Over my time working I have seen business leaders make important decisions. Some decisions have turned out well, others less so. Surely you have seen decisions go well and poorly in your line of work too. Nevertheless, it has been highly educational — and at times inspirational — to witness how these individuals make choices impacting products, organizational structures, and people. If you aspire to make smart decisions, here are some necessary that will help.
Dissent is invaluable
Before making any decision, understand the shortcomings of given assumptions. What are you missing? Where are your blind spots? Benjamin Franklin, a Founding Father of the United States, believed that “if everyone is thinking alike, then no one is thinking.” I often think about this in the context of meetings: articulating a different point of view is an often arduous, if not painful task. Yet dissent can more readily assure successful outcomes. Dissenting views can tease out fallacious logic, influence others to pursue unconventional ways of thinking, and alter assumptions. Dissent is particularly compelling if you root your arguments in data and logic, showing attention to detail. I have seen a leader decide to take his or her company in a certain direction, over the objection of other stakeholders. When these people voice their opinion they may or may not change the ultimate outcome. But what is clear is that dissent can clarify the ultimate decision makers judgement and make them aware of other or contrasting variables.
Data driven arguments
The former Netscape CEO Jim Barksdale sarcastically quipped: “If we have data, let’s look at the data. If all we have are opinions, let’s go with mine.” Good decisions benefit from data; intuition alone is often misleading or incorrect. In a TED talk Dan Ariely the behavioral economist notes that “it is very difficult to make really big, important, life-changing decisions because we are all susceptible to a formidable array of decision biases. There are more of them than we realize, and they come to visit us more often than we like to admit.” Data can help mitigate human biases. Data driven decisions are likely better decisions. Data can not only lead to better outcomes but it improves the health of the decision making process. It sends a strong signal when you lead with data; it shows confidence and the ability to look at root causes.
A corollary to rule #2: be mindful of numbers or assumptions that can be misleading
A variable that has an important effect and yet is not included amongst the predictor variables under consideration is called a lurking variable. Be mindful of lurking variables, as they may tell one story when in fact another reality exists. Let’s look at one example. The price of a computer can be modeled as a function of its Build of Materials (BOM) cost, which includes values such as the quality of the battery and the type of the display. However, there are other important factors that go into the price of a machine. If one only valued a computer on the data tied to its BOM, it would only tell part of the story. Other variables could include: volume of units produced, location of assembly, shipping and tax costs. Understanding a holistic array of numbers, and how these numbers impact outcomes, is important to make a well informed decision. Be mindful of numbers, the narratives derived from data, and where certain figures may lead you astray.
Failure is only acceptable if it is done quickly, graciously, and with a post-mortem
Thomas Edison, one of the great designers and thinkers in human history, famously noted that he had “never failed, but just found 10,000 ways that won’t work.” In this regard, decision making in technology differs greatly from how many of us were trained as students. In school, failure is looked down upon; work that is not accurate is assigned a poor grade; and students that make mistakes may be chastised. My schools never had an award for “biggest mistake” or “greatest risk taken”. Is it any wonder that our future workers grow up hostile to failure? We have been educated to behave in ways that advances progress slowly because it mitigates downsides. In technology the only way to advance new concepts or products is to take real risks however. You don’t see many companies out there that made small incremental improvements to others’ ideas. Google didn’t invest the search engine; Apple didn’t invent the computer; Amazon certainly was neither the first nor most dominant e-commerce site. What these companies have in common is that they incentivize staff to take moonshots. They are willing to place big bets; when they fail they learn why and move on. Does Amazon have a popular smartphone out today? No. They certainly tried however. After disappointing results with the Amazon phone they killed the project. Does Google have a social network that competes with Facebook? Likewise, they tried Google+ which also failed in many respects. However, a key feature of Google+ was the ability for users to upload and view the photos on their phone. Today Google Photos, which was born out of the failure of Google+ is a massively successful product within Google. Only through risk taking and gracious failure did Google learn something new. And this new thing led a hugely profitable new business unit.
Failure is an inevitable by-product of thinking differently, and thinking differently is a necessary ingredient to progress. Learning from past missteps is highly valuable and the only way to push ideas, products, and new ways of thinking forward.
Change quickly and often
Decisions, once they are made, must be acted on. Execution is oftentimes harder than making an initial choice. It is important not to maintain a status-quo; there are often benefits from re-examining assumptions and probing new ideas. In regards to products, it is important to think about broader adoption trends. Does your decision make sense today? This year? This decade? How will your decision impact product usage in other languages? Who wins and who loses as a result of your choices? Understanding how to change course, adapt, and remain fluid is important to executing a good decision. There is a very important concept that all economics students learn about, and that is the notion of an opportunity cost. An opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen. If you make a decision and are slow to act upon it, you are acquiring an opportunity cost.
If you waiver, more costs are incurred. The time, effort, and gains forgone are all real yet hidden costs. You might not see them in your bottom line but they are impacting you, and your business nevertheless. If you change, change rapidly. If you see new paths that are more desirable, go down those paths with purpose. If you don’t change you need to have conviction that your way is superior to all other alternatives. Legendary investor Warren Buffett famously quipped that “opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” If you see a reason to change, do it. If you don’t see a reason to change, justify why not.