actively outlining the parameters for conscious decision making. Design and divergent thinking processes benefit from the four principles as a holistic approach are utilized, and the practice of these principles sets the occasion for an established habit. The more a decision-making process is used, the quicker a decision can be made. Employing a process does not denote time delays or multiple decision-making stages. The overarching concept is to identify your process, bias, skillset, and culture while recognizing the ramifications, risks, and rewards of the decision at hand.

Automotive Thinking

For example, to illustrate this initial challenge, let us consider buying or leasing a vehicle. Some people believe that a smart financial decision is only purchasing a car in cash or paying off the vehicle through an aggressive purchase plan. Some people think that a vehicle should never be bought because it is a depreciating asset; therefore, leasing is a smarter decision. Some people do not have a definitive opinion on one side versus the other side. With the three given outcomes, how does someone determine which is a good or a bad decision? What is rational, logical, or common sense? The answer to if it is a good decision to buy a vehicle or not is “Yes” and “No.” The answer depends on a host of factors that ca...

Table of contents

• Cover
• Half-Title Page
• Title Page
• Copyright
• Description
• Contents
• Book Overview
• Chapter 1 Introduction
• Chapter 2 Train of Thought
• Chapter 3 Straight A’s
• Chapter 4 Free T-Shirt
• Chapter 5 H₂O
• Chapter 6 Golden Rule
• Chapter 7 Mine or Yours
• Chapter 8 Interdependence
• Chapter 9 Why
• Notes
• References
• About the Author
• Index
• Backcover