10 Secrets to Making Great Decisions

I worked with a vice-president of a major corporation who was a great decision maker.

"You make such good decisions. What's your secret?" I asked.

"First, I decide if I have a choice," he told me. "If not, I don't waste my time deciding."

That advice has often saved me from mulling over a fact of life that can't be changed. When I genuinely have a choice in a difficult leadership decision, I rely on ten helpful questions.

1. What are my options?

J.C. Cain, a distinguished doctor of Mayo Clinic, once told me, "A great diagnostician knows the most symptoms. Any practicing doctor can diagnose the common illnesses. At Mayo, we specialize in knowing and thus seeing what's not obvious." Similarly, those who know the most options see what's not obvious and make a better decision.

Robert McNamara, former president of Ford Motor Company, once asked an executive who brought him a decision, "What did you decide not to do?" He wanted to know that the person had thought of more than one way.

The secret in developing options is doing our thinking early. If we wait till the last minute, we don't have time. I've become so option-driven that my son, Fred, gave me an engraved sign: BUT on the other hand. Increased options increase our chance of being right.

2. Is this mutually beneficial?

Maxey Jarman, who built Genesco to become the world's third largest apparel company, was one of my mentors. He acquired many businesses as he built the corporation, and he would say, "Don't drive a bargain so hard that the other person becomes a loser." That creates a wedge in the relationship and generates retaliation.

Some decisions are difficult to make mutual. Several times, I've had to let an employee go. I agree with the chairman of a bank who called such moments "throw-up time." No effective executive I know enjoys firing people.

Yet many times, looking back, both the employee and I have seen it was the best thing that could have happened. Roger Hull, who was chairman of Mutual of New York, once said to me, "I've lived long enough to have people whom I fired come back and thank me for their termination." (I don't want to paint this too rosy; the hurt of being let go can last a long time.)

Harvard University commissioned a thirty-year study of successful CEOS. One common trait among them: altruism. I define altruism as this–"I give before I receive." That attitude makes for mutually beneficial and better decisions.

3. What's the risk?

Once in New York City, I looked out my hotel window and saw several teenagers walking an 18-inch ledge, 30 stories up, with no railing to grab. I couldn't look. These students hadn't calculated the risk and the reward.

This principle of calculating the risks is seen in the verse, "What good will it be for a man if he gains the whole world, yet forfeits his soul?" The benefits of temporary gain are offset by permanent loss.

I've heard some Christians confess things in a small group that they should have kept to themselves. I think they got a short-term reward–they felt better–but in the long run, their confession proved disastrous to relationships. The risk was too high.

To accurately assess the risk, we must know when enough is enough. A 27-year-old man I know, worth $3.5 million, recently ran across a business deal that promised to convert his present net worth into $25 million. He asked my advice.

"What can $25 million do for your family," I said, "that $3.5 million can't? It's too risky. You'll be jeopardizing your wife and children's security."

He gambled and lost. Fighting bankruptcy, he and his wife are laden with debt during the years they should be enjoying their small children.

Money isn't the only thing we need to say "enough" to. What about prestige, ministry, power?

4. Is it timely?

I once asked a successful executive in California what traits he wanted in his leaders.

"The trait I value most," he said, "is a sense of timing."

As Kenny Rogers sings, "You gotta know when to hold 'em, know when to fold 'em."

When making decisions, more leaders are late rather than early. I think that's due to our natural fear of making decisions. Whether starting a program or buying a stock, most of us tend to procrastinate.

Timing is an intuitive matter, so some leaders are better than others in sensing the right time. (This is a place where I ask for help.) But we can all develop our sense of timing by cultivating what a friend calls "disciplined imagination." That means taking the present facts and extending them into the future–what will be their relationship in the future?

Many problems in American industry can be traced to poor timing, which comes from not extending present facts into the future. We have a hard time creating even five-year plans for our organizations. Recently an acquaintance traveled to Japan to study that country's business practices–they're making 100-year business plans!

5. Do I have staying power?

When we make a decision, we need to follow it through the valleys until we get back to high ground. We need to make sure we have the emotional resolve to carry out our decisions even if they prove harder than we expect.

For example, some parents do not have the staying power to back up their decisions. This teaches their children to scream when they're small and rebel when they're older, knowing their parents will not stand their ground. I feel for the parents, because it takes a great deal of emotional stamina to say no to children. But it's better to never make a policy you won't enforce.

Murphy's Law works often enough in life that we had better develop staying power. In business deals, for example, I have learned I need at least 50 percent more money than anticipated and 200 percent more time. In making a decision, we need to anticipate a possible downturn and not presume on the future or the Lord.

A young man from a well-known ministry once approached me for financial support. "I've recently purchased a van on faith for our ministry," he said. "Would you contribute to pay off the loan?"

"Did the car dealer know you didn't have the money?"

"Uh, no."

"Then you didn't buy it on your faith," I said. "You bought it on his. I recommend returning the van."

6. What are the long-term ramifications?

Every action has a reaction. We are free to act, but we are not free from the consequences of our act.

Some Christian leaders make poor decisions because they fail to look at the long-term ramifications. Not long ago, I had the opportunity to speak with ten well-educated pastors.

"How can we get our churches to adopt our vision and programs?" they asked.

"Did you found the church?" I replied.

"No."

"Are you going to stay there if you land a better opportunity?"

"No."

"Then maybe the church isn't yours to change," I said. "That's short-term thinking. A long-term strategy would say, 'How can I help our church create a ministry that will continue after I'm gone?'"

A leader's job is to become dispensable, equipping others to do his work. A litmus test of leaders may be how well the organization can run without them.

The late Ray Stedman once invited me to Africa with his eleven pastoral staff members.

"Who's going to run the church when you're gone?" I asked.

"The same ones who run it when we're here," he replied. "The church doesn't depend on us."

That stayed with me. In my family life, I would like to make decisions so that when I die, not a single person will need me but all will love me. I don't want to make decisions that make me indispensable.

7. Have I built in escape hatches?

Not all decisions can include correction points, or what I call escape hatches. When you realize you have no possibilities for correcting the decision, act carefully.

But often we can build escape hatches into our decisions. In contracts, for example, I like to stipulate an evaluation of the contract at some specific future time.

Once I was involved with a company whose president's contract did not cover unsatisfactory performance. When it became clear their decision to hire this person was a mistake, the company had no escape hatch. They fired him but were required to make good on his salary.

A friend of mine in the banking industry once said, "Never delay a failure with your money. Get out of a failure as fast as you can." His comment reminds me to build into major decisions the opportunity to get out.

8. Have I asked for advice—after doing my homework?

Arrogance sometimes keeps us from asking for help. In one business meeting, I needed help, so I called someone and asked for his advice. An executive overheard me and said, "I could never do that."

"Why?"

"I can't admit I don't know."

"My ignorance," I said, "is my greatest asset."

I get by with a lot of help from my friends. But I try to have the integrity of not asking for their advice until after I have done my homework.

When I ask for advice, I use three criteria:

Will this person take my question seriously? If I'm serious enough to ask for advice, I want people to tell me what they honestly think, not just what they think I want to hear.

Is my question in this person's area of expertise? Theologians are great, but they're not the people to ask about cancer.

Does the person have time to think through my questions? I can't call someone five minutes before a major decision and expect thoughtful advice. If my decision is important enough to ask for outside help, then it's important enough to give my outside help enough time to make a good call.

Last year a young man told me, "We have a baby who's ill. The doctor is keeping her on an expensive medical machine. I'm not sure my child needs the constant technological care she's receiving at the hospital, and the bills are mounting.

"You know a lot of people, Fred," he continued. "Could you call someone to see if we're being ripped off by this doctor?"

I called my friend at Mayo Clinic, who took my request seriously. He found an expert–a co-writer of a medical journal article about this child's symptoms. That physician saw the baby and said it didn't need all the high-priced medical equipment. The original doctor had been dishonest. The situation showed the reward of asking for advice.

9. Have I validated the decision in prayer?

When Theodore Hesburgh was president of Notre Dame, David Rockefeller asked him to join the board of directors of Chase Manhattan Bank. Father Hesburgh laughed. "I'm a priest," he said. "I don't even have a checking account."

"You are trained to know right from wrong?" asked Rockefeller.

"Yes."

"That's why we need you on our board," Rockefeller said. "We understand banking and finance. We need your help when difficult questions of right and wrong come."

To be right, we need more than facts, we need the truth. The Pharisees were experts in facts but missed the truth.

Christians have an advantage in making decisions: we have the help of the Holy Spirit when we really want to do the right thing.

I have never found a foolproof way of discovering God's will for the future. Looking back, I see his hand clearly, but looking forward requires faith, and faith is what pleases him.

By validating a decision in prayer, I mean talking to the Lord exactly as I would to a business partner about all the details. I am really praying to see if my mood, motives, and method are correct. I ask the Lord to let me remain in neutral–willing to go any way–until after I've talked with him and been honest about what I should do.

I follow the saying, "When in serious doubt, don't." When making a decision, I hope not to knowingly violate scriptural principles. For example, I believe greed violates scriptural principle, and often this belief has protected me.

A friend who was knowledgeable in the silver market once suggested I get in at $35 an ounce; the price was rising fast. When I felt my greed meter going up, I talked it over with my wife, Mary Alice, and we decided against investing. That decision proved not only morally right but financially wise when the silver market collapsed.

I'm also suspicious of any decision that stirs my pride. If I'm asked to join a board, I try to define any uniqueness I would bring. If I find none, I refuse, no matter how prestigious the invitation. If I do have a uniqueness to contribute, then it's my responsibility, not an honor.

10. Am I afraid to pull the trigger?

One person who gave the Lyman Beecher lectures at Yale remarked, "Some people, if they saw a sign, ‘THIS way to heaven,’ and another sign, ‘THIS way to a discussion on heaven,’ would take the discussion." Some people like to wear out a decision just talking about it.

Others stall on decisions out of fear they won't be liked. We can't make good decisions on that basis. One question I've added to my evaluation of people is "What will this person do to be liked?" Peer pressure and false humility both cripple effectiveness.

When Maxey Jarman retired, I asked what he had learned. He said, "Not many people will make a decision. Many can, but few will."

To shoot a rifle, you have to pull the trigger. To make a decision, you have to act.

Fred Smith’s related article: The Fine Art of Saying No.