CEO decision making – A key quality investors seek

Editor’s note: “The Angel Connection” is a regular feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share advice for entrepreneurs seeking angel investors and/or venture capital investment. He is chairman of the Triangle Accredited Capital Forum, an angel investor network with over 100 members throughout the Southeast.

RESEARCH TRIANGLE PARK, N.C. - Investors want to see that their CEO’s know how to make decisions.

They might even ask CEOs if the executives ever stopped to ask themselves how they can make better business decisions.

Chances are these executives haven’t.

You’ve probably read about decision making and problem solving strategies. You soon discover that good decision making alone is not sufficient to solve business problems. Capable management with analysis skills, change initiation capabilities and solid change control that directly addresses the right problem and supports the decision are also required.

Think about the last time you had one of those “aha” moments when you made a decision and later discovered that the solution didn’t work, and with further analysis discover that your solution had little to do with the real problem? To get to a good decision, it is necessary to be focused on the right problem which consequently becomes the foundation to good decision making. This process starts with a critical analysis through probing questions. By objectively asking and answering critical, focused, probing questions you will often discover that what you thought was the problem is not the problem at all. Sometimes it’s like acting as a five year old kid, asking why, why, why until you really get to the core issue. You may discover that there is some underlying problem or set of problems that are causing what you thought was the issue. Look at this as a goal of simplifying complex issues. Don’t allow yourself to go any further until you clearly understand the problem, else you will be suffering wasted time and effort on solutions that won’t work.

Whatever the result of this critical analysis, it will most assuredly result in a more complete and precise definition of the problem which will lead to much more focused solutions when you get to the solution development phase.

Your critical analysis will often find that there are multiple problems. It is important to discover how they are related, if at all, and then to prioritize them. At this point, you will have more information about the problems that will change their importance and scope and therefore their priority.

You will need to establish criteria for prioritization, but more often than not, it will be based on which problem is most painful and has the most impact on the success of the business. CEOs often focus on the issue that is causing them the most grief when they should be prioritizing based on what is best for the business. In any case, make sure you take the time to clearly determine and understand the problem before you take action.

About the author: Bill Warner is the managing partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.