BENCHMARKING: One Tough Decision at a Time

Someone once said, “Hindsight is much more accurate than foresight, but a lot less useful.”
 
Have you ever felt that you didn’t have enough information from your accounting system when faced with making a difficult decision or preparing the upcoming year’s budget? Perhaps the information from previous years was too inconsistent to identify trends or make a correct analysis of the situation. Maybe you were thinking of buying a new piece of equipment – a mini-excavator or a tracked loader – but you weren’t sure if it would pay for itself.    

Labor shortages have lessened somewhat as the economy has softened. You may have thought about hiring a new supervisor, but then thought, “What if the bottom falls out of the economy?” Could you justify a new position? Should you take the risk? If you aspire to be an entrepreneur, then welcome to the club. You pay your dues one tough decision at a time.

IDENTIFYING PATTERNS. Generals rarely have enough information when making tough decisions. Often, they make life or death decisions with minimal information to work with. I’m reminded of Dwight D. Eisenhower and D-Day. Gen. Eisenhower and his staff agonized for months as they painstakingly planned the Allies’ invasion of France during World War II. In the end, success or failure hinged upon the weather.
 
Leaders never have enough data and the data they have is either incomplete or not 100 percent reliable. Great leaders understand this and appreciate the value of timely, accurate and reliable data. Still they manage to make good decisions. Somehow they are able to step back, analyze the data they do have and identify patterns. This is a skill that is important to develop.

PARALYSIS OF ANALYSIS. Many leaders (leader may be the wrong term) freeze up when faced with tough decisions. Others, like Gen. George McClellan, one-time head of the Union Army during the Civil War, get caught up in endless analysis. I call this the “paralysis of analysis.” The worst offenders simply procrastinate. Often, any decision is better than no decision at all. While training as a 2nd lieutenant in the U.S. Marine Corps, our instructors taught us that if we were ever caught in an ambush, not to “hunker down.” That was certain death and what the enemy had counted on. It was better to immediately counter-attack – that was “un”certain death. I guess this is one of the few times when uncertainty is better than certainty.

Here are some tips when faced with tough decisions.

• Remember, experience is the best teacher – preferably someone else’s.
• Collect as much data as you can.
• Use industry benchmarks and your own historical data if available.
• Plan. Remember, if you fail to plan, you are planning to fail.
• Focus on the big picture and develop your end-game strategy.
• Read. Leaders are readers.
• Network. Be proactive. Join associations. Participate. Take the initiative to seek out people who are valuable resources.

PULL THE TRIGGER. Being an entrepreneur is not for the faint of heart. You will have to make some tough decisions. This may be especially true during the current economic cycle. Many of my clients are currently making unpleasant decisions regarding personnel, pricing and cutbacks.
 
Remember, you will never have complete or perfect data (hindsight) to help you make decisions. But don’t let that stop you. Entrepreneurs are rewarded for seeing patterns and opportunities that no one else sees (foresight) and taking action accordingly. LL

Jim Huston is president of J.R. Huston Enterprises, a Denver-based green industry consulting firm. Reach him at 800/451-5588, benchmarking@gie.net or www.jrhuston.biz.