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.

Lawrence & Co’s work focus­es on sus­tain­able and enhanced growth for you and your busi­ness. Our diverse and expe­ri­enced group of advi­sors can help your lead­ers and exec­u­tive teams stay com­pet­i­tive through the use of var­i­ous learn­ing tools includ­ing work­shops, webi­na­rs, exec­u­tive retreats, or one-to-one coaching.

We help high-achiev­ing lead­ers to have it all – a great busi­ness and a reward­ing life. Con­tact us for sim­ple and impact­ful advice. No BS. No fluff.