How to make the right decisions quickly
When the stakes are high...
People leaders have many important responsibilities, including setting the vision, organizing their teams, ensuring employees' career growth, and creating frameworks and processes to assess and improve execution, team performance, and system health. They also need to figure out how to manage upward and sideways, among many other tasks. However, the most crucial skill a leader must master is the ability to make the right decisions most of the time and to do so quickly.
If you are looking for a framework to make business decisions swiftly, read on!
Before we jump into the framework, there are a few high-level concepts that managers need to understand. The next section will provide a primer on the foundational building blocks of the framework. If you prefer to skip ahead directly to the framework, scroll down until you see a chart.
Foundational Concepts
Understand your role - If you are a people leader, how would you define your role? Why do you think the company hired or promoted you into that position? Is it to help your team achieve its goals?, Is it to help the individuals on your team hit their career goals? Is it to help manage the team’s stakeholders better? Is it to help the team’s customers? This list can go on for twenty more pages, and all of them will be true to various degrees. However, the cold reality is-
Your job as a people leader is to generate a positive return on investment on the money the company has entrusted you with.
And the longer you go without generating a return for the company, the higher the chances of you getting replaced. If the company isn’t doing that well, your runway to show a positive return becomes even shorter.
I know this is an extremely capitalistic way of looking at the world, but like it or not, that is the truth for most tech companies, especially VC-backed or public ones.
The weight of decisions - The definition of the word 'decision’ seems straightforward, right? Dictionary.com defines it as
“to make a final choice or judgment about.”
However, for leaders, I suggest using this definition: “Is this a risk I should underwrite?”
Every decision a manager makes carries some level of risk. By making a decision, you are inherently underwriting that risk. Even small choices, such as allowing the timeline to slip on a minor project, pushing a promotion through despite having doubts, or letting someone go, all involve some degree of risk. The more you understand the risks and their short- and long-term implications for your business, the better you will become at assessing them.
Understand the business - Leaders often make the mistake of staying in their lanes. While focusing is essential, to improve your decision-making skills and do so swiftly, you must understand how the larger company you work for operates. This is especially crucial in large organizations where individual teams can become so detached from the bigger picture that they lose sight of how they fit into the company's overall structure. As a leader, you must understand the following:
Who are your company’s customers?
What are your company’s acquisition channels? To phrase it in slightly less corporate language: How does your company find new customers?
Why do those customers prefer your company’s product over others?
Who are the competitors?
How is the company performing financially?
How does your team contribute to selling the company's products or services?
If your team ceased to exist tomorrow, what would happen?
Every company I worked for holds regular all-team meetings where the senior leaders present information about some combination of the bullet points I highlighted above. An easy way to get detailed information about the inner workings of the company is to talk to the leaders who regularly present at all-team meetings after those meetings. If you can’t connect with the presenter, try connecting with somebody who is one level down from the presenter.
Pro-tip: The team most proficient in the inner workings of any company is not the product, engineering, marketing, or sales teams; it is, in fact, the finance department.
The finance function consistently tracks every dollar coming in and going out and continuously assesses how each department contributes to the company's success and failure. That’s why a member of the finance team is always present as a speaker at all-company meetings. Build connections in that department to gain insights into your company's inner workings. By doing this research, you can quickly determine how a team-level decision you make will impact the overall company.
Understand your neighbors. Take time to learn about the cross-functional partners you work with. Understand what their roadmaps look like, what their goals are, and what keeps their leaders awake at night. Set up regular one-on-ones with the leaders and key members of your cross-functional partners. Chances are, any critical decision you make will affect them as well. The deeper your understanding of how they function, the easier it will be for you to grasp the ramifications of your decisions.
Understand one-way and two-way doors - I have discussed one-way and two-way doors extensively in my Substack writing and my book, but here is a quick primer for all the new readers. One-way doors are decisions that are very costly to reverse. Decisions like -
A pricing or packaging change
An acquisition
Creating a new line of business (products, services, etc.)
Creating a nontrivial footprint (people and products) in a new geographical location
Changing the name of the company
Changing the company values
Changing the company’s financial footprint/ownership dramatically (IPO, sale, SPAC, etc.)
Altering the infrastructure footprint dramatically, for example, going to bare metal from AWS/GCP or vice versa
Dramatically altering roles (e.g., removing certain job families) or compensation structures
Embarking on a new product/feature that is going to take more than twelve months and a full team (more than ten or so engineers, more than one product manager, and more than one designer)
The opposite of one-way doors is two-way doors, which are fairly easy to walk back out of. Decisions like... well, everything else not on the list above.
A common mistake new managers make is sitting on a two-way decision, thinking it’s a one-way decision. Pro-tip: Most decisions that leaders, including executives, have to contend with are two-way in nature. The key is to quickly recognize what is a one-way door and what isn’t. If it’s a two-way door decision, leave it up to the team to decide what to do. Provide your input during the discussion, but don’t bother tipping the scales unless you are dealing with extraordinary situations, such as an escalation, system outage, or basically any situation where you already know the ramifications of the team choosing the wrong option.
Build or find a core group - Every leader should have access to a core group of people who can provide quick feedback on their decisions. This core group could consist of peer leaders or senior individual contributors, preferably working in the same company. To be clear, I am not referring to a large group here. The key is for it to be more than one and fewer than five. It needs to be more than one because you want multiple points of view, and it should be fewer than five because anything more will make it harder for you to sift through the noise. It is also important to ensure that this group doesn’t merely echo your opinions. You want your core group to provide unbiased feedback, and you also want them to challenge you when necessary. You want your group to feel comfortable telling you when you are wrong, and you should feel comfortable receiving that feedback.
Put in the time - Nobody comes out of the womb learning how to make perfect decisions all the way. You have to put in the time. The more time you spend making decisions and learning from the outcomes (good or bad), the better and faster you will become in making high-stakes decisions.
Now that you know the foundational building blocks, here is a simple framework to use when making critical decisions.
High-velocity decision-making framework
If anyone has additional questions or feedback about the framework, feel free to drop them in the comments!
That is it, for now, folks! Until next time!
Leadership Coaching - If you are an engineering or product leader and want to learn how to make high velocity decisions under pressure, shoot me a note at info@maheshguruswamy.com. I am limiting the number of coaching clients I take on, so don’t wait :)
Book - If you are struggling with how to navigate messy leadership conversations and haven’t picked up my book https://www.amazon.com/How-Deliver-Bad-News-Away/dp/B0D7FHTTNN …tsk tsk tsk. Just kidding, please buy my book :)