Decision-Making, Made Easy
How are you instilling a culture of speed, accountability, and teamwork as your organisation scales up?
The biggest asset to a business scaling up is making the right, informed decisions. Decision making is a skill.
It’s a critical thinking process that is deliberate, it’s problem-solving and decision makers comes from long term practice, not chance.
Great leaders understand how to reason to make decisions that allow them to respond to problems, seize opportunities or position themselves (or products) for success in the future.
Good decision-making is compounded over time. When you make a good decision, it allows you to overcome problems, while also avoiding future problems too.
All decisions are not created equal
Type One decisions:
Type One decisions are one way doors, they’re consequential and irreversible (or nearly irreversible). Which means that they’re very important in nature, so must be made methodically, with deliberation and often with consultation.
A type one decision is no going back.
Ideally, you really want to keep the door ajar as long as possible, sourcing as much information as possible, before committing to passing through the door.
- Having a child
- Making a large financial investment
- Getting Married / Divorced
- Renovating your House
- A tattoo on your forehead
- Launching a new product in your business
Type One decisions are often treated as binary. We either do it, or we don’t.
Type Two decisions:
Most decisions in business and life are two-way doors, which is much less scary. If we decide and don’t like the outcome, we can double back on the decision without many repercussions.
Whilst Type Two decisions are inconsequential and reversible, in business, for some reason they’re treated with the same pain-staking process.
This is where delegation to teams further down the organisation should be utilised, empowering them to make these decision based on their own judgement.
These teams may make the occasional bad call but the speed of decision making and business-progress will outweigh the negatives.
‘One size fits all’ decision-making has drawbacks
Businesses spend significant time and investment launching new projects or products. Quite right too as launching a new product is a Type One decision. Once you commit to launching the product, there’s no turning back.
You can never turn back the clock and claw-back the capital spent taking that product to market. If you make the wrong decision, it’s only going to cost more money and time in future to correct the error of your ways.
Your bad decisions compound over time, creating bigger problems in the future.
Use experimentation to make the right call
Use experimentation to gather the right information before making your Type One decision and launching that product into the market.
It cannot be launched based on opinion, blue-sky thinking or because the boss reckons it will ‘go down a storm’. It must be launch based on fact rather than fiction and experimentation is the process of justifying your decision making.
Type One decisions can be scary but if you break them down in to series of smaller, Type Two decisions.
Rather than look at one big decision, break it down into a series a smaller decisions. For example, target segments, customer problems, solution design, value proposition, pricing, distribution channels, business model etc.
Once you have done this, each part can be tested through a series of experiments to give you quantifiable, proven data which will help to make the overall decision. This allows you to learn from your customers, validating and testing your assumptions prior to market launch, whilst reducing waste of business resources.
How you can apply these techniques professionally?
1. Define the decision to be made. Is it an iIrreversible Type One decision or a reversible Type Two decision?
2. If Type Two decision, delegate the decision to your team, or, use your judgement to make the decision.
3. If the decision is a Type One decision, break it down. Type One decisions are to be broken down into smaller component parts so that you can test and validate your assumptions to decrease business risk
4. Conduct fast, low-cost experiments with customers to gather data and information to facilitate relevant, high-quality decision-making on your big decision
If it feels like a scary decision then it’s probably a Type One, break it down to multiple Type Two’s and experiment to validate your decision.
Much less scary and much more beneficial.
In theory, decision-making is easy – if presented with the required data prior to making the decision. If you consistently make the right decision you will continue to learn and keep yourself in motion.
Scaling a business, cohort or team can be very difficult. Making the right decisions based on data through experimentation is the best way to make them.
Here at Effective Experiments, we have built a framework called Experimentation Ops which enables companies to build a scalable experimentation program with solid foundations. by making the right choices. This enables growth beyond the core teams and into the wider organisation.