Decision making in a high growth environment

There is no easy way to make hard decisions. My approach brings that of a structured engineer (the beginnings of my college studies), psychology and behavior (my college degree), military thinking (the first 10 years of my professional career) and an operations approach (my roles after the military).

Decision making can be hard and it’s important to keep in mind there is no one-size-fits-all process. Many decisions are reversible, two-way doors that can easily reserved or changed.

While frameworks can be helpful, good judgment always applies.

Understand the type of decision you are making

Start with clearly defining, “What are we trying to decide and how significant is that decision?” A way to think about the significance of a decision is laid out in this article by McKinsey.

• Big-bet decisions. These infrequent and high-risk decisions have the potential to shape the future of the company.
• Cross-cutting decisions. In these frequent and high-risk decisions, a series of small, interconnected decisions are made by different groups as part of a collaborative, end-to-end decision process.
• Delegated decisions. These frequent and low-risk decisions are effectively handled by an individual or working team, with limited input from others.
• Ad hoc decisions. The organization’s infrequent, low-stakes decisions are deliberately ignored in this article, in order to sharpen our focus on the other three areas, where organizational ambiguity is most likely to undermine decision-making effectiveness.

Clearly define what success looks like

State the broader goal. Be perfectly clear about what you’re ultimately trying to accomplish. Is the broader goal to bring a new product to market, to delight customers, hit growth targets, or something else? Understanding this helps set the stage for making a specific decision (see “Commander’s Intent” section below).

Define the decision. Executives get this one wrong a lot. The ostensible choice might be whether or not to fire the CEO’s friend — but it could be something else. Maybe her role should be redefined, or his performance incentives adjusted.

Be aware of biases and have a plan for safeguarding against them

Our minds are riddled with a host of cognitive biases that help us act quickly in the face of danger but make accurately weighing evidence, assessing probabilities, and deciding logically often pretty difficult. Cognitive biases stem from heuristics, or mental shortcuts we take to arrive at decisions quickly. Such shortcuts are often necessary as we don’t have the time to go through an arduous process to reach each decision.

The problem is that in certain situations, these shortcuts can systematically lead us astray, and in these situations the shortcuts are known as cognitive biases.

There are entire books written on the subject of biases, though here’s a few of the most common errors to watch out for:

• Recency bias — The tendency to give disproportionate weight to recent events and discount information from the more distant past. Because it’s an easy way to think about a decision, we’re inclined to use our recent experience as the baseline for what will happen in the future. Similarly, pattern recognition can also mislead us. When we’re dealing with seemingly familiar situations, our brains can cause us to think we understand them when we don’t.
• Confirmation bias — It’s much easier to simply ignore information that calls our most cherished ideas into question than it is to engage with threatening new information. So, often, that’s just what we do.
• Expert bias — The inability for a person who has mastered a skill to understand how they could possibly be wrong.

Techniques that help safeguard in situations when the threat of biases is strong:

• Inject fresh experience or analysis. You can often counteract biases by exposing the decision maker to new information and a different take on the problem.
• Introduce further debate and challenge. This safeguard can ensure that biases are confronted explicitly. A rotating devil’s advocate role can bolster critical thinking, while premortem exercises (in which you start by assuming the initiative in question turned out to be a failure, and then work back for likely explanations) can pressure test for weak spots in an argument or plan.
• Impose stronger governance. The requirement that a decision be ratified at a higher level is another option. This isn’t appropriate or needed in every situation, but a quick sanity check from a senior member of the company can help when there is uncertainty around a decision.

Dealing with potentially false or incomplete information

Colin Powell has written, “Use the formula P=40 to 70, in which P stands for the probability of success and the numbers indicate the percentage of information acquired. Once the information is in the 40 to 70 range, go with your gut.” Powell’s advice is don’t take action if you have only enough information to give you less than a 40 percent chance of being right, but don’t wait until you have enough facts to be 100 percent sure, because by then it is almost always too late. Procrastination in the name of reducing risk can actually increase risk.

Another way to think about the above is with the thinking, “A good plan violently executed now is better than a great plan executed next week.” In many types of decisions, be careful to not let perfect be the enemy of ‘good’.

It’s commonly understood in the military that first reports from the field are usually wrong. They may not be completely wrong, but they certainly aren’t 100% true. The same holds true in the business world…initial information you receive about a situation is most certainly not the full story. How to operate in an environment where you may need to make a decision but not have complete information? A great question to ask yourself is, “What else might be true?”

Asking “What else might be true?” is another way of questioning assumptions, which is particularly important when the stakes are high.

Understanding the “Commander’s Intent” is critical. This is another military approach and espouse the idea that leaders should know the intent of the commander two levels above them. Telling a subordinate what to do all the time is not sustainable…the ‘fog of war’ is too great and the situation on the ground is sure to change the moment execution starts on a plan. Rather than tell a subordinate a specific action to take, make sure they know your intent and the intent of your manager. With that information they can use their good judgment and make real-time, battlefield decisions based on their assessment of the current situation and the ultimate goal.

Making the call

Lay down the ground rules. For example, you might tell the group there will be 30 minutes of discussion and then a vote, and if there is no resolution, the issue will be brought to an executive. It’s especially useful to explain the finer points: Does anyone have veto power? Does the group vote determine the final decision, but a two-thirds majority is needed? Will minority viewpoints be documented for stakeholders to review? Whatever the process, explain it clearly so that everyone is aware.

Unwrite the rules. Think you can’t fire the CEO’s friend? Maybe you can. We have a lot of rules in our heads that may no longer apply — or never did. Quiet your fears by questioning your assumptions.

Diversify thought. It’s natural for people to group themselves together with people who think or act like them. It’s crucial to get outside your personal bubble. In team settings, give people the chance to give their opinions independently without the influence of the group. This tactic helps prevent people from engaging in groupthink.

Seek commitment, not unanimous agreement. As Jeff Bezos has famously said about decision making at Amazon, there are times to disagree and commit. This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.

After the decision

Communicating the decision is as important as making it. Does everyone who needs to know about the decision have the information they need? How are you sure? How are you distributing that information and how is it being recorded (for both the short-term as well as long-term)?