Decision making is a key aspect in developing a business. A good decision can make us earn much money and poor lose a lot. There are several ways to make decisions and believe me that while not all instinct aid business decisions are those based on it.
As we saw in the article ‘s mistakes and failures are the Road to Success , finally the largest employers are also wrong in their decisions and how they said it was important to err less and learn from mistakes.
One way to make decisions is by making a calculation of probabilities of potential outcomes of decision making compared to existing alternatives.
If for example the decision to settle a problem going from commercial or should I switch suppliers to analyze what the potential outcome in one or the other scenario by calculating the different scenarios against each decision.
Ie if the decision is transact the business problem must calculate and assign a percentage of probability to a possible outcome of that decision. Imagine the best outcome is to win 100 will assign a probability of 30%, winning 50 a 50% chance of winning zero probability of 20%. Using a simple calculation we will the end result of that decision.
Note that when assigning a value to a potential is neutral or even a negative result, we avoid falling into what I call the parachutist paradox when making the decision.
If a skydiver is likely to ask me to open your parachute and not in a crash and say that the probability is 99.99%, to him that he will not mind as much as if the 0.01% may be able have the accident.
When I assign a value to a potential negative or neutral’m also assessed in the decision-making.
The calculation of probabilities of potential outcomes will help me when making a business decision but it is only an aid in other decision-making mechanisms that exist.