Systematically making good decisions

This is the seventh in a series on business topics inspired by the 20th century business management icon Peter Drucker.

As an owner and/or manager of a retail propane business, you’re required to make many daily decisions involving employees. These decisions include all aspects of your operation and, when combined, reflect the direction and character of your company.

Each decision will have consequences, since each reflects a choice or direction. We cannot expect that all decisions will be perfect, but we must remember that the aggregate impact of these decisions will, in the long run, determine the success or failure of our companies.

Carl Hughes

Successful companies make decisions systematically. Poor companies make decisions haphazardly.

Drucker’s decision-making process starts with three key decisions that must be made:

• What is the idea of our business?
• What is our specific area of excellence?
• What are our priorities?

The idea of our business

Every business begins with an idea of what it is to become. The idea continues throughout the life of the company.

The idea of the business defines what the business is and isn’t. It defines what products and services you deliver, and to whom you deliver them. It should also define the need you are supplying to the marketplace.

Simply saying you’re operating a retail business is not specific enough. Instead, define which customer needs you are trying to meet and which needs you are not going to pursue.

Re-examine the idea of your business and come up with a game plan. Know these and your business idea is clear:

• What is our business?
• What should it be?
• What will it have to be?

Defining your excellence

Closely following the concept of the business idea is the excellence that is associated with each idea. This excellence is always knowledge embedded in our individual companies.

Whatever the excellence is, it must be operational in nature and must lead to actions that serve your customers and drive your decisions on the selection and hiring of your people.

Setting priorities

The importance of setting priorities is neither controversial nor new. There are always more priorities than we can get done. Making good decisions about priorities converts good intentions into committed action plans.

Priority decisions set the company’s direction and tone for all your employees, giving clarity to your vision and strategy.

When it comes to priorities, we often fail when we don’t define what to do and what not to do. Drucker says, “One does not postpone, one abandons.”

Does your company have postponed priorities? Drucker says to make the commitment to them, or abandon them. Postponed priorities require and zap limited company resources.

Success story

One retail propane company in a major metropolitan area excels in its approach to the specific needs of a certain customer segment – one whose seasonal demands are the most difficult to anticipate and respond to.

This company has created a service plan around this segment. Employees understand and accept the plan and the standards required to make this customer group a priority. Management knows the type of people to hire who will meet the needs of this segment.

The company is the area’s leader in market share, customer satisfaction and profitability. They know their excellence behind the clear idea of what their business is, and subordinate all other priorities to focus on this area.

Don’t fool yourself into thinking this topic is purely academic. Either your leadership will decide the company’s major decisions, or they will be decided by others down the line, which in turn will define your company’s character and direction.

Carl Hughes is vice president of business development for Inergy LP. He can be reached at
Chughes@InergyServices.com
or 816-842-8181.