Have you ever agonized over making a decision, particularly one that was very important to your company? Have you seen people who just couldn’t get enough information to make a decision, so they just kept putting it off, sometimes losing a great opportunity? Why is it that great CEOs seem to make decisions faster than other people do? Making tough decisions, with limited information, is what sets these CEOs apart from their peers, and makes them so effective as leaders.
Great CEOs know how to balance their data and intuition to make decisions quicker than others. They may not even know how they do it, but they are likely working within a framework that Colin Powell, former Chairman of the Joint Chiefs and Secretary of State, used. He called it the 40-70 rule.
The 40-70 Rule Applied
His rule is that you make tough decisions with no less than 40% of the information you need to make the decision, and no more than 70%. If you make a decision with less than 40% of the required information, you are basically shooting from the hip, and stand little chance of making a good decision. If you try to get more than 70% of the information you need, you will wait too long, and delay the decision, perhaps losing an opportunity or creating a bad situation.
Using The Information At Hand To Make The Best Possible Decision
In my career, I have seen CEOs and other executives make decisions with very little information. The results seldom worked out, and too many mistakes were made. On the other hand, I have also been witness to CEOs and executives who couldn’t make a decision because they simply never had enough information. They were so afraid of making a mistake that they kept holding out for more information. 70% wasn’t enough. Neither was 80% or 90%. They wanted as close to 100% of the information they needed to ensure the decision was foolproof. They always wanted one more report, one more survey, one more spreadsheet, or one more meeting. They drove everyone crazy, and seldom made a timely decision. They agonized over every possibility that something could go wrong. I know you have seen this kind of executive yourself.
What Colin Powell was saying is that 70% is enough information because you can use your intuition to fill in the rest (see my previous post “Do you trust your intuition?”). Being absolutely certain of a decision is simply not possible, so trying to get there is a futile exercise. If you can gather 40 to 70 percent of the information you need, then you are in the range for making an informed decision. At that point, use your judgment, and make a decision. Chances are pretty good that you will be successful.