Before you're faced with a choice that will affect your company's fortunes, it's important to have a system of predetermined rules and outside opinions in place.
It is lonely at the top, especially when you have a big decision to make. But as a leader, making a decision by yourself only makes it harder. The pressure soon can soon turn into fear, and you'll be beset by emotion, unable to make an unclouded decision based on facts.
Freek Vermeulen, author and associate professor of Strategy and Entrepreneurship at the London Business School, says it's common for smart leaders to make bad decisions--and most of the time, emotions are to blame.
"Whether it's a personal choice or a strategic business decision, emotions often crowd out objectivity. After all, executives are only human, too," Vermeulen writes in the Harvard Business Review. "Precisely because strategic choices are such important ones, loaded with anxiety and uncertainty ... people start to 'follow their heart,' 'rely on intuition' and 'gut feeling,' overestimate their chances of success, and let their commitment escalate."
Create your own decision-making rules.
Vermeulen suggests writing a clear, objective set of rules to guide future decisions. He tells the story of how when Intel was still focused on memory chips, co-founder Gordon Moore and then-director of engineering Andy Grove created the "production capacity allocation rule" to decide which products would receive priority in the company's manufacturing facility. When memory chips started losing money, Moore had an emotional attachment to the product that built his company and had trouble letting it go. But since the rule was already in place, the company's middle managers made sure the plant focused on microprocessors. "Because top management had made the decision what sort of product should receive production priority well before it became a concrete issue, the strategic choice became detached from their emotion of the moment," Vermeulen writes.