27 June 2023 |

The Opportunity Cost Of Indecision

By workweek

You may be wondering, why is effective decision making so important? If for no other reason, it is the opportunity cost of a poor decision — or worse, making no decision at all.

When I say opportunity cost, I am referring to the missed upside of failing to make a decision or making the wrong decision.

Let’s make this real through an example.

Imagine you run a team of eight sellers and one of them wants you to travel with them to France to visit a key customer. When you take into account the travel time and other factors, it means you will miss four customer calls you were supposed to support with the rest of your team.

You now have a decision to make, A) Travel for the one key meeting abroad and miss the four local customer calls or B) Remain in-country to deliver the four customer calls and miss the one meeting abroad.

Whichever decision you make, there is a potential opportunity cost associated with not choosing the other option.

Prioritization Pays

The question then becomes, well, how do we actually make effective decisions. It comes down to 2 variables: first, how we prioritize and second, an opportunity cost assessment. 

The way you prioritize as a sales leader dictates your success or failure in-role. All roads start and end with your team and customers, no exceptions.

Meaning, if you have a decision to make between supporting your team on a customer call, or attending a weekly cross-departmental meeting, you shouldn’t have to think twice about which comes first.

Taking time to establish priorities enables efficient decisions. You want to avoid being in a position where you’re constantly deliberating over calls.

When you know your order of prioritization, you can quickly move matters forward, to focus on work that truly moves the needle.

The second aspect of this is an opportunity cost assessment, in simple terms, evaluating which is option has more upside and which presents greater risk.

Let’s revisit the scenario in the section above. They’re both connected to your team and revenue, so on face value they seem of equal priority. The next step would be to unpack whether traveling or remaining local would have a greater potential revenue impact whilst establishing which option would present a bigger risk to exceeding quota.

Always connect your decision back to revenue as your north star whenever you feel compromised about a decision. Combining both effective prioritization and an assessment of opportunity cost will allow you to make effective decisions at pace.

Avoid These Mistakes

One of the biggest mistakes I see sales leaders make is seeking to make fast decisions as opposed to making effective ones. 

Just because you have made a quick decision, doesn’t make it the right one. Always take a moment to evaluate the decision you’re making against both your priorities and opportunity cost assessment before validating if it is the most appropriate decision.

There is always an opportunity cost to any decision. Our job is to make the most de-risked decision possible. In most cases, there will be a ‘what if’ factor. There will always be an alternate decision that could have been made, but our focus is on making the best possible decision with the information made readily available to us.

Don’t be afraid to make big decisions. Almost all decisions in life carry some form of perceived risk. There are times when you need to be the person to make the hail mary plays. Don’t retreat when it is time to make a notable call. Take the time to evaluate, unpack what you need to, make a decision and underpin it with logic. Be mindful about making decisions fuelled by emotion. Any emotive decision can and must be validated with data and logic.

Next Week: Performance Management

One of the key aspects of being a sales leader is to drive rigor around performance management to ensure you have the best possible team who are primed to be successful.

Next week we will cover some core principles related to performance management, including how to maximize the potential of your sellers along with signals to note when it may be time to part ways.