How is making a decision about what to purchase for dinner different that buying a new car? Those differences are pretty obvious. What about the difference between a rental car you want on vacation and a car to purchase? What about purchasing options for a new car?
All these examples highlight three impacts that you need to look at when making a decision. Once you understand the impacts you can determine the optimal buyer persona to use when making the decision. This will improve your decision making speed and outcomes. Most importantly it should maximize the return in your business!
Decisions can be ranked based on the three impacts below:
Organizational impact is essentially how many team members (or customers, suppliers, shareholders) the decision will impact. The “span” of the decision is a good way to think of this impact. Let’s also define it as a DIRECT impact, not just tangential. A good example is that of insurance. The selection of your Property Insurance carrier is of little (direct) impact to your employees, but your Health Insurance carrier is very impactful!
Duration is a key data point to consider when making a decision. Renting the wrong car may ruin your weekend getaway, BUYING the wrong one may ruin your life! The level of commitment you are making in a decision should always be considered. A key misconception here is that longer durations are bad. Longer durations allow your business to lock in LOWER financial costs and reduce the variation in your operations. Not to mention making longer term commitments means you don’t have to spend time making the same decision every month!
Financial impact is where most buyers start their buying process. This should be the LAST component you are using to understand the type of decision you are making. Until you understand the organizational and duration impacts it is impossible to quantify the financial ones. Once the other two impacts are understood, it is easy to put together a return on investment projection for the financial part!
Technology decisions are critical to your business. The majority of the time they are impacting everyone in your organization, for better or worse. They also are hard to reverse (duration) and can be financially significant. At Stringfellow, we utilize this framework to enable better business decisions every day!