I’ve worked in a few startups. It is usually an exciting, dynamic and fast environment to work in. Startups tend to do new things. Things that haven’t necessarily been done before. Startups need to move fast and the number of decisions the founders and management team need to make is usually huge. In such an environment, how do you avoid analysis paralysis and make decisions quickly? I have a few thought patterns and principles that may be of help when approaching decision-making in startups.
1. There are no hard decisions.
Probably the most common way to make decisions is to make a list of the all the pros and the cons of each decision. For our example, let’s say that we have a binary option decision: it is A or B. Then you make a list of all the pros of A and all the cons of A. Then you do that for option B as well. If you find out that one option has substantially more pros than cons and it is also overwhelmingly the better option, the decision is easy. Right? Let’s assume the option A has an 80% chance of success and option B has a 20% chance of success. It’s easy to make the decision to go with the option A. But what if it seems that the chance of success is around 50% in both options? This is usually considered a hard choice. But actually, the more equal the chance of success gets, the more irrelevant your decision becomes. Since it is 50-50 it really doesn’t matter what decision you make.
So if it is a clear choice it’s an easy decision and if it’s an even choice it’s even more easy.
2. When in doubt, lean towards action.
Many people talk about data-driven decision-making. And that is important. But sometimes in a startup environment you don’t have any applicable business metrics or past financial data available to draw conclusions from. This can sometimes lead to indecisiveness. How to make decisions if there is no data available? Well, you kickstart the feedback loop. You kickstart the feedback loop by making the decision even when in doubt. The decision leads to action and then you can start gathering the data and that helps you to refine the decision in the future. If you don’t make the decision, you never get the feedback loop going, you never learn from the actions and this will paralyze the company. I learned this principle from Jocko Willink, who is a retired Navy SEAL commander. This principle seems to work in life-and-death situations and I’ve found it works in startups as well.
3. Nobody knows the future for sure
The future is a guess for everyone. Nobody can know with absolute certainty what the future holds for us. Some people get things right more than others, but nobody gets it right all the time. Sometimes people avoid making decisions claiming they lack information. But the information we have today cannot accurately predict the future, and as Garry Kasparov, the chess grandmaster, said at Nordic Business Forum: “There comes a point when adding new information to the decision-making process becomes completely useless”. So don’t be afraid of making bad decisions, just be afraid of not learning from them.
I hope these principles turn out to be useful for you. But I’ll leave you with the words of the billionaire investor Mark Cuban:
“Never take advice from someone who doesn't have to live with the consequences.”