Startup leaders often face tough and ambiguous decisions. They must choose from various high-stakes options. It’s not easy to pick the “best” one and can lead to wasted time. But making a decision is more than finding the perfect choice.
It’s about using the information at hand, building trust, and acting decisively. We’ll look at six strategies for making quality decisions at fast-paced startups. These tips come from experienced executives. They know how to think critically, solve problems, and plan strategically. These skills help them make decisions that push their companies forward.
Key Takeaways
- Successful decision-making is not about finding the “best” option, but rather making the most of available information and executing with conviction.
- Developing a set of decision-guiding principles, such as “Think Rigorously” and “Trust and Amplify,” can help teams maintain a shared decision-making compass.
- The “Xanax for Decision-Making” matrix framework distinguishes good decision-making from good decisions, and categorizes choices as either irreversible or reversible.
- Practicing different decision-making styles, such as being decisive, analytical, collaborative, or inclusive, can increase a leader’s agility in adapting to various situations.
- Reframing the decision-making process by separating the “What” (the strategic choice) from the “How” (the execution) can help leaders focus on the underlying strategic question.
Codify a Set of Decision-Guiding Principles
As a startup grows, knowing what a “good decision” is might get fuzzy. Stripe’s COO, Claire Hughes Johnson, crafted a decision-making framework. It provides a guide for everyone on the team. This framework lays out key principles. For example, it tells members to “Think Rigorously” (focus on accuracy, challenge common beliefs) and to “Trust and Amplify” (work with great people and support them well).
Think Rigorously
Stripe’s approach pushes the team to think deeply and clearly. It asks them to make sure they get things right and spot common mistakes. This kind of thinking is crucial for making decisions that push the business ahead.
Trust and Amplify
“Trust and Amplify” highlights teamwork and creating a culture of trust. It lays out the idea of working with excellent people. These people are kind to others. Together, the team can boost their performance and decisions.
Bake Principles into Hiring and Performance Reviews
Stripe makes sure its decision-making principles are always remembered. They do this by including them in hiring and performance reviews. This keeps the company’s decision-making on track. As the business expands, it ensures a uniform approach to decision-making.
Lean on the Matrix: The “Xanax for Decision-Making”
Flatiron Health grew from 4 to 135 employees. Its CTO, Gil Shklarski, saw a lot of slowdowns in making decisions. To fix this, he came up with the Decision-Making Matrix, known as the “Xanax for decision-making.” It helps teams make hard choices quickly and wisely.
Distinguish Good Decision-Making from Good Decisions
This system tells apart good decision-making from good decisions. Even a good outcome might lead to trouble without a sound process. It looks at decisions as either Type 1 (irreversible) or Type 2 (reversible), aiming to improve making those reversible choices.
Type 1: Irreversible Decisions
Type 1 decisions are big changes that can’t easily be fixed. They need careful thought because they can impact a lot in the long run.
Type 2: Reversible Decisions
In contrast, Type 2 decisions can be changed or canceled. This means you can test ideas quickly and find what works best.
Facilitate Open Discussion and Psychological Safety
The Decision-Making Matrix encourages talking openly and feeling safe. It asks everyone to list the good and bad points of each choice. This makes decisions clearer, helps teams agree, and lets each person share their thoughts.
Decision-Making Styles for Strategic Choices
Good leaders know when to use different decision-making styles. Carol Kauffman found four main styles they might use: Lean In, Lean Back, Lean With, and Don’t Lean.
Lean In (Be Decisive)
Lean In means making quick, hard decisions. It’s great for times when you must act fast. Leaders in this group are good at looking at facts to make the right choice.
Lean Back (Be Analytical)
Lean Back, on the other hand, is all about careful thinking. This style works well for big, complex problems. It helps leaders choose wisely by looking at all available information.
Lean With (Be Collaborative and Empathetic)
Lean With focuses on working together to decide. This makes everyone feel their ideas count. It leads to decisions that everyone can support.
Don’t Lean (Let Others Speak Up)
Don’t Lean gives the team a chance to lead. It lets others share their smart ideas. This way, leaders can use the team’s wide knowledge in decision-making.
Leaders often stick to what they know works, but that can limit them. Trying different styles can make a leader more versatile. It makes them ready for any situation, even the tough ones.
Reframe the Question: Separate “What” from “How”
Leaders can mix up Strategic Decision-Making with Separating Strategy from Execution. They might think about the “What” by how they can do it. Instead of the core question. To fix this, they should ask, “What would you decide if it was easy?” Answering this can help cut out the “How” for now. This way, they focus on what’s most important, the strategic choice itself.
When they know the “What”, talking about “How” is clearer. And it’s free from confusing options of not going for the goal. This approach makes decision-making smoother and more focused.
Avoid the Binary Trap: Consider the Third Option
Leaders often get stuck in binary thinking, only seeing black or white choices. This stops them from finding better options. Professor Sheena Iyengar’s research shows that looking at 3 to 6 choices can really help people understand their situation better.
Expand Perspectives Beyond Yes/No
Choosing beyond black or white opens up more discussions. It makes the final choice better and more effective. It’s important to pick options that are very different from each other. This makes teams think outside the box and see more possibilities.
Ideal Number of Alternatives: 3 to 6
Research says that between 3 and 6 choices is perfect. This range lets you thoroughly check all options without getting lost. The aim is to have more choices and not fall into the binary trap. This way, decisions are smarter and more complete.
The Cost of Indecision: Overcome Analysis Paralysis
Fear and the hunt for the “perfect” choice often lead to indecision and analysis paralysis. Leaders can beat this by assessing the cost of postponing decisions. They should figure out the worst-case scenario and how likely it is. Then, they can plan how to handle things if that bad scenario happens. Knowing the cost of indecision and being ready for the worst can make decision-making easier. It stops the endless cycle of needing more and more info.
Consider the Cost of Postponing
It’s common to delay tough choices in search of the “perfect” answer. But leaders should remember the cost of indecision. Waiting means missing chances, facing more risk, and slowing progress. By looking at what they lose by waiting, leaders can see the real cost. This can push them to decide, even if it’s not the perfect one.
Identify the Worst-Case Scenario
Beating analysis paralysis involves planning for the worst-case scenario. Leaders need to carefully think about what could go really wrong with their choice. They should also think about how likely these bad outcomes are. This process helps them grasp the full risk and get ready to handle tough times.
Plan for the Worst-Case Scenario
Once they’ve tackled the worst-case scenario, leaders must make a plan. They should figure out how to react if things go south. This worst-case scenario planning makes leaders feel more prepared and less surprised. It helps them face risky decisions with more assurance, all because they have a plan for the bad times.
Conclusion: Start with the End in Mind
Great leaders make decisions that lead to success. They think about their end goal. Imagine being on their deathbed, proud of their life and work. This helps them focus on what really matters for their future success. They learn to ignore distractions and choose wisely. Their choices push their business ahead.
A leader’s choices shape their company’s path. They should make decisions based on their vision. This means understanding the big goals and being ready to make hard choices. These may not be popular now, but they set the business up for long-term triumph.
In a world that’s always changing, making smart decisions is key for leading. The tips in this article are tools for better decision-making. Leaders who use them can guide their teams well. They inspire new ideas and lead their company to big achievements. It’s all about using what you know to act confidently. This attitude can truly change the game.