Guest Writer: Steve Soars, VP of Programs at Ardent Mentoring.
Ardent Mentoring’s experience shows that enterprises can succeed or fail in critical moments in the early stages of growth. We believe that mentoring can play a vital role during these moments to help an entrepreneur navigate through difficult decisions. In this video, Sean Lambert, President of YWAM San Diego/Baja, shares how his mentoring relationship with Ardent’s Co-Founder, Chris Crane, helped shape the success of his enterprise.
To learn more about wise decision-making in your enterprise, below is an excerpt from Chris Crane and Lloyd Reeb’s new book, The Social Entrepreneur: Seasoned Advice to Multiply Your Impact 100x. If you would like to read this full chapter with all 11 suggestions on how to make wise decisions, please e-mail [email protected] and we will send it to you.
CHAPTER 15: WISE DECISION MAKING
Here is an old joke: A young business executive says to an older business executive, “How is it that you always make good decisions?” The seasoned executive replies, “By making many bad decisions when I was younger.”
Making wise decisions and implementing them well is almost always the difference between succeeding and failing. You will make bad decisions—every executive does. By providing proven methods for making wise decisions, we hope to minimize those bad decisions, especially those big ones. First and foremost, do your homework, take your thinking to the Lord for His divine guidance, and then do what He tells you. So where’s a good place to start doing your homework?
- PROS AND CONS
Benjamin Franklin is often credited with developing this method of taking a blank piece of paper. He makes a vertical line separating the two sides of the page. Then he lists the positive reasons for a particular decision on one side and negatives on the other side. Although they have been around for a long time and almost everybody uses them, pros and cons lists are an excellent starting point.
Sometimes the cons are so overwhelming that a compelling case is made not to make the decision. In this case, you should obtain advice from other people regarding the pros and cons that they see. Then take the decision to the Lord in prayer. Be sure to seek the Lord earnestly so you desire His will more than your own as you listen for His answer. If that prayer time gives you peace about not pursuing this decision, you have saved time and avoided a bad decision.
- RISK-TO-REWARD RATIO
What is the upside and downside of a particular decision? Always consider the risk-to-reward ratio of every major decision.
It is unfortunately common for entrepreneurs to make decisions with much less upside than downside.
They see an opportunity that looks good and pursue it before thinking through possible negative ramifications. Perhaps they made a similar decision in the past that worked out well. However, maybe they did not not consider how circumstances are now different.
Carefully think through what could go wrong, and then put a numerical value on how things going wrong could negatively impact your organization. Then think of what could go right and put a numerical value on how things could positively impact your organization. This relatively fast and easy tool helps avoid bad decisions. It will also highlight some risks that could be mitigated if you go forward.
An example is a nonprofit leader I know who started a major new initiative, thinking it would result in benefiting 30 percent more people. However, the leader was focused on the upside and did not carefully consider that cost overruns. This could result in 50 percent fewer people being benefited due to the new initiative requiring far greater funding. This resulted in money being taken away from existing successful programs. The new initiative also took away a great deal of management time. It got bogged down with unanticipated problems for several years.
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- STRATEGIC PLANNING
The strategic plan, in full accord with your mission, is your plumb line to guide you as to which current initiatives you should continue or drop. Embark only on new initiatives that are clearly in accordance with your strategic plan. Social entrepreneurs often love new ideas and fall into the trap of pursuing exciting initiatives. An excellent strategic plan with mediocre execution will often yield better results than a mediocre strategic plan with excellent execution.
Many excellent strategic planning models are available. For example, Professor Michael Porter wrote the article “What Is Strategy?” for Harvard Business Review, and it is an excellent resource to inform your strategic planning process. This article clarified and simplified strategic planning for Chris. We encourage you to work with your mentors, board members, and executives most experienced in strategic planning to choose the optimum model for your enterprise. You can also gain much from critiques of your strategic plan. Working with a consultant who specializes in strategic planning can be very helpful. Make the investment of time and money to develop a good strategic plan that includes metrics to measure your success. Be sure to research trends in your field and obtain ample input from outside experts and those you serve.
It is the CEO/ED’s responsibility to develop a strategic plan. The board of directors is responsible for critiquing the strategic plan, requesting changes to it, and when satisfactorily revised, approving the strategic plan.
- GET INSIGHTS FROM WISE OUTSIDE SOURCES
To help you gain insights from wise outside sources, we encourage you to present your business issues to your mentors or a trusted group of advisors in a systematic way. This could be a personal board of directors or an accountability group that has members with significant life experience.
As with all important decisions, consult one or more of your mentors for wisdom. (Please refer to our advice on choosing great mentors in Chapter 11.) Time and again, mentors have been invaluable to Lloyd and Chris in reaching good decisions.
- WISDOM COMES FROM THE LORD
The most important step you can take in making wise decisions is to pray and earnestly seek the Lord’s guidance. If it is a particularly big decision, praying and fasting for a day or two or three often yields the greatest clarity on God’s direction.
Sometimes social entrepreneurs shortchange themselves by focusing only on the analysis done by themselves and their advisors. Although such analysis is important, the Lord’s guidance must be sought to arrive at the best decision. The omniscient Creator of the universe, who loves you dearly, is always ready and delighted to guide you. For your sake and the sake of those you serve, seek the Lord.
James 1:5 tells us,
“If any of you lacks wisdom, you should ask God, who gives generously to all without finding fault, and it will be given to you.”