Learn about the autocratic decision-making style and the situations when it’s most appropriate.

The first style of decision-making is autocratic, and this is where decisions are made at the top. Buy-in is not seen as an important aspect of making this decision, and actually, it may be counterproductive to involve a lot of people in making the call.

Typically, in an environment where you’re making autocratic decisions, work activities and roles are very tightly structured, they’re monitored and well-controlled, and command and control is a very important aspect of making these types of decisions.

Now, performance on an autocratic decision is measured based on the individual’s execution of that call.

Allow me to offer an example:

At one point, I ran a call center organization and every once in a while, we’d get a pretty angry customer calling in.

Now, these were going to be small decisions. Should we offer a refund at that moment?

And there was very high urgency on making that call. It’s not like you can tell an upset customer, “Hey, hang on a couple minutes and I’ll get back to you when we actually have a decision.”

You need to make the call in that moment, so I empowered my managers to make those autocratic decisions because they were small, there was high urgency, and there was very low risk.

If they were wrong, it wasn’t a big deal, and in the broader scheme of things, having that speed and having that decision-making authority pushed down to the lowest level was a critical success factor.

So as you look at the decisions of yours that are more autocratic, make sure you’re focused on the speed of the decision, as well as the risk that you’re going to take.

Want to learn more about decision-making strategies? How about taking an entire course on it? Go directly to the course and start learning decision-making strategies. The entire course is available at LinkedIn Learning. Enjoy!

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Learn when to use each of the four decision-making styles.

When you make decisions, there are four decision-making styles that you can use. There’s an autocratic style, a participatory one, a democratic style, and a consensus-based decision making style.

Your choice of which of those four styles to use is driven by two things. First, the urgency of making the decision. From low urgency so you’ve got plenty of time to make the call, to high urgency, we need a decision right now. The second dimension to consider is the size or impact of the decision from small decisions that won’t have a large impact, to big decisions that are going to have a huge impact. So as you look at which style of decision-making to use, you need to consider both of these dimensions.

So for situations where you have low impact and they’re reasonably small decisions, but they get larger as urgency goes up, an autocratic decision-making style is the most appropriate.

For larger decisions where there’s higher urgency and you need to make a call soon but the impact is going to be big, you’re looking at a situation where you need to use a participatory decision-making style.

For situations where it’s a large decision but there’s no urgency around it, you’ve got plenty of time. You can be using a consensus based decision making style.

And last, for midsize decisions where there’s not a lot of urgency but you do need to make a decision and move on, a democratic style is the most appropriate.

As you go to select a decision-making style, just remember to consider the urgency of making the call and the size or impact of that decision. In future posts, I’ll go into much more depth in each of these four styles to give you a better sense of which one you should be using in various situations.

Want to learn more about decision-making strategies? How about taking an entire course on it? Go directly to the course and start learning decision-making strategies. The entire course is available at LinkedIn Learning. Enjoy!

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Think through this set of five questions to clearly define the decision you’re trying to make. 

The first step in the decision-making process is clearly defining the decision you’re going to make. There are some key questions you should be asking as you’re defining the decision.

First, what’s the desired outcome?

Is there a specific metric that you’re trying to drive?

What are the choices that we’re trying to make and what are the possible choices that we can choose from?

When do we have to decide?

Who is this decision going to affect?

If you don’t go through these steps of defining the decision, you’re going to have unclear objectives, and that may lead you to make a bad choice. If you don’t define all the possible alternatives, you might miss a great opportunity. And last, not being clear about timelines or who’s going to be involved is going to increase risk, it’ll cause confusion, and it’s going to frustrate people in the decision-making process.

Allow me to offer an example of when we clearly defined a decision to be made. In my corporate life, one of the organizations I ran had paper-based payments that we were getting from our business partners, and we wanted to move from paper to electronic. So we define the desired outcome, no more paper. We said, “The choice we’re trying to make is how to best make that shift for our business partners.” We said, “The possible choices are going paper, electronic or some hybrid.” We clearly define the timeline. We said, “We need to decide by the end of the month. And within six months, we need all the paper to go away.” And we thought through who is going to be impacted by the decision, our organization, our business partners, as well as ultimately, our customers. And by going through this step of clearly defining the decision, we were able to successfully make a decision upfront and execute it well on the back end.

So as you go to make your own decisions, think through this set of five questions and drive that clarity of the decision you’re trying to make.

Want to learn more about decision-making strategies? How about taking an entire course on it? Go directly to the course and start learning decision-making strategies. The entire course is available at LinkedIn Learning. Enjoy!

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There are 5 important steps to keep in mind when making a decision.

It’s important to realize that decision-making is actually a process. And it’s the process of selecting a choice from my range of possible options, with a goal of achieving a very specific objective. Now, contrast that with judgment. Judgment is the ability to form an opinion or reach a conclusion based on available information plus prior experience. So as you go to make a decision, there are some important principles to keep in mind.

Prepare

First, be clear about the objective. You need to understand what you’re optimizing for or trying to achieve as you make that particular decision.

Decide Who Gets to Decide

Second, decide who gets to decide and who doesn’t. Be clear about who’s going to be involved in the decision-making process. You need to define who to involve and how to involve them. Some people are going to provide input, other people will provide perspective on implementation, other people will actually make the decision, and having clarity of roles is critical for successful decision-making.

Gather Information

Next, you’ll need to reduce ambiguity and risk as much as is reasonable before making your decision. The way to do that is to gather information, but realize that gathering information takes time. And as you’re taking that time, new sources of uncertainty are going to emerge.

Decide and Communicate

Next, you’ll need to make your choice and make that choice known to the organization. Tell people you’ve made a decision, what the decision is, and why you made it.

Measure and Adjust

And then last, once you’ve made the decision, you need to evaluate and adjust based on new information.

So the decision-making cycle that you should think about following is first, prepare to make the decision, then you actually make the decision, communicate it to people in the organization, execute, which is put the decision into action, and measure and adjust accordingly.

Want to learn more about decision-making strategies? How about taking an entire course on it? Go directly to the course and start learning decision-making strategies. The entire course is available at LinkedIn Learning. Enjoy!

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Use these six techniques as you go through your negotiations. They can be very effective, but each one has their downsides. So be deliberate around picking the technique and understanding the risks that come along with it.

Over the years, I’ve learned some great negotiating techniques and tactics, and I’d like to share them now.

The Invisible Man

The first is called The Invisible Man, and that’s where you’re in the heat of a deal and you don’t want to give an answer right now, or you don’t like the position that the other party is taking, and you just say, well, I have to check with my colleagues before I can give you an answer. That other party isn’t in the room, so you’ve pushed back the negotiation, you’ve bought yourself some time, and now you have the ability to go back to the other party, and say, I know you wanted a 20% discount, but I’ve spoken with my colleagues and the best we can do is 10%. So, you’ve created an invisible authority that the other party has to negotiate against.

The Bogey

The second technique is called The Bogey. Act like something you don’t care about at all is really important to you. And then as you go through the deal, fight hard for that one point, but then you can trade it away later like you’re making a major concession and it doesn’t really cost you anything.

The Nibble

The next technique is called The Nibble, and this is right at the last minute, right before you get a deal done, ask for something extra. It’s not going to be big enough to break the deal, but beware, it can upset the other party. For example, if you’re out shopping for a suit, and you buy two suits and you’re spending a lot of money, and at the last minute, right at the register, say, well, you know what, I’ll buy the suits, can you throw in a tie and a belt? Now, the salesperson is looking at a really big commission and they’re not going to lose that big commission over a tie and a belt, and it’s a small nibble right at the end.

The Highball or Lowball

The next technique is The Highball or Lowball, depending on the position. Start ridiculously high, or ridiculously low, to cause the other party to really reevaluate their opening price. Now, there’s risk in this one, it could backfire and end the deal immediately.

Future Value

Another technique is Future Value. This is where you promise more value tomorrow in exchange for concessions today. Hey, we want to do this deal with you, so we want a much lower price, but we’re going to create a long-term, strategic partnership with you. And in the future, we’re going to send a lot of business your way. Here’s the thing, that business never materializes. Early in my career, I would accept that, and I would make concessions on the promise of that future business. And so many times, I’ve been disappointed when it doesn’t appear. If you’re promised future value, beware of this dynamic. And the best way to make that happen is build it into the contract and say, fine, I’ll give you the concessions, when that future business comes in, and protect yourself from that future value approach.

Multiple Rounds

The last technique is Multiple Rounds. Every time you think you have a deal done, there’s one more negotiator they didn’t tell you about and you have to satisfy their needs, and at each step of the way, that one additional negotiator wants a little bit more of a concession. I’ve been in several situations where we thought we had a deal done and we got the, oh, well, we have to kick it up to my boss, and that boss wanted another 5% or 2%. And after several rounds of negotiations, we gave up a lot of value.

Now, you can use all of these techniques as you go through your negotiations. They can be very effective, but each one has their downsides. So, be deliberate around picking the technique and understanding the risks that come along with it.

Want to learn more about strategic negotiation? How about taking an entire course on it? Go directly to the course and start learning how to set business unit goals. The entire course is available at LinkedIn Learning. Enjoy!

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Anchors are initial points from which you’re going to negotiate. They can lock you into a position, and unfair anchors can kill a deal. 

There’s an interesting dynamic that can happen in negotiations. It’s called anchoring. Anchors are initial points from which you’re going to negotiate. They can lock you into a position, and unfair anchors can kill a deal. If you get one, consider walking away. Also understand, if you give the other party an unfair anchor, they may walk away.

When you go to set an anchor, base it in reality with data or assumptions. Many times, the final offer in a deal, will end up within a reasonable distance from that initial anchor. For example, if you anchor your deal at $100 upfront, and that’s your first offer, more often than not, you’ll end up between 80 and $100. If instead, that first anchor was $500, you’ll end up between 400 and 500. That anchor can drive the final deal price a great deal. Now understand, that anchor also has to be based in reality. You can’t just throw a huge number out there, without some basis in fact. If you receive an anchor from the other party, and you don’t like it, change it. Go from one metric to another, and that’s an easy way to switch the anchor.

For example, I know a software company that was going to launch a platform, and the customer wanted to pay them $10,000 for the software. But they also wanted unlimited use of the software, forever. The startup would’ve lost out on significant longterm revenue, if they went with this single purchase price. That initial $10,000 anchor was not a tenable position. Now the startup didn’t argue with that anchor. They changed it. And they said “Well we don’t look at it as an initial purchase price. We’d rather look at it as a subscription model. And we’ll only charge you $100 per user, per year, for a seat license to our software.” They set this anchor based on comparable software sales in the market. And they were able to show their customer, “Here’s what comparable software costs.” They ended up ultimately with a fee structure of $100 for the first thousand users. $90 per year for the next thousand, and then $75 a year for any users over that. And it was an ongoing revenue stream. The startup captured significantly more value over time, because they were able to change the anchor from that initial one-time purchase, to an ongoing subscription.

As you look at the deals you’re entering into, be very aware of what those anchors are, and how they can shape the final outcome of the negotiation. Be deliberate about putting an anchor out there, and offering facts and data to support your in-going point. Because ultimately, that starting point is going to have a huge effect on the final negotiating price.

Want to learn more about strategic negotiation? How about taking an entire course on it? Go directly to the course and start learning how to set business unit goals. The entire course is available at LinkedIn Learning. Enjoy!

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