No matter what your role is at your company, you’re likely making decisions every day. But for executives like a CEO CMO, CTO, COO, or even CFO, your decisions can make the biggest impacts, ranging from your company culture to how your industry (or the public) views you, to your ability to sign and retain clients and maintain the financial stability of your company.
Needless to say, these are pretty important. And some of these decisions you’ll face will need to be made quickly… or do they?
In this article, we’ll dive into the age-old debate of Time or Timing vs. quality vs accuracy when it comes to making important business decisions. Is decision-making velocity really necessary? Are rapid-fire, gut-based decisions always the best idea? Are there times where it’s better to take your time to research and evaluate your options? Keep reading to find out where we stand.
3 Key Variables in Decision Making
When it comes to making decisions, it’s not always black-and-white. Good decisions require a careful blend of both accuracy and speed. But there’s also a third variable that can’t be ignored: data-driven decision making (DDDM).
What does this mean? We’ve talked about data-driven marketing and data-driven web design before on the blog (seeing a trend yet?), and when we apply it to decision-making, it’s a similar concept of using data to guide your decisions, rather than relying on gut instinct or loose observations.
To recap, approach your problem or challenge with these three things in mind:
- Accuracy — making the best decisions (note: you’ll need to define what “best” means depending on the scenario)
- Speed — making the decision as quickly as possible (within reason)
- Data-driven decision making — making the decision based on the data you have
From there, it’s easy to blend those 3 elements with the following equation:
[(ACCURACY OF DECISION MAKING) X (DATA-DRIVEN DECISION MAKING)] / (SPEED OF DECISION MAKING)
(RATE OF GROWTH)
High-Quality Decisions vs. High-Velocity Decision Making
Of course, the above is easier said than done. And there are some situations where you might be tempted to slow down and hold off on making your choice. After all, there’s always more data to gather, more tests to run, and more research you could do.
On the flip-side, you might feel pressure to always make fast decisions in order to keep up with rapidly changing markets and industries (Product teams, we’re looking at you).
So, how do you find the balance? We love this quote from Amazon founder and CEO Jeff Bezos, pulled from his 2016 shareholder letter:
“Most decisions should probably be made with somewhere around 70 percent of the information you wish you had. If you wait for 90 percent, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.”
How to Make High-Velocity Decisions with Quality in Mind
Once you understand the steps involved, getting to this point will become like second nature. This article does a great job defining the process; below, we’ll recap as well as add a few more points to consider:
- Establish and follow a defined process. As a leader, it’s up to you to document and share a process with your team. With this in place, everyone in the organization will know exactly where to start and what to do when or if they feel stuck.
- Use a decision model. For complex decisions, like when you’re evaluating multiple options, it’s smart to have a “Decision Model” that clearly outlines how to weigh (or score) the different elements. For example, if you’re comparing various options for a potential vendor or subcontractor, what matters most to the organization: total cost or overall quality?
- Know your deadline. Is there a clear deadline for making this decision? If not, consider other tasks and decisions that might be waiting on this one. If your team can’t proceed with a particular task until you choose a tool or vendor, you’re not doing any favors holding them up.
- Adjust as you learn. Don’t expect to have all the information you need upfront. Some decisions may require extra research and take more time than you expected—and that’s OK. As you learn more and gather more data, be prepared to tweak your business case, plans, and opinions to account for new insights.
- Consider your alternatives. Similar to the tip above, don’t be afraid to make big changes later, even after you’ve made a big decision. We like the 3-point decision rule: if you have 3 consecutive data points that indicate a trend, it’s time to consider that alternative.
- Confirm with data. Keep track of benchmarks you have from the past, or general rules of thumb you’ve seen if you’ve faced a similar problem. Blend historical data with new or AI-generated predictive data for the best, most holistic approach.
- Evaluate the solution. How might this decision impact the organization, the group, or even the individual? What are the potential risks and rewards? Think through all of this as you assess your options.
- Develop and implement a plan of action. Once you’ve determined your solution, you need a good plan of action—and your team needs to be on board. Clearly articulate the what, where, when, why, and how.
Getting Even Faster
Another tip for making faster, better, and more accurate decisions? Surround yourself with a strong team. While you may be known as the “decision-maker” around your organization, you’re only as good as the people you surround yourself with. Moreover, we all have different strengths and weaknesses. A strong executive board (and organization overall) should have a mix of strengths, areas of interest, and even personality types.
Working with a data-driven focus or mindset can also help, especially since tight-knit companies tend to fall into group-think after a while. When faced with a big challenge, sometimes the best thing you can do is get a fresh perspective.
Decision Velocity Drives Innovation
As we mentioned earlier, corporate leaders like Jeff Bezos have mastered the art of high-velocity decision making. The Amazon website even includes it in its Leadership Principles: “Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk-taking.” Bezos suggests that organizations need to act like a “Day 2 Company”—meaning, act like a company that’s already got it all figured out.
Another Bezos credo is three simple words: “Disagree and commit.” This management principle says that while the team is welcome to disagree while a decision is being made, once the decision is final, everyone must commit to it. As a leader, you may not always get consensus when you’re making big decisions that impact a large group. But everyone needs to be rowing in the same direction to achieve success in the long-run.
Elon Musk has also shared a similar mindset and process for making evidence-based decisions. His six-step mindset for making decisions includes:
- Ask a question
- Gather as much evidence as possible
- Develop axioms based on the evidence and try to assign a probability of truth to each one
- Draw a conclusion based on cogency to determine whether these axioms are correct, relevant, and lead to this conclusion with what probability
- Attempt to disprove the conclusion
- If nobody can invalidate the conclusion, you’re probably right (but not certainly right).
This decision-making process helps Musk determine whether he should pursue an idea, solve a problem, or start a business. It’s worlds different from the traditional “it’s true because I said it’s true” mindset. These innovative leaders focus on evidence-based decision making and critical thinking.
Whether you’re deciding what to eat for breakfast, whether to offer a new product or service, or whether you should start a new company, making decisions requires critical thinking, evidence, and experience. Mastering the relationship between time, accuracy, and quality can help you make quicker decisions without sacrificing quality. Here at smartboost, we implement data-driven tactics to help executives improve their decision making velocity.