The current economic environment is concerning to us all. In the midst of uncertainty, continuing to make clear-headed business decisions is exceedingly important. Let’s explore how to ensure stress due to the current economic situation doesn’t result in suboptimal decisions that may have long-term negative consequences. 

Four Economic Indicators that Can Lead to Unsuccessful Business Decisions

data, data-driven, data insights, insights, data, decision making, analysis, analytics, strategy, competitive intelligence, customer experience, smart business, scenario analysis, growth strategy, future proofing, business pivot, alignmentInformed organizations monitor a variety of economic indicators to help gauge the state of the economy and the potential impact on their business. These indicators provide insight into how much more or less expensive it will be to run the business. Some common indicators include, but are not limited to, the price of goods, employment, and the cost of money.  As we write this post, these four major indicators are fueling unease:

  1. Costs of Inflation
  2. Labor participation rate  
  3. Declining job openings 
  4. Increasing interest rates 

The current indicators increase stress on everybody. The challenge is to keep that stress from resulting in poor decisions that might derail your short and long-term strategy and business results.

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Yes, I Want My Growth Idea

 

Stress Suppresses the Ability to Make Wise Decisions

If you’ve ever used the phrase “I can’t think straight,” it may be because stress is impacting the ability to make rational decisions. According to neuroscientists, decision-making happens in the foremost part of our brains, the prefrontal cortex.  A study published in The Journal of Neuroscience found that stress-induced anxiety decreases activity in this part of the brain. As a result, we end up making quick, rash decisions or moving into another state known as paralysis analysis, which might lead to a no-decision scenario.

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Why? Because stress  makes it harder to process all the information we need to make the best decision. If we can keep stress from leading the process of deciding, we can make well-informed and wise decisions, even amidst uncertainty.

Five Questions to Ask Yourself to Ensure You’re Making Smart Choices

Some companies adhere strictly to the “always be prepared” motto. These companies regularly engage in scenario analysis planning and integrate economic indicators into these scenarios. They recognize there are ups and downs in the economic cycle.  As a result, they also implement future-proofing processes.

Both of these capabilities enable the organization to pivot as needed.  In some instances, these pivots are worthy of becoming permanent to the operation of the organization.

If these are not part of your regular approach to business, there are still steps you can take to ensure that stress doesn’t override good decisions. You can use these questions as a guide:

  • Is the decision taking care of the “big stuff” first?  Sometimes we’re so overwhelmed by the situation that we tackle minor decisions instead of focusing on the bigger picture. Find a way to divide decisions into categories based on agreed-upon criteria such as time, cost, impact to customers, etc.  Use the criteria to organize decisions into tiers from major to minor.
  • Does the decision align with your purpose and mission? Be clear about what your company does: how and why. Then, evaluate whether the decision you are about to make is in line with these priorities.
  • Does the decision positively impact your relationships?  Customers, partners, suppliers, and employees are all essential relationships to the survival of your company.  Consider how the decision(s) affect each of these relationship types.
  • How will the decision impact the long-term? Today’s quick fix will have implications down the road. Step back and try to gain insight into the impact of the decision in the long run.
  • How will we use this decision to create opportunities or a competitive advantage? Your competitors are navigating the same economic environment. While the decision you need to make enables you to “survive and fight another day,” explore whether and how you might use the decision to support growth and give you a competitive edge.

data, data-driven, data insights, insights, data, decision making, analysis, analytics, strategy, competitive intelligence, customer experience, smart business, scenario analysis, growth strategy, future proofing, business pivot, alignmentWe are all navigating the sea of uncertainty. In such times of economic unpredictability, it is common to feel unsure and stressed. The key is to keep panic from resulting in bad decisions that have long-term negative consequences. Consider how you can regulate your stress and even use it to your competitive advantage. Keep your focus on the long-term, and make decisions that prioritize your relationships, your purpose, and the matter at hand. By keeping a clear head, you can emerge from uncertainty even stronger than you might in times of ease.

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