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A startup is driven by the speed of their decisions. In an early-stage startup, it’s especially hard because there are so many meaningful decisions with no clear “right” answers. Rather than taking each one individually, I think it’s extremely helpful to have a general process that guides your approach.
Here are a few considerations when setting up your org’s decision-making framework.
Consensus vs. Single decision maker
Consensus decision making in a growing org often leads to less optimal outcomes than having a single decision maker for each decision. Consensus decisions end up being negotiated, often with stakeholders that are only exposed to one side of a problem or have misaligned incentives. They’re slow and lead to bland decisions, when bold calls are needed. Consensus decisions happen because people don’t want to take on the weight of accountability for making decisions, or people aren’t confident in their answer, or there’s a desire to make everyone happy or get “buy in” to decisions.
In reality, there is usually one person who can best gather the information and make the best decision - the real trick for companies is to find that right person for what decisions and empower them to make those decisions. Decision makers need to be coached to take on the accountability. A culture of “disagree and commit” needs to be fostered to allow for open debate during the decision-making process, followed by commitment after a call is made. This all leads to faster and more accurate decisions.
Who is the right decision maker?
When considering who should make a particular decision (or solve a problem), there is a common refrain in the startup world: “the person closest to the problem should solve it.” This mantra does a great job of getting to an efficient answer and empowering people at all levels. But after many years as an operator, I think it’s a grossly over-simplified answer. To me, the decision-maker should be the closest person to the problem who also meets these 3 conditions:
1. They have a deep understanding of the problem
2. They have the ability to solve the problem
3. They understand the full consequences of their decisions
Here’s an example - if we need to buy a new customer service tool, a customer service rep may have the best understanding of what is needed to perform the job (#1). However, they might not have the ability to critically analyze various vendors (#2) and not fully understand the regulatory, budgetary or downstream effects and the affected stakeholders (# 3).
This framework serves to both identify the right decision maker, but also communicate why certain decisions should sit with different people.
Accepting that the right decision can end up wrong
One of the hardest things I see startup founders and executives struggle with is being wrong so often. Most successful people are used to getting the right answers on the test in school and making the right decisions in a standard work environment. The reality of creating something new is that you’re often making 50/50 decisions, so by definition you’ll likely be wrong 50% of the time.
It is possible to make the correct decision based on all available information and still end up with the wrong result. That is why it is crucial to build a culture of retrospectively looking back on decision making, improving on the aspects that are under your control but also accepting when the probabilities worked against you.
it’s important to find the right balance of accountability, acceptance of the randomness of predicting the future, and acceptance of ‘mistakes.’ This creates a healthy environment for decision makers to not shy away from bold decisions - therefore leading to faster iterations and an overall shorter timeline to get to the right answers. Over time, a higher frequency of decision making will lead to better decision making skills - and the whole org will get better and more accurate at it.
Every decision is good practice for the next one.