By Dani Zelezniak, a seasoned CEO (kVisi), Angel investor and entrepreneur with expertise in technology, marketplace platforms and mobile apps.
If there’s one thing I’ve learned while building my business and investing in the future of technology, there is no shortage of opinions about what to do. The question is who to turn to when it matters and how to evaluate the advice given. For a CEO, learning who to consult and seek advice from is a critical skill and can mean the difference between success and failure.
Here’s an example: In 2011, Ron Johnson was appointed CEO of J.C. Penney set. As a former head of retail at Apple, Johnson was subjected to high standards. Shortly after taking office at J.C. Penney, however, made a number of bad business decisions for Johnson, including laying off 10% of its employees, laying off J.C. Penney and the abolition of discounts and sales. Its Q4 2012 could be considered the worst quarterly performance in large retail history. At the end of February, the stock fell 46%. Shortly thereafter, Johnson was released.
Most likely, the series of bad decisions could have been avoided, or at least minimized, had Johnson received adequate advice from his team. Unfortunately, Johnson isn’t the only CEO in history making bad decisions that affect a company over the long term. Think Blockbuster is turning down the option to buy Netflix.
So what do you have to do to avoid such mistakes? Here are four important steps:
1. Understand the different types of counselors and when to seek their advice.
There are three levels of counselors, each of which offers different types of thoughts and opinions:
• Official outsourced consultants such as lawyers, business consultants or accountants: These people are paid to help you succeed. However, this does not mean that their advice is essential.
• Colleagues with whom you work closely and who are not necessarily seen as consultants: This group includes employees, co-workers, investors, customers, and suppliers. Your co-workers are likely to have the company in mind when providing advice, but they may also have personal motivations.
• People in your life with whom you have no business relationships, such as B. Your spouse, friends, and family members: These people usually have your wellbeing in mind when they advise you. You are less involved in the day-to-day running of your company than in you as an individual.
One of the biggest mistakes CEOs make in their decision-making process is not understanding who their advisors are and what impact they can have on the decision-making process. Taking advantage of advice from all sources and thinking through the matter and the contributions each individual can make can reduce the likelihood of a bad decision.
2. Know who your advisors are personally and write them down.
Once you understand the different levels of counselors available to you, it is equally important to look internally to understand why one affects you more than the other and what prejudices you might have about one solution about another accept. You should also ask yourself whether you are interested in an emotional or a pragmatic solution. These considerations help stamp out suboptimal decisions. In a table, write down the people you consider advisors. Next to each person’s name, add the following information:
• How do you relate to them?
• How did you get to know her?
• What is their motive or interest in advising you? What do they have to win if this deal works or fails?
• What is your knowledge in this particular area?
• Why do you ask for their advice? (In this case, be honest with yourself – avoid taking advice just because you think they will agree with your thoughts. Take advice from people who are honest with you.)
• What is their track record?
• What does it mean to you if this person disagrees with your actions?
Also, ask yourself how this decision can affect you as an individual and whether this causes you to inadvertently make the wrong decision. If you choose to take advice from a particular person, write down their suggestions and review your answers to the questions above. Then sleep on the advice before making a decision.
3. Remember that as the CEO, you have the final say in most decisions.
So your advisor may know a lot about the subject. This is great and will most likely come in handy when seeking advice on specific topics and subjects. Ultimately, however, you have the final say on how to proceed in the decision-making process. Your advisor may have a lot more expertise or experience in this area than you do. That doesn’t necessarily mean they are right and you are wrong. Also part of the decision making process is trusting your gut and making the best overall decision based on how you are feeling.
4. Always take the time to review the decision you have made.
After consulting with your advisors, make sure you are doing the best you can. Write your thoughts in a decision journal or record your options in a probability tree. Whichever method you choose, take your time to review and make sure what has been recommended to you is the best decision going forward. When you are sure, it is time to carry out your plan.
Understanding the different types of counselors, knowing who yours are, remembering that you have the final say on most decisions, and taking time to review your decisions should reduce the chance of you making mistakes make in blockbuster size. As a CEO, you often juggle several projects at the same time. Learning to rely on trusted advisors can reduce the chance of things going wrong in your company and take the agency off your shoulders.