Want to build a great company? Start by hiring people who make a high percentage of great decisions each day.

Manage differently, too. If you’ve got a “rock star” employee, give him or her some slack.

For as the great baseball manager, Whitey Hertzog, once said, “I can take a lot of guff from a guy who hits .350.”

I want the people in all of my organizations to be making good decisions at least three-quarters of the time. You’ll notice that this still leaves room for a lot of bad decisions. But this is to be expected. People are not infallible, and people do rely upon incomplete or erroneous information when making decisions.

And don’t think that just because you’ve got your people making decisions that you are personally exonerated from same. You will still make all of the toughest decisions yourself --- each and every day.

In fact, if you’re doing your job right, you should “out-decision” (in terms of quantity) all of your immediate subordinates combined.

If you are going to build and run a company, you had better not be a stranger to making tough decisions. In fact, you had better love making tough decisions.

I’m reminded of the time that I was watching the Johnny Carson Show on late-night television some time ago. Joining Johnny that night were the quick-witted comedian, David Brenner, along with George Hamilton --- the “pretty boy man --- with the perpetual tan.”

David Brenner was behaving as David Brenner does. He was using his street savvy to poke fun at Mr. Hamilton. Mr. Hamilton couldn’t even figure out what was going on.

Mercifully, Johnny Carson stepped in and called off the dogs. And I do say mercifully. Then, he said to Brenner, “You have the quickest mind of any individual I have ever known. Why is this?”

Brenner replied, “Johnny, I grew up in the streets of southwest Philadelphia. And to survive in the streets of south Philly as I did, you soon learn that you have to make more ‘decisions-per-half-hour’ there than anywhere else on earth. And so I think that it’s this quick decision making “practice” that really helped to sharpen me.”

Let’s face it. The brain is a muscle, and the more you use that muscle, the stronger and sharper it gets (I often think this is why so many people find themselves bored --- or worse --- following their retirement; that muscle between their ears no longer has to work as hard or as fast).

There are many broad areas of decision-making in business. I’m going to pick four here that are, and in my opinion, the most significant:

• People-related Decisions – This is the most difficult decision-making area, if only because you don’t always get a rational and honest set of data to work with.

  Specifically, people will lie to you. They will also purposely alter their numbers. And, they will deceive you in terms of their true intentions.

  I personally don’t see how anyone can run a company without first having a great set of data on each of their people. This is why the Predictive Index is such an important tool for our company. The PI enables us to understand the drives and predilections of all of our people. Thus, it becomes much easier to “match” people with one another.

  The Predictive measures all of the areas that matter. It measures attention to detail; willingness/lack of willingness to “play by the rules;” and drive and desire (also known as ambition); finally, it measures salesmanship --- this employee’s ability to “manipulate” others.

  Believe it or not, these four factors, and once known, are pretty much all you need to determine where each employee should be placed and what they should be doing in your company.

  The Predictive also measures energy and stamina levels. These are also essential to know.




• Money-related Decisions – One must be absolutely certain that he or she is properly navigating that very narrow line between “going broke” and “properly managing cash flow.”

  Each and every Thursday, I sit with my bookkeeper and we go over our numbers. We look at bills to be paid, accounts receivable/payable, future revenues (including sales forecasts), cash held in reserve, and long-term debt.

  Needless to say, you don’t want to pay any bill before its time. But at the same time, you know that a certain number of your suppliers are a bit more fastidious about when their bills get paid. Over time, this is a “feel” thing, and so you must rely upon your sales and financial people to give you an honest and true idea as to how your vendors will react to a delayed payment.

  You also must be sure that you have enough cash in reserve to handle emergencies. For example, sometimes a customer that you might never expect it from will ask for “immediate payment.”

  In this case, you must have that reserve cash I just talked about.

  Keep in mind the fact that most salespeople (especially the young ones) will “over-forecast.” That is to say, they will gain the temporary ego-satisfaction of reporting a huge deal or over-inflating a number of lesser deals when, and truth be told, their forecast should be only a fraction of that total amount.

  The “old dog” salespeople look at this differently. They have learned that it is best to “sandbag” their forecasts. “Under-promise and over-deliver,” the savvy salesperson will always tell you.




• Distribution-related Decisions – As I tell my students at Duquesne University, decisions related to distribution are the only decisions a business makes that are irrevocable.

  In other words, once you choose a distribution channel, you are pretty much wedded to that channel forever. (This is also known as the “If you’re going to start out by selling your product in Wal-Mart, don’t think that you can also and easily, also sell it at Saks Fifth Avenue” syndrome.)

  Be very careful with “exclusive” distributorships as well. These are killers. Be very weary of exclusivity. If you must offer an exclusive, make sure that it is what I call “Contingently-Exclusive.” In other words, you may keep your distributorship, Mr. Distributor, but only for so long as you hit certain minimum revenue targets.

  There are many other key decisions that must be made vis-à-vis distribution, but these are, and without question, the most important.




• Lastly, Product-related Decisions – Look at the components of your product. Are any of them from suppliers who themselves are in deep financial doo-doo? Also, are any of your suppliers basing their products on antiquated technologies?

  Finally, do any of the people in your organization truly understand those technologies --- or, have we reached the point where these technologies simply aren’t even being taught in school anymore?

  In the technology game, “You dance with who brung ya.” That is to say, “The technology that you entered the game with is the technology that you will (most likely) employ forever.”

  This is a frightening thought. But it is also true. You must be very careful when selecting the core components of your product.

  Some years ago, my partner and I had to make a hard decision on an underlying product that we had already based more than one hundred licensees upon. The product itself was an operating system by the name of CP/M, and it was the essential underpinning of our solution. CP/M was from a company by the name of Digital Research.

  Its competitor was a brand-new technology from a start-up company by the name of Microsoft, and Microsoft had a whole different way of looking at things. Their product was called MS/DOS.

  My partner and I argued vociferously about this product. He wanted the new technology (and why not? He was a technologist!) and I wanted the proven player.

  The only way we could resolve it was by getting on an airplane and flying, respectively, to Palo Alto, California (to see the digital research product) and then on to New Mexico where we looked at the Microsoft product.

  (Apparently one Mr. William Gates, founder and owner of that Microsoft, had one too many moving violations in the eyes of the state of Washington. So, and to keep his driver’s license, he took up residence in New Mexico.)

  Another product-related decision that is absolutely frightening deals with what I call, “Owning the railroad tracks.” Unfortunately, this is a situation that we right now find ourselves in at Pittsburgh Business Radio.

  You see, we have built what I believe to be the best entrepreneurial radio show in America. That is, and essentially, our “train.”

  But our train, and like all trains, needs railroad tracks. And our railroad tracks happen to be owned by a third party --- in this case, AM 1360 WMNY, the Renda Broadcasting Corporation.

  And because our train needs tracks to operate, we are in somewhat of a tenuous situation. For while it would be difficult (but certainly not impossible) for us to move our shows to another station or medium, such a move would cause us great difficulty, starting with the fact that we would have to tell over 100,000 people where to find us!

  This is why anyone must be quite careful when it comes to basing their product on some other product or delivery service.

I hope that these examples help you, as you build and grow your business.