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No matter what stage of business you’re in — whether a gray-haired CEO or a scrappy founder with an idea in a garage — it’s vital that you impose a level of discipline around your decision-making process. The grayer my hair gets, the more intuition I have, so I’d be lying if I said I’m not relying more on intuition and experience than I did in the early days of my career. I don’t necessarily need a 50-page term paper on a potential project these days — I’ve seen a lot and can usually distill what I need from a few key metrics. However, without some level of process to balance metrics, intuition and input, you’ll find yourself wasting valuable time and money as you set out on your growth journey.
For small business owners, how, when, and who makes key decisions is a vital part of your operating procedure. As you scale, you have to become more quantitative and organized about where and when to invest, as well as what projects take priority. Here are a few tips for implementing your decision-making process.
If a leader goes into a decision without clear criteria for what success looks like, it will be very difficult on the other side of a decision to determine whether the venture is doing well or poorly, or whether you should invest more or less. This lack of clarity on the converging on specific outcomes, leads to lack of clarity for the entire organization. The more you rely on anecdotal information, the easier it is to attempt everything on the list rather than being intentional with priority items that will have a larger impact on the success of your venture. Intentionality is key to scale.
It may seem counterintuitive to some, but the more you scale, the less you, as a business leader, will need to measure. Therefore, when creating a framework around decision-making, your first decision should be which metrics matter and which don’t. The easiest way to delineate what matters for me is by tying it to one of my main three constituents — customers, employees and investors.
At the executive level, leaders really shouldn’t be looking at more than 15-18 or so measures, with the majority of those going unchanged year to year. The deeper into the organization you go, there will be many more measures that derive from these executive-level views. However, taking the time to have a shorter list of what moves the needle on the overall business, the greater clarity the executive team will have and can provide to the broader organization.
Chaos only works in the early stage
Within the startup phase of your business, chaos can be your friend. There isn’t always a strong understanding of what to do, how to do it, when to do it or what proportion to do it in. So, you’ll likely end up doing a lot of things, trying to get something to stick. This form of scrappiness is good, though not sustainable in the long-term.
Once you do have a good understanding of the product and your entry into the market, you will have to become more rigorous in your structure. This is when the opportunity cost increases for wrong, rushed or incomplete decisions.
For many companies at this phase, your team will have been together since the very beginning, and everyone will feel as though they have a sense of ownership in the company. It can be a painfully personal experience, but this is when structure and strategies must be realigned and shifted. If you don’t, you will have too many cooks in the kitchen, which does more than foster frustrating meetings. Too many opinions causes confusion, impedes responsibility and hinders ownership — all of which are necessary to make informed decisions. You must get clear on who needs to be involved at what level and make that a formal process.
Get consensus on the process
For large decisions, ones that meet a magnitude criteria — acquisitions, buybacks, product launches or anything that is cross-functional — DigitalOcean uses the RAPID® model, a loose acronym for input, recommend, agree, decide and perform (full disclosure: I am the CEO of DigitalOcean). Whether you use that model or something else, there needs to be buy-in from predetermined roles in the process: those who provide input and recommendations, those who will make the decision and those who execute.
The consensus of that process and execution is more important than consensus on the outcome. Generally speaking, it’s good to have consensus among your executive team, particularly if their department is involved in the execution. But having an agreed-upon process will make everyone’s life easier. This way, even if the outcome of the decision is a failure, the decision-making process was agreed upon and approved, enabling you to move beyond it quickly and with everyone on board.
Adjust from failure
Speaking of failure, early-stage businesses must embrace failure to some extent. Obviously, you can’t fail more than you succeed, and you should always try to make the right decision, but failure as an organization should be seen as a huge opportunity. Failure can enable you to be self-critical and make continual improvements. Success can be a curse, because often, success is misread and under-analyzed, whereas failures are generally read carefully and thoroughly analyzed.
Even today, we are still having to adjust and learn. A few years ago, we at DigitalOcean moved forward with a sub-optimal product, where we didn’t fully analyze the market needs or have a clear understanding of the problem we were aiming to solve. As a result, we’re playing catch-up, and that particular product isn’t growing as quickly as it should be. We learned from that. With our latest acquisition, we walked around the problem thoroughly, which took a little bit longer, but that buy-in and preparation has led to us hitting timelines and goals for the product that wouldn’t have happened without the learnings from previous missteps.
Having a structure to your decision-making in place allows you and your organization to move (and grow) faster. That’s why I love the word “simplicity” in our values and our decision-making framework. It allows us to move forward with purpose and intention. For new founders or business owners, keeping focused — on metrics, finding the right product, the right team and making continual improvements — will help you and your business grow.