Starting from the End — Lean Decision Development
Reflections on the Psychology of Decision-Making
I was fortunate enough to take the Lean LaunchPad course with Steve Blank at the Haas Business School at Berkeley. Through a structured decision-making process, the course allows the participants to think more clearly and make smarter decisions about creating a viable startup or a new product. The process is referred to as Customer Development and it walks the entrepreneur on how to validate the business model canvas. At its core, the model is about hypothesis testing (“getting outside the building”), learning, and iterating — before committing too much time and money resources.
Sharing the similar spirit of hypothesis testing, although following a different structured approach, is the concept of Design Sprints, developed at Google Ventures and adopted internally at Google. The idea provides “a shortcut to learning without building and launching.”
I personally see both approaches as complementary. I would use Design Sprints for fast iteration to search for a product-market fit via a low-fidelity minimum viable product (each cycle is 1 week). I would then use the Customer Development approach to validate the other business model aspects to form a well-investigated execution blueprint (time duration is about ~ 10 weeks).
Both are focused on startups and product. They both made sense, but the caveat is in possessing the self-discipline to adhere to those principles. We have a tendency to choose the path of least resistance and to stick to our comfort zones. For instance, we tend to listen to ourselves (either because of a personal bias, or as a result of group-think bias) rather than having the humility to invest in the efforts to listen, in a statistically significant way, to market feedback.
I’ve experienced this first hand during the Steve Blank course. One to two weeks into the course, my team wanted to start coding and to build the product. Reflecting on this impulse, I believe it is because we fell into the group bias trap thinking that our idea is great, and then we quickly drifted towards our comfort zones. Rather, our energy should have been spent on deciding whether it is really the right idea for a product by investing efforts to know how many customers will really want or need this, before committing to even writing one line of code. This is also the idea behind Design Sprints.
The same story can happen at large scale with startups or even big companies spending 6–9 months building a product and burning money to discover that at the end, once the product hits the market, that they were way off in their assumptions and expectations.
It makes sense to validate the assumptions before committing to a journey, but it is elusive and psychologically tricky to do it right. I attribute this to three types of biases: personal ego (it is right because I think so), social loafing (it is right because the founder says so), and group bias (it is right because we think so). Bias is the invisible enemy of decision-making. That’s why self-awareness and structure are needed for the decision process.
Whether it is Customer Development or Design Sprints, each methodology is designed to add structure and clarity of thoughts in an efficient and systematic way. And to a certain extent, they protect the entrepreneur/decision maker from the costly pitfalls of bias. That’s why these methodologies have been so successful and are getting widely adopted by entrepreneurs and product managers.
Our comfort zone is when we are in the Doing Mode rather than when we are in the Decision Mode. Sometimes we jump pre-maturely to the Doing Mode as it puts our mind in “auto-pilot”. As humans, we psychologically seek to be in the Flow. The Decision Mode is intrinsically uncomfortable due to the many unknowns we’re facing, and that’s why we tend to shorten it.
Based on these experiences in approaching startups and product management, I started to apply such philosophies in the wider context of decision-making.
The Lean Decision Development
I am proposing a Lean Decision Development concept for making strategic decisions. Some examples are: what field should I choose for college; should I do an MBA, or a PhD, or create my own company, or join other companies, and if so, what type of companies: early-stage, late-stage, or public companies, and in which fields, and in doing what; or, in general, how do I want to draw my future.
I discuss here the strategic decisions rather than the tactical day-to-day, or week-to-week decisions. A strategic decision leads to a journey where significant time, resources, and efforts are invested. And as time is the most precious asset, it begs two fundamental questions:
- Why should I take the journey in the first place, what is the end goal, what is the return being sought.
- How to choose which journey has the best return on investment? The second question builds on the foundational first question.
In what I am calling as a Lean Decision Development, I advocate for an introspection phase for finding one’s True North. This narrows the options to consider. Then an inquisitive phase follows by going “outside the building” to conduct journey sprints to try to figure out what lies at the end of each journey. After a decision is made and I step into the Doing Mode, it is crucial to setup regular reflection retreats to step-out from the Doing Mode to reflect, evaluate, and decide again.
Introspection Phase — Getting the values directions right, and then sailing for True North. In this phase, it is more about why should I take the journey. It is about me as an individual, my ambitions, values system, authentic self, stories past and present, what I am good at, and the future verse that I want the journey to write. It is the introspection phase. It is the base, the core. It is the mission statement. (By the way, great companies start like that by a great and authentic sense of mission).
This introspection and alignment with one’s values is so important because it forms the strength the person needs to persevere. This is echoed in this quote by Steve Jobs:
I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance…. Unless you have a lot of passion about this, you’re not going to survive. You’re going to give it up. So you’ve got to have an idea, or a problem or a wrong that you want to right that you’re passionate about; otherwise, you’re not going to have the perseverance to stick it through.
Inquisitive Phase through Journey Sprints — Imagining the journey is complete, finding now the then what. After hypothesizing about what is at the end of the journey, as a thought experiment for me as the decision maker, assume that the time and resources are already spent and that the end of the journey is reached. Then what? Is what lies at the finish line aligned with my expectation? To answer this, this phase is inquisitive and outward-looking.
It starts by doing research, seeking primary resources of information for answers. It is done by asking the right people, reading, and researching until I develop an evidence-based confidence to my assessment that the journey is worth the investment.
As an illustrative example, let’s say I want to work at the United Nations, and for this reason, I will spend $150K and 2 years doing an MBA from a top Business School because I heard that this is what they look for — well, before I go that route, let me do a journey sprint to ask recruiters at the UN whether this is really what I need. Let me ask people who work there about what is it like, whether this is really aligned with my expectations, and listen to them on what they like, don’t like, and discuss their reflections.
The inquisitive phase is time-bounded and it is not open ended — for instance, it can be a 10 weeks investigation. The world moves fast. I believe after 10 weeks one starts getting diminishing returns and risk paralysis by analysis. If the decision is not reached within 10 weeks, it is an indication that the information out there is not conclusive, and that one has almost reached the boundary of the known and the unknown.
The objective of this phase is double-checking one’s assumptions by answering: 1) Is this really what I desired? 2) Am I aware of the risks? 3) Did I collect adequate information on what I need prior to embarking in the journey and what support (people, information, resources) do I need along the way? 4) Did I get a sense of the boundary between the known and the unknown, the tried and the untried?
Decision Time — The time for making the best educated guess: At the end of the Inquisitive Phase, I probably formed the best educated guess, which was reached in an efficient way, about which journey path to choose from the candidate options. It is then best to stop procrastinating and dive into the-best-educated-guess journey and start the learning discovery by Doing.
Into the Doing Mode — In this mode, I have already made my decision, and I committed to invest my resources to reach a certain milestone in mind. While the majority of resources are allocated to execution, value creation, and the discovery of new information by doing, at the same time, some small amount of resources needs to be spent to continuously learn how the world is changing and how it is affecting my journey; whether there are new dots to connect, or whether there are new options that emerged and came to light.
Reflection — While in the Doing Mode, I discover new information and I gain more knowledge. I create value and I make progress. However, am I still in the right direction, and what does “right” means?
Am I true to my True North that I formed in the Introspection Phase? Does my True North need calibration as I gained more wisdom based on my experiences? Is this journey the best one, did it meet my goals and expectations, should I persevere or pivot this journey in my march to the North?
How can I synthesize the past, the present, and my aspiration for the future? This is where I have to step out of the Doing Mode and back into the Decision Mode for a reflective introspection. I have to step out from the Flow to evaluate the direction of the flow.
As I cannot optimize what I cannot measure, it is best to write down the goals and set milestones to help in the self-evaluation and reflection process. This has to be revisited on a regular basis, say once every quarter, or once every year.
In my experience, a physical retreat helps with the mental retreat. A reflective retreat ensures the Flow stops, gives me time to recollect, extract the signal from the noise, allow these new extracted and abstracted signals to sink in and to build on top of them. I think clarity of thought comes through hierarchical synthesis of information.
In Lean Decision Development context, the hierarchical synthesis of information should be towards the True North — am I still aligned and true to the reason why I started this journey in the first place, and how is it progressing, how is it fitting together, what to change, what to do better, and should I course-correct. This never stops, and this is a continual state of mind.
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