Up to Speed with Decision Making

“An expert is someone who has succeeded in making decisions and judgements simpler through knowing what to pay attention to and what to ignore.” – Edward de Bono, physician/psychologist/author, Six Thinking Hats

There’s much written and said about the speed and quality of decision-making.

Companies, as they scale up, are often successful because they are quick and nimble but, as they get bigger, have difficulty keeping decision quality high and fast. Leaders often slow down the process as their companies become less attentive and more bureaucratic.

I’ve seen many styles of decision-making in my work with many different types of leaders: some default to very fast on almost everything, and others like to think things through.

So, when it comes to decision-making, is it better to be fast or slow?

After seeing hundreds of CEOs and executives handle decision processes, the answer is clearly…it depends!

In a famous letter to shareholders, Amazon’s Jeff Bezos identified two categories of decisions:

Type 1 Decisions

These are a one-way door, requiring thoughtful analysis of 90% of the necessary information to make an appropriate decision. Once you’ve gone through there’s no going back without great consequence. Some examples:

  1. the location of a second manufacturing location for your business
  2. where to expand to internationally and who to partner with
  3. implementing a change to your compensation program that affects all your employees
  4. hiring a key executive
  5. whether to let a 20-year employee go – or give them one last chance.

Type 2 Decisions

These are a two-way door: you can enter and exit without long-term ramifications. These need 70% of the required information available and should be made as quickly, with as few people, as possible. For example: the initial price of a new product, where to hold the annual retreat, hiring a customer service rep or changing the layout of your website.

Bezos noted two things:

  1. Many people get it backwards as they become more bureaucratic and end up using Type 1 for almost every decision which slows them down and makes them less effective
  2. Some super-entrepreneurial companies use Type 2 for most decisions, which can get them in trouble.

You need to be really clear on when you need to use which process. And when you and your team need to be more conscientious and thorough.

The Challenge

When it comes to decisions…

  1. Where are you the bottleneck? What are a few Type 2 decisions you need to make that you can delegate to someone else?
  2. Where are you the risk? What Type 1 high-impact decisions do you need to think through more thoroughly? The ones that need more data or consultation with an expert.

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