The power of compound decision making: Part 2

  1. The speed at which one can assess their situation
  2. The actions you take once you make that assessment
  3. The speed of execution
  • Emotion
  • Instinct
  • Bandwidth (i.e. time to execute)
  • Experience (i.e. points of reference — correlated to confidence)
  • Data
  • Information (i.e., clear communication of data)
  • Analysis (i.e., interpretation of data)
  • Negotiation (i.e. a market-driven decision-based on analysis by both sides)
  1. High-velocity decision-making is essential for private growth-oriented companies. If the goal is to double revenues every 1–2 years, there will inevitably be a trade-off between fast decisions and high-quality ones. Err on the side of speed and accept that failing fast is better than taking too long to act.
  2. Never lose sight of the fact that only high-magnitude decisions that are value accretive, not the small but unavoidable decisions that must be continuously made. Do not be lulled into thinking that value is being created just because decisions are being made, and do not beat yourself up if you make a string of bad decisions. Most can be overcome, as long as you don’t make a really stupid financial decision. Remember, any company that has ever gone bankrupt does so for one reason and one reason only — it runs out of money — so get yourself a good CFO!
  3. Whether realized or not, indecision in a growth company is implicitly a decision also. If a leader finds that time is passing without much progress, there better be a really good reason, since the opportunity cost of dwelling on important decisions can not only be high, but deadly.
  4. Making fast decisions is relatively easy, but exhibiting great judgment is much harder. There is a muscle-memory that comes with experience, but short of that, work on the qualities that increase your odds of making better, faster decisions.
  5. The power of fast decision-making is that you create the one commodity that is always in short supply for high growth companies — time. Not only do you give yourself more time to successfully execute, but since your balance sheet is likely a melting ice cube, you are financially stronger the earlier you make the hard, needle-moving decisions.
  6. Make one of the criteria for hiring your management team the ability to make good, fast decisions, as well as further down the organization. The more you can decentralize the day-to-day decision-making, the more time you have to focus on the higher value-added strategic ones.
  7. Do not underestimate the power you unleash within your company when high-level decisions are made and communicated throughout the organization. Employees at high growth companies are like pent-up thoroughbreds that need and want their gates opened up so that they can get out onto the race track and show off their stuff. The earlier you make
    important decisions, the more time the company can focus on moving forward. Not to say there won’t be pitfalls and pivots, but forward progress should be the mantra.

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