Importance of Quick Decision Making
speed in business is critical
Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk-taking.
Jeff Bezos: Founder of Amazon
Earlier in my career I was working for a larger business that was unfortunately known for bureaucracy. As an outsider it appeared that way, and as an insider it was clearly pervasive. The culture was devoid of risk taking and tended to punish those who made mistakes. The outcome was lack of decision making, and pushing some of the most basic decisions to senior levels. And then those sometimes would just fester.
In one situation, I needed a decision on a multimillion contract extension -- the impact of not extending the contract would be tens of millions in additional costs. The decision wasn't made in time, additional costs were consumed internally ... and everyone moved forward as normal.
The Importance of Quick Decision Making
I've worked for both the Air Force and a handful of businesses -- some large and some small. You would think that the bigger a business gets, the more bureaucratic it becomes. The more controls the business puts in place, and so on... But that has not been the case in my career. The largest business I worked for was Amazon at 1 million + employees, and the smallest a 80 person startup. Both were able to minimize bureaucracy and ensure decisions were made quickly.
You may be thinking, "OK Greg, I get the small business, but Amazon? Really?". Yes.
Jeff Bezos said in one of his shareholder letters (if you haven't read these before, they're full of insightful, valuable learnings), that "Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk-taking." Jeff and other strong leaders have realized that with the right decision making you can enhance business results.
Of course it's important to make decisions fast .... you may be asking, "sounds great, but how do I do this"? Read on....
Lets dive into this quick decision making a little more.
Quick Decision Making - Built In
Every business has its own unique culture. From the bureaucratic business I spoke about above, to those that are high-performing and fast moving. Those cultures drive the way team members act, react, make decisions, and drive growth. The culture starts at the top -- creating expectations, senior leader behaviors, and team members emulating those behaviors.
According to SHRM, the company culture defines the proper way to behave within the organization. "This culture consists of shared beliefs and values established by leaders and then communicated and reinforced through various methods, ultimately shaping employee perceptions, behaviors and understanding." Many businesses have expectations or values but often time they are either not directly aligned with the business goals or insufficiently reinforced and adopted by the business leadership.
Best practice decision making processes should be part of the cultural expectations - helping team members with the tools to make better decisions that positively impact the business. How can use both methodical and quick decision making to accelerate growth?
Quick Decision Making - How To
You are making decisions every day both in your personal and business lives. Most of these decisions are quick decisions though some tend to take more time. Decision making creates the best outcomes if it falls into two categories -- reversible or non-reversible. Though its a scale ... its not just two options, its a range from 100% reversible to 100% not reversible. And the impact of the decision must also be considered. Most decisions are reversible and do not have high-impact -- those can be made with 60-70% accuracy.
The more non-reversible a decision is (and its impact) the more you must take time to be sure your decision is correct.
Examples on quick decision making:
- Should I buy a bottle of water? Reversible (probably not since its food) but its cost is very low so even if you bought it and decided you didn't want it -- or only part of the bottle, its not an issue to dispose of it.
- Should I buy a car? Reversible (sometimes for a few days) but you can test a car out, read about it over a short period of time. You can also sell a car on the used market. Impact? A car cost tends to be high to very high. So can you make a quick decision? You don't want to make a very quick decision without some research, test drive, etc as you would be stuck with depreciation and the time to sell the car. But this is probably a medium on the scale.
- Should I buy a home or business? Reversible? (no except for reselling it). Impact? high as the cost is high that you are contractually obligated for over a long period. Additional assessment needed: Can you afford it. Are there problems with the house that would require additional money? Does the house meet all of my needs. Is the school district ok, crime, etc. This is higher on the scale of take your time to make a decision.
Jeff Bezos calls this the one way door vs two way door. Those decision that can be reversible can be made quickly while decisions that are not reversible must be understood and have a high degree of confidence in the outcome.
For those decisions that are only one way doors -- those decisions that require a 90%+ level of quality and outcome -- take your time as they are not reversible.
Other related articles: decision making and strategic decision making, decision making quotes, quick decision making.
How do you make decisions and do you and your business value quick decision making?
Every decision brings with it some good, some bad, some lessons, and some luck. The only thing that’s for sure is that indecision steals many years from many people who wind up wishing they’d just had the courage to leap.
Doe Zantamata: author, artist, and photographer
1 Comment
As an entrepreneur the formula for decision making is always at the forefront. I appreciate Greg’s perspective and find a number of these articles helpful in tweaking my recipe. Greg makes the point that company cultures are created from the act of observing. Employees observe leaders, who should be conscious of their actions and decisions because they will frame culture. From the outside, observers think the decision was made too quickly, or made without enough information or it took too long or just never made. Even the decision made to not make a decision is a decision, but it’s hard for people to appreciate it AS a decision. The key is that YOU are making the decision. Making a decision is your action. Doing it fast is good more often than not, when it’s a two-way door. Not all the observers recognize it’s a two-way door. Observers don’t see how equally rapidly the decision can be walked back through that door. When that happens, the decision maker (and team) acquired more insight and can choose another door. Getting a peak at the outcome, has its own value. It’s a significant value too! The outcome is not always a mistake either, it could just be sub-optimal. As Greg points out, if you never open a door, or waste precious time you should have allocated to a real “one way door decision” while considering that move, this lost time has its own opportunity cost. Thanks for your contribution to my library of thought leadership, Greg. Keep on writing!