By Steve Sinek
Is it an athlete, business executive, or marketer? It might sound a bit basic, but in today’s competitive world, decisions need to be made based on measurements.
Measurement allows people to see trends in past performance, predict the future, understand competitors, and make better decisions.
Philosophically, decision-making is based on a series of conditions:
Insight – understanding what you know about the problem and what is unknown.
Trust – believing your decision will be supported by facts.
Evaluation – having evidence to back your decision.
Chance – you could be wrong about your decision and end up making mistakes.
But sometimes situations, experiences, or factors are uncertain, and some are just too far away, even if you have the information to measure. At that point, somebody else—not necessarily you—will need to make the decision.
How do you ensure your decisions are based on accurate measurements? In the spirit of making tough choices, here are a few steps.
1. Know Why
Why are you making decisions? Is it because you need to win a sales pitch? Because you have a marketing plan to shape the community? Because you have to get products in new stores? Why?
Typically, reasons are formulated by paying attention to other people’s activities—by analyzing how someone else’s behavior compares to yours.
The wider the range of possible factors, the better the decision-making process. For example, if you want to reduce costs, you may look at numbers related to customer lifetime value and the customer’s return on investment. Alternatively, if you’re interested in adding new customers, you may look at information from loyalty programs.
In terms of consumer products, marketing materials, packaging, and other insights should help you make smarter decisions.
2. Measure by the Numbers
The right benchmark is the one that tells you exactly what to measure.
Three questions to ask yourself about your industry are:
How is your industry competing?
What are the parameters of competition?
What are the outliers on that list?
To answer these questions, you need to identify the real indicators of your industry and compare them to one another. A newspaper article about a product launch or market analysis about people using your products might provide valuable information, but are they the same ones that define competitive trends?
Measurement is easy when compared to making decisions for a typical business. Rather than trying to figure out the optimal frequency of spending on customer acquisition and the size of a marketing budget, you can easily track information like frequency and ROI.
3. Assess Results
What conclusions can you draw from your monitoring data?
In sports, for example, your game-planning will invariably involve understanding what works for each team. You can study match-ups, combine your information, and decide how to place your resources. You also need to analyze game-day results so you can determine the best measures of success. That could be something like the ratio of goals to penalties in one game versus another. You might even look at the frequency of crucial plays by certain players.
Doing that analysis could cause you to alter your decision-making processes. You might decide to sell certain products or services instead of others. Or perhaps you now make more strategic decisions based on statistics.
For example, did you know that some players are more effective in soccer than others? Or that it takes a person with a Midas touch to find the winning ball in tight situations? In business, some entrepreneurs may be better at identifying key markets than others. Other entrepreneurs might have an unusually difficult time approaching customers.
It’s very tempting to put blinders on and disregard market indicators, but they are indicators that will help you become a better decision-maker.
4. Relate to Your Customers
Making decisions that fit the needs of your customers is another important way to make better decisions. When it comes to expanding your operations, whether it’s more store locations or streamlining your workflow, good quality examples are customer surveys. Making decisions based on customer feedback and not hindsight is a far more accurate measurement of success. You might use market research to identify competitive dynamics or new products and services.
Setting aside the obvious—because you should never avoid the obvious—making better decisions is a process. One that requires you to observe and understand data.
This post originally appeared on Baboom