Decision Making in Tough Environments
Right now, many decisions faced are unprecedented; there’s no history to evaluate them, and there’s no clear path forward.
Last week, Professor George Wu of Booth School of Business led Polsky’s Small Business Bootcamp: Decision Making in Tough Environments. He began the session by introducing the ABCs, a framework to help think about choices clearly with consistency.
The ABCs stand for: Alternatives, Beliefs, and Consequences.
Alternatives: Identify and create options
- Be creative! Don’t generate narrow alternatives. Come up with a wide variety of options for you and your business.
Beliefs: Identify the critical uncertainties
- Think about what you want resolved (even if you can’t get the answers) so you can gain clarity about the things you want to know.
Consequences: Identify your objectives
- What do you want?
This checklist ensures that all major elements of the decision have been thought through. By gaining clarity, you eliminate any confusion or stress and instead become confident in your conclusion.
Business’s ground state is uncertainty, so you need to figure out the best way to cope. Most people deal with uncertainty in decision making by waiting, but that’s rarely the best course, according to Wu. To decide whether waiting’s worth it, ask these two questions: “Can I wait?” and “Should I wait?” Articulate for both these questions the costs and benefits of delaying your choice.
Also consider the long-term and short-term tradeoffs. In this Covid-19 world, think about how the decision affects the future. How does the decision affect you right now, in a time of crisis? How about during a period of cautious recovery? What about when things are back to normal?
It’s easy to choose the wrong opportunity, Wu said. Though often ignored, opportunity costs can guide your choices. Professor Wu defined opportunity costs as, “The ‘cost’ incurred by not enjoying the benefit associated with the best alternative choice.”
If you pursue one opportunity, what resources, (time, people, money) do you divert from others that might present themselves in the future?
The Polsky Center’s virtual Small Business Bootcamp was made possible through a partnership with the Rustandy Center for Social Sector Innovation and the Office of Civic Engagement at the University of Chicago, on behalf of a larger coalition of University groups and partners.
// We will be recapping the Bootcamp all week, but all the sessions were recorded and can be found online, here.
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