Operating a business is all about making decisions. It’s about deciding what to do, how to do it, and even what not to do. The decisions range from the very large, like executives deciding what strategy to employ, to the seemingly very small, like how the receptionist greets visitors and who she should communicate with. Even in small businesses there are countless decisions made each day that compound over time to move your busines towards or away from its goals. It’s like the miracle of compound interest.
To use another compounding metaphor, consider the Boston Marathon. Like most marathons the Boston Marathon is a foot race run over slightly more than 26 miles. What separates the first, second and third place finishers? Amazingly, it is only seconds, not minutes. In the 2009 race the first place finisher ran the race less than 1% faster than the third place finisher, yet the prize money for first place ($150,000) was nearly four times what the third place finisher received ($40,000).
Which of the tens of thousands of strides required to complete the Boston Marathon was the most important for the winner? Of course, they were all important. Each stride compounded over the 26 miles to deliver the winning performance.
In running a business, some decisions are clearly more important than others. But all decisions made in a business compound to move your firm towards, or away from, its strategic goals. The decisions the receptionist, warehouse worker, sales representative, R&D technician, and all those high paid vice presidents make every day affect whether your firm is creating superior customer value profitably. But are they making their decisions in a fashion that moves the firm towards its goals?
How do people like you and
your employees make decisions? They rely on the organization’s culture for
guidance on how to make all those decision, large and small alike.