How to make decisions, or how to avoid the deadly embrace!



As I’ve posted before, startups are decision machines. Founders will be making exponentially more decisions than they ever have in their lives. And making those decisions with far less information than the executives in mature companies. Estimates say you will only have 80% of the information of an established company.

Here are some other ways to make decision than those elucidated in my previous post.

One is way is to compute your ROTI, your Return on Time Invested. When you are a startup resource allocation is a much tougher problem than in an established market leader like Microsoft. You have zero slack. And your most important resource is you and your team. So looking at the time to actually implement a decision that got through the pros/cons and decision tree process is vitally important. As is what is called opportunity cost, which is what benefit your venture would have received but gave up to take another course of action. Sometimes the opportunity cost is too high and you have to choose a different course of action or perhaps none at all.

It is always good to have a default . I borrowed this term from my programmer friends, where default means a selection automatically used by a program in the absence of a choice made by the users, as in default settings.

A default is what I call a forcing function, a term I borrowed from human interface design.

forcing function is an aspect of a design that prevents the user from taking an action without consciously considering information relevant to that action. It forces conscious attention upon something (“bringing to consciousness”) and thus deliberately disrupts the efficient or automatized performance of a task.

A good example of a forcing function is when it comes to shipping a product is an important trade show. The date of that show becomes a forcing function to get the organization focused on everything it needs to do to ship the product by that date.

A retired VC told me about the system he and his wife use to make decisions. If they couldn’t reach agreement the decision would go in favor of the party to whom the decision was most important. For example, if he wanted to paint the living room white and his wife wanted to paint it beige, the room would get painted beige because he cared about the color a whole lot less than his wife.

In The Wall Street Journal review byDavid A. Shaywitz of the book Meltdown Why Our Systems Fail and What We Can Do About It there are a couple of other examples of how to make decisions.

The use of explicit criteria to make decisions can reduce our dependence on gut reaction. Conducting a “premortem”—imagining that a proposed project has failed and figuring out the possible reasons—can enable us to anticipate potential problems.

Finally here’s the results of a study from behavioral economics that affects your decision making:

Perhaps the most important lesson of “Meltdown” is captured by a series of studies performed by Evan Apfelbaum and his colleagues at MIT. They found that, as much as we’re predisposed to agree with a group, our willingness to disagree increases dramatically if the group is diverse; deference dissipates. Homogeneity may facilitate “smooth, effortless interactions,” according to the authors, but diversity drives better decisions.

But whatever you do, don’t get caught in a deadly embrace. This is a term I learned when I trained to become a lifeguard. A deadly embrace is when you allow the person you are trying to save to pull you both down, drowning you both. Here’s the computer science definition:

A stalemate that occurs when two elements in a process are each waiting for the other to respond. For example, in a network, if one user is working on file A and needs file B to continue, but another user is working on file B and needs file A to continue, each one waits for the other. Both are temporarily locked out. The software must be able to deal with this.

There are some good options for you to avoid a deadly embrace or a making sub-optimal decision. Generally speaking, any decision is usually better than no decision. But if all else fails and you are in gridlock, sit under the decision tree and wait for the apple of decision-making to fall on your head.

Author: Mentorphile

Mentor, coach, and advisor to entrepreneurs, small businesses, and non-profit organizations. General manager with significant experience in both for-profit and non-profit organizations. Focus on media and information. On founding team of four venture-backed companies. Currently Chairman of Popsleuth, Inc., maker of the Endorfyn app for keeping fans updated on new stuff from their favorite artists.

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