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No matter what stage of business you are in, whether it’s a gray-haired CEO or a cheeky founder with an idea in a garage, it’s vital that you impose a level of discipline around your decision-making process. The grayer my hair, the more intuition I have, so I would be lying if I said I don’t trust intuition and experience more than the first few days of my career. I don’t necessarily need a 50-page article about a potential project these days; I’ve seen a lot of things and can usually distill what I need from some key metrics. However, without a certain level of process to balance metrics, intuition, and input, you’ll find yourself wasting valuable time and money as you begin your growth journey.
For small business owners, how, when, and who makes key decisions is a vital part of your operating process. As you scale, you need to be more quantitative and organized about where and when to invest, as well as which projects have priority. Here are some tips for implementing your decision-making process.
If a leader makes a decision without clear criteria for success, it will be very difficult on the other side of a decision to determine whether the business is doing well or badly, or whether to invest more or less. . This lack of clarity in the convergence of specific results, leads to a lack of clarity for the entire organization. The more you rely on anecdotal information, the easier it will be to try everything on the list instead of being intentional with priority elements that will have a greater impact on the success of your business. Intentionality is key to scaling.
It may seem counterintuitive to some, but the larger the scale, the less you will have to measure as a business leader. Therefore, when you create a decision-making framework, your first decision should be which metrics matter and which ones don’t. The easiest way to define what matters to me is to link it to one of my three main components: customers, employees, and investors.
At the executive level, leaders really shouldn’t look at more than 15-18 measures approximately, with most of them unchanged year after year. The deeper you go into the organization, the more measures will be derived from these opinions at the executive level. However, if you take the time to have a shorter list of what moves the needle in the overall business, you will have more clarity and can provide the executive team to the larger organization.
Related: How to intentionally grow your business
Chaos only works in the early stages
In the start-up phase of your business, chaos tin be your friend There is not always a good understanding of what to do, how to do it, when to do it or in what proportion to do it. So you probably end up doing a lot of things, trying to get something stuck. . This form of wear and tear is good, although it is not sustainable in the long run.
Once you have a good understanding of the product and your market entry, you need to be more rigorous in your structure. It is when the opportunity cost for incorrect, hasty or incomplete decisions increases.
For many companies at this stage, your team will have been together from the beginning, and everyone will feel like they own the business. It can be a painfully personal experience, but it is here that the structure and strategies need to be readjusted and changed. Otherwise, you’ll have too many cooks in the kitchen, which will only encourage frustrating meetings. Too many opinions cause confusion, impede liability, and hinder ownership, all of which are necessary to make informed decisions. You need to be clear about who should be involved at what level and make it a formal process.
Achieve consensus on the process
For large decisions, those that meet a criterion of magnitude (acquisitions, repurchases, product launches or anything that is multifunctional), DigitalOcean uses the RAPID® model, a loose acronym to introduce, recommend, agree, decide and perform (disclosure complete: And I am the CEO of DigitalOcean). Whether you use this model or something else, there is a need for adherence to the default roles in the process: those who provide input and recommendations, those who make the decision, and those who execute it.
Consensus on this process and execution is more important than consensus on outcome. In general, it’s good to have consensus among your executive team, especially if your department is involved in execution. But having an agreed process will make life easier for everyone. That way, even if the outcome of the decision is a failure, the decision-making process was agreed upon and approved, which will allow you to go further quickly and with everyone on board.
Related: How to use the right data to make effective business decisions
Adjust for failure
Speaking of failure, start-ups need to accept failure to some degree. Obviously, you can’t fail more than you succeed, and you should always try to make the right decision, but failure as an organization should be seen as a great opportunity. Failure can allow you to be self-critical and make continuous improvements. Success can be a curse, because success is often misinterpreted and little analyzed, while failures are generally read carefully and thoroughly analyzed.
Even today, we still have to adapt and learn. A few years ago, at DigitalOcean we advanced with a suboptimal product, where we did not fully analyze the needs of the market or have a clear understanding of the problem we wanted to solve. As a result, we are playing catch-up and this particular product is not growing as fast as it should be. We have learned from this. With our last acquisition, we fixed the issue thoroughly, which took a little longer, but this acceptance and preparation has led us to achieve deadlines and goals for the product that would not have passed without the learnings of the previous error steps.
Having a decision-making structure allows you and your organization to move (and grow) faster. That’s why I love the word “simplicity” in our values and in our decision-making framework. It allows us to move forward with purpose and intention. For new founders or business owners, staying focused (on metrics, finding the right product, the right equipment, and making continuous improvements) will help you and your business grow.
Related: 4 decisions that will increase your income and business growth