Building an Organization with High Decision Velocity
What does it take to scale up a decisive yet collaborative startup culture?
Decision-making with speed, quality and scale
“You have to somehow make high-quality, high-velocity decisions. Easy for startups and very challenging for large organizations” — Jeff Bezos
Most organizations care deeply about the quality of their decisions. But in today’s ever-changing world that is not enough. Increasingly, it is the speed with which your organization makes good quality decisions — and then implements and evolves them — that sets you apart from your competitors.
This is not a new idea. But it remains very difficult to achieve in practice, particularly once an organization moves beyond a fairly small scale.
Our journey in scaling a decisive startup culture at Certsy
As an in-house SEEK startup, Certsy has enjoyed the autonomy to make rapid decisions while being able to leverage the main business to scale up fast.
From a team size perspective, we’ve grown 10x in around 3 years. Along the way, we’ve navigated a few key transition points where we had to evolve our ways of working to cope with the challenges of being a larger organization.
As a leadership team, we’ve read widely, observed others, tried things out, reflected on our own experiences, and tried to identify practical ways to achieve that holy grail of high quality and high velocity decisions at scale.
This article is mostly written for our own benefit — i.e. to distill the essence of how we make fast, effective decisions — so that we can keep growing fast without losing our mojo. But we share it here in case others on a similar journey find it useful and perhaps choose to share their own insights…
Case study: Amazon and high decision velocity
Amazon CEO Jeff Bezos has talked for years about needing to remain what he calls a “Day 1” company focused on growth & opportunity. Why? Because…
“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1"
Bezos argues that decisions are made differently in Day 1 vs Day 2 firms:
“Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions.”
Examples of his advice about how to achieve quality decision velocity include:¹
- Don’t use a one-size-fits-all decision process. Many reversible decisions are not a big deal if you’re wrong, so keep the process lightweight for them.
- Make decisions with 70% of the information you wish you had. If you wait for 90%, you’ll probably end up being too slow.
- Being wrong is often not as costly as you think, provided that you are good at detecting this quickly and then course-correcting.
- Be prepared to disagree and commit, especially when you have conviction on the direction but a lack of consensus on the particular solution.
- Recognize true misalignment issues — i.e. fundamentally different objectives and views —early and escalate them immediately.
“Speed matters in business — plus a high-velocity decision making environment is more fun too” — Jeff Bezos
Fast decisions are easy in a startup … but much harder as you grow
High velocity decisions are more common in startups than large enterprises because startups have a few natural advantages that enable fast decisions:
- Singular focus on an initial product or service
- Large ambition and relatively little to lose (no established business)
- Fewer decision-makers and stakeholders to involve.
Entrepreneurial success generally requires a combination of good quality decisions + fast learning + a spot of luck.
If startups make fast but low-quality decisions, the clock is ticking on their survival. Some may learn their way to a viable business with iteration and luck, but many crash and burn as they run out of resources. At this early stage when everyone is fast, quality decisions and execution make the difference.
Once a new venture gets traction and starts taking off, it hires more people, expands its scope, and becomes a more complex organization. To hold the rocket ship together and survive the growth phase, it must evolve its systems, processes and structures to maintain high quality decisions at greater scale.
Unfortunately, this process of growing and maturing as an organization often ends up eroding decision velocity unless the startup fosters the culture and practices for high-quality, high-velocity decision-making at scale.
Our approach to high quality, high velocity decisions
Here’s a practical guide to help individuals, leaders, and organizations make effective decisions faster — and it comes with a handy mnemonic: DECIDE
D = Decentralize
E = Energize
C = Contextualize
I = Inform
D = De-Risk
E = Execute
D … is for Decentralize
Decisions should be made as close to the action as possible. Done well, decentralization enables fast and effective decision-making with reliable implementation… but it requires an appropriate culture and structure.
Accountability and autonomy
When people have accountability for outcomes and autonomy for relevant decisions, they usually respond with creativity, innovation, and commitment. You get better solutions delivered faster with considerably less effort.
Decentralized decisions also lower coordination costs significantly. There’s much less time wasted on coordinating calendars, waiting for responses, preparing fancy presentations, or building consensus across diverse groups.
Unlike top-down approaches, decentralized decisions avoid the “ivory tower” problem of impractical solutions which demotivate teams and create budget and timeline blow-outs. You also avoid the overhead of trying to monitor and enforce compliance with a specification, because teams are self-managing.
But to paraphrase Peter Parker from Spiderman, “with great autonomy comes great responsibility”. To avoid purely local optimization, teams need to understand the broader context and must take responsibility for externalities and overall results despite only having direct control over part of the system.
Design your org structure wisely
Structure really matters. Being thoughtful about how you define teams helps set them up for success as fast, effective and decentralized decision-makers.
For example, when Certsy out-grew a single team, we re-organized into the four squads we have today based on the following org design principle:
“Design our organization structure using small, stable, cross-functional teams that have genuine autonomy to tackle an important opportunity space.”
There is no perfect way to set team boundaries. By choosing carefully, you can reduce dependencies and hence the need for coordination and alignment. But this gets harder as you add teams and the product scope & complexity grows.
Effective context and information flow is always essential (see below) but the mechanisms used should evolve as your organization crosses particular scale thresholds. For instance, defining ‘domains’ that comprise multiple ‘squads’.
It is natural to question how far decentralization can scale, but consider the example of Chinese white goods manufacturer Haier: they evolved a radically decentralized model and now employ 70,000+ people across 200 customer-facing micro-enterprises and 3800 service & support micro-enterprises.
E … is for Energize
Decision-making is fundamentally an act of willpower and courage. You don’t know the future, yet you make a call now and commit to action. For high velocity decisions across all parts of your organization all the time, you will need a culture and leadership style that energizes teams to decide.
Energizing teams to decide requires 3 key components: (i) bias to action to overcome the inertia of the status quo; the (ii) psychological safety to realize we will make mistakes; and (iii) growth mindset to learn and improve.
Bias to action and sense of urgency
Inertia is the enemy of progress in organizations. People are hardwired with status quo bias: we see more risk in acts than omissions. It feels safer to defer a decision, wait for information, get input from others, or push the decision up to your boss.
But that’s dangerous in a competitive, dynamic environment where staying still leads to obsolescence. Culturally we must find ways to flip the bias from inaction to action, setting a clear expectation that successful people here are those who use their best judgement to make decisions and keep moving.
An appropriate sense of urgency helps. This isn’t about an artificial or unsustainable rush — just a reminder that we’re here to have an impact and time is precious so let’s not waste it. And our competitors aren’t napping…
Make it safe (and expected) to disagree
Part of the secret when energizing people to decide is removing the negative energy of fear that holds them back. A culture of psychological safety helps people speak up, disagree, make mistakes, etc without fear of reprisal or jeopardizing their group membership. We’re all in this together!
It’s one thing to say this but people will be skeptical at first and only truly believe when they see your commitment to this principle play out in action multiple times. Use your incidents, flare-ups, disagreements etc as an opportunity and a moment of truth to demonstrate you really walk the talk.
Create an organizational growth mindset
We know from eminent psychologist Carol Dweck that a growth mindset is powerful for individual health and long term success … and we believe the same applies to organizations too.
Organizationally, a growth mindset requires a culture of learning from experiences and mistakes – i.e. using them as opportunities to get better. This reinforces psychological safety and helps to re-frame decision-making from a one-off, get-it-right mindset to a repeated game where the more decisions we make, the better we get at it.
It’s also energizing and liberating to be explicit about the implications of your growth mindset: e.g. “We prioritize learning over revenue. Revenue matters to us as proof our product is delivering value. For now, let’s focus on making the product better, not hitting a dollar target for its own sake”.
C … is for Contextualize
For autonomous teams to make high quality decisions that align to the organization’s strategy, it is critical they understand the overall strategy and also that they work out for themselves how to connect and contribute to that.
Define a clear strategy and ambition
Don’t be shy about providing top-down direction on your strategy (what and why) because that’s the necessary flip side to teams having autonomy on how to get there. Teams tend to appreciate this clarity provided that the logic stacks up and they have space to work out how they can contribute.
There are many approaches to articulating strategy and fostering alignment. The specific framework matters less than the depth and quality of strategic debate and the clarity with which you express the output of that process.
Personally I am a big fan of the approach in Good Strategy/Bad Strategy (e.g. diagnosis, kernel, chain link logic) and Playing to Win (where to play, how to win, enabling capabilities). But ultimately it’s just having a set of coherent, mutually-reinforcing choices that play to your strengths and add up to a distinctive theory of winning in your domain.
For example, across SEEK we use a product ambition, product system, high level roadmap, and OKRs to communicate the context and strategy. Within Certsy, we’ve also been using squad charters to help teams distill the essence of what they’re about and how they can contribute to direction and strategy.
Articulate key principles, constraints and tradeoffs
Tradeoffs are intrinsic to decisions that matter – if there’s no hard trade-off, the choice is simple. What’s hard is when one desirable objective comes at the expense of others —for example, the classic speed /quality / cost trade-off.
Teams can make quality decisions faster if everyone agrees on what the difficult trade-offs are and aligns on principles for how to make the call. It also helps to be aware of particular strategic constraints or guardrails that define the broad area within which teams should use their initiative and judgement.
Principles are powerful because they generalize the situation and make future decisions simpler. We don’t need to re-litigate the trade-off each time a specific instance pops up – instead, we just apply the general principle to the details of the situation. On occasion, if teams strongly feel the outcome would be wrong, we use this as a trigger to review the principle and either re-commit with deeper understanding or revise it to reflect new insights.
Connecting to context is a multi-directional effort
It’s usually at least a 3-way process to properly connect all teams to the right context: i.e. top-down sharing of the overarching strategy and ambition; bottom-up connecting to that and working out how you can contribute; and sideways sharing between teams to align and resolve dependencies. This is often an iterative process to narrow in on an agreed approach and then to maintain the connection with context over time.
We try to avoid telling teams exactly what’s required of them – instead, we expect them to actively work out for themselves (and be able to explain to others) how they can best contribute. This process builds understanding and commitment, and also surfaces gaps, issues and dependencies to discuss.
One technique that helps is having simple and consistent summary artefacts (e.g. squad charter, ambition one-pager, OKRs) that all teams publish for the wider organization to see and that can frame up the key debates.
I … is for Inform
As the famous business thinker Peter Drucker observed decades ago, effective decision-making requires us to ask “Who needs to know about this decision?”. He argues that a decision has not been made until all the relevant people know about it, understand it and at the very least do not strongly oppose it.
With decentralized decisions, individuals and teams take responsibility for informing others (i) what their decisions are and (ii) why they decided this. Teams typically need to use a combination of (i) targeted communications (ii) asynchronous broadcasts to inform others.
Consensus is not usually necessary
Remember: your aim here is to inform, not necessarily to agree.
Most often a lack of agreement is not based on fundamental or critical issues — it’s just intelligent people with good intentions coming to different conclusions based on their own interpretation of the facts and implications.
If you value good judgement, you’ll naturally expect teams to listen to feedback and be curious about why others are drawing a different conclusion. But if you also want to do bold things and move quickly, teams simply won’t have time to go around talking until everyone “signs up” with official agreement. And requiring unanimity via committee will likely dilute the boldness and distinctiveness of your product or action plan.
Amazon’s famous “disagree and commit” technique is a useful example of informing — this signals full consensus is not necessary and in most cases of disagreement they respect the autonomy of those closest to the action. Only for very serious and fundamental issues would you want to over-rule that.
Targeted communications where it matters
Direct interaction is a powerful but time-intensive method of communication so in the interests of speed it should be used selectively.
We like it when individuals and teams think about who is affected by their decisions and to what extent, and take on responsibility for pro-actively reaching out to the most critical stakeholders to let them know what has been decided, why this decision was made, and how it is being implemented.
Thoughtful, succinct and well-crafted written messages can work well, with video or graphics as support where appropriate. We like to start by assuming a synchronous meeting is not needed, and only add one if there’s a compelling reason (e.g. debate, key stakeholder feedback, relationship building, etc.).
Asynchronous broadcasts as a general rule
However, you simply can’t know everyone who needs to be informed about a decision, nor is it a good use of your precious time to talk to everyone directly.
Now, thanks to modern tech, you can easily broadcast your decisions via slack, intranet, team wiki/confluence/blog, newsletters, and other mechanisms. This enables people anywhere in the organization to become aware of a decision and reach out if needed to discuss or to raise concerns.
However, people also need to take responsibility for informing themselves. Teams should pro-actively monitor progress in areas that impact their own efforts, and skim the news from elsewhere for general contextual awareness.
D … is for De-Risk
There’s no need to be reckless —in many cases, you can reduce risk and increase decision velocity at the same time. How? By taking inspiration from the agile manifesto, discovery driven planning, and human psychology.
Break decisions into smaller chunks
Agile encourages early and continuous delivery of value by breaking tasks into smaller pieces. You can apply this to all sorts of decisions, not just software.
For example, rather than deciding on a 3 year $10m project commitment, why not start with a 1 month $10k prototype? If it works, you’ll have learned useful things and can move ahead with the next logical step at lower risk.
Small, frequent decisions yield a large cumulative advantage over occasional, big ones — you waste less effort, get insights sooner, reduce the risk of catastrophic failure, and get regular practice in effective decision-making.
Validate your key assumptions early
Try to identify critical assumptions upfront so you can focus on validating them as quickly and cheaply as possible.
Techniques like startup prototypes and minimum viable products (MVPs) are based on this approach of converting assumptions into knowledge but the core idea dates back to discovery driven planning in the mid 1990s.
Google X has a mindset for their moonshot projects that they call Monkey First. In essence, if your project is to have a monkey on a 10 foot pedestal reciting Shakespeare, then you don’t start by building the pedestal, you first train the monkey because that’s the hardest, riskiest, most critical part.
Consider multiple options
Another very simple yet effective way to boost decision quality and reduce risk is to insist on always considering a range of alternatives.
This shifts the frame from a risky yes/no decision on one project (which can trigger psychological biases like anchoring & confirmation) to a more rational and balanced stance of looking at alternative options. It encourages clarity on what success looks like, and helps articulate principles for deciding on A vs B.
E … is for Execute
Decisions are pointless unless some real-world action occurs. And to get full value from them, you need fast, effective and coordinated action.
Aim for commitment, not compliance
One reason decentralized decision-making is powerful is that it leads more reliably to committed execution. Top-down decisions may achieve compliance – in various unappealing flavours like lukewarm, malicious, letter of the law, etc. – but for top quality execution, you really need heartfelt commitment.
When a team defines their own plan and takes responsibility for delivering on it, they are far more likely to actually believe in it, persist in the face of obstacles, and find genuinely creative or novel solutions.
“No matter how beautiful the strategy, you should occasionally look at the results” – Winston Churchill
Avoid artificial distinctions between strategy and implementation – it’s only through the effective combination of both that you get lasting results.
Strive for an organization culture that cares deeply about results over the long term but doesn’t focus too much on them in the short term. This can help you avoid common traps like conflating skill and luck; not staying the course; or counter-productive incentives.
Focus on the 80/20
As per the Pareto Principle, you’ll find that the bulk of your organization’s impact comes from a small fraction of your actions. This is liberating because it reminds us that success does not require perfect consistency or flawless execution —you simply need to nail the critical few things that really matter.
When you know that particular decisions and actions are not make-or-break for you or the organization, it’s easier to use your judgement and move fast on these matters —if it doesn’t work out, just learn, adapt and and keep moving.
Streamlining the trivial many frees up valuable time and attention to focus on the critical few. This is essential if you are to adhere to Google X’s ‘monkey first’ principle by tackling the hardest, riskiest, and most critical tasks first.
Have your say!
We hope this article provoked some interesting reflections about how you can accelerate quality decision-making in your organization. We’d love to hear your thoughts and perspective on this, so please join the conversation below.
- Jeff Bezos’ letter to Amazon shareholders: https://www.sec.gov/Archives/edgar/data/1018724/000119312517120198/d373368dex991.htm
- Peter Drucker’s advice on effective decision making in his book (https://www.amazon.com.au/Effective-Executive-Peter-Ferdinand-Drucker/dp/0060833459) and HBR article (https://hbr.org/1967/01/the-effective-decision)
- Gary Hamel & Michele Zanini’s new book Humanocracy: https://www.amazon.com.au/Humanocracy-Creating-Organizations-Amazing-People-ebook/dp/B07B9HFSHX
- Haier’s organizational philosophy and evolution is described above in Humanocracy and also in this article: https://corporate-rebels.com/haier/
- Stephen Bungay’s book on ‘strategic intent’ and directed opportunism, based on the lessons of military history: https://www.amazon.com.au/Art-Action-Leaders-between-Actions/dp/1857885597
- Richard Rumelt’s excellent book on distilling the essence or ‘kernel’ of an effective strategy: https://www.amazon.com.au/Good-Strategy-Bad-Difference-Matters/dp/0307886239
Thanks also to Ariel Hersh, Timo Hilhorst, Isabel Keeley-Reid and Alan Skorkin for their feedback on draft versions of this article.