pieces of information are facts and which are assumptions. The reason for this is risk. Planning with assumptions is necessary. It does, however, introduce risk into the deci- sion-making process. Why? Because an assumption that proves untrue could seriously impact the outcome. So, how should you handle assumptions? First, make sure ev- eryone knows what is fact and what is assumption. Second, try to turn as many assumptions as possible into facts. For instance, a letter of intent (LOI) is not enforceable. Ergo, every - thing in the LOI is an assumption. But by moving from LOI to contract, you can convert the vast majority of the information from assumption to fact and, thus, make it enforceable. ESTABLISHING OBJECTIVE CRITERIA Finally, to drive decision-making forward, establish evaluation criteria against which you can compare each course of action. Evaluation criteria are standards your team will use to measure the relative effectiveness and efficiency of one course of action versus another. Some examples in- clude cost, speed, projected returns, and development risk.
In most cases, three to five eval - uation criteria are sufficient. A few more may be helpful for significant decisions (e.g., opening up a new asset class, deciding to start up a new business, or any other strategic decision). Try to stay under 10 total; beyond that point, they will be challenging to manage. The ideal time to determine evaluation criteria is after you’ve created a shared understanding of the situation but before you start devising courses of action. This will prevent confirmation bias, whereby your team selects evaluation criteria that supports their predisposition toward a particular course of action. The power behind this step is that evaluation criteria are usually fairly scientific, meaning they will allow you and your team to eliminate bias and overcome internal politics. They also provide a defendable position to all stakeholders, regardless of the outcome of the decision. THE CASE FOR CONSISTENCY In light of the VUCA environment that investors, owners, and opera- tors are working in today, having a consistent decision-making process is essential. Your process should
be well-defined, backed by facts and assumptions, and driven by evaluation criteria. Making a decision is hard enough. Having a structured, documented process to follow can, at the very least, eliminate the need to decide how a judgment should be reached. It can also give you the confidence that, no matter what your outcome is, it was supported by steps that both internal and external stake- holders can comprehend. Although you can’t predict exactly how a decision will play out, you can ensure you approach a problem with complete information, consider every possibility, and act as objectively as is feasible. In doing so, you’ll set yourself—and your portfolio—up for the greatest chance of success. •
Scott Lewis is CEO of Colorado-based Spartan Investment Group, a privately held real estate investment firm specializing in the self-storage industry.
Prior to Spartan, Lewis held positions as a regional sales manager for a biotech firm, various positions in strategic and project management for the federal government (culminating at the GS 15 level), and was on active duty in the U.S. Army as an infantry officer. Lewis graduated from Michigan State University with degrees in chemistry and marketing, from Catholic University with an M.S. degree in management, and from Georgetown University with a certificate in project management.
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