How to Improve Organizational Decision Making

May 12, 2022

“And a mistake repeated more than once is a decision.” -Paulo Coelho

Decisions, decisions, decisions. We make a ton of them every week, many of them trivial. However, a tiny percentage of decisions determine the next six months or six years. Not all of them are reversible without high costs, raising the stakes. Every incentive for us in the Product and other responsible roles is to continually refine the decision-making process.

Your effectiveness as a product leader is determined by the effectiveness of the decisions you make and execute. Which decisions led to what outcomes: enhanced customer experience and loyalty, 3x revenue growth, agility in your deliverables. The decisions you make (e.g., roadmap) have much higher consequences on resource allocation, budget management, and go-to-market planning, among other things.

How important is the decision

The following decision-making framework (via @BalesFootball and @JimRaymount) summarizes the process involved in the personal decision-making process if you're deliberate. The framework aligns well in the professional setting too.

No matter what you say to the external world, you make some guesses at the end of the day. The difference is between a wild guess (risky!) vs. an educated one. So, on the education front, how much you should invest in learning depends on the nature of your decision.

Jeff Bezos, in his 1997 letter to shareholders, describes two types of decisions (emphasis is mine):

Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.

The nature of the problem you attempt to solve determines the effort you need to invest in designing the solution (decision-making). Be deliberate in identifying whether you are dealing with a one-way door (or Type 1) situation or a reversible two-way door (or Type 2)?

Also, don't fall into this trap.

Bezos follows-up:

As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.

Who is making the decisions

There is a lot of talk about the empowerment of the product teams (or employees, generally). However, true empowerment lies in decentralizing the decision-making process. If every decision has to be approved by the senior leaders, you are hindering the agility, which leads to a bureaucratic environment — a sure-shot way to kill the innovation.

I’m not suggesting you make the decisions on a whim. Determine what type of decisions you are making: Type 1 or 2. Ensure all Type 2 decisions are made by the Product Managers or the leaders who have the most intimate knowledge of the problem space. You are incentivizing the organization. When it’s their decision and not yours, they are thoughtful as their credibility is at stake.

For all Type 1 (nearly) irreversible decisions that the senior leaders typically make, define a process in place with some strict turnaround times. That will help the organization know where you are in the decision-making process and when they can expect guidance on the matter.

Win: Right people making the right decisions at the right moment.

Asking the right questions

Your decisions are as good as the quality of your questions. Start with listing the questions, and ideally, use it as a template for every major decision you’re making:

Do we have the expertise to design and implement the solution?
Do we understand the budgetary concerns?
Do we understand the time pressures? If yes, do we understand them fully — internal (organizational), external (customer commitments)?
Do we rely on someone other than our team to build this — and do we understand the dynamics at play?
Do we understand the technical feasibility of the proposed solution?
Do we understand whether the solution as proposed is viable for the business?
Do we have the metrics to track our bets to prove (or disprove) once we roll the solution out?
(and so on.)

Writing a One-Pager

I’m a huge fan of long-form writing describing why and what — the fundamentals of an initiative. By writing it down — the very act of it — makes you ask the questions about the assumptions you’re making. At the very least, you’re capturing the assumptions that you can validate either immediately or during the project's execution.

Please do yourself a favor and not jump to how without understanding the desired outcome and scope. This exercise feeds in more insightful inputs into your decision-making process.

Check out this excellent checklist [Google Doc] from Amplitude.

Evaluating multiple options

Ask your team (if you are a product leader) what other options they considered before presenting you with a recommendation. If you’re an individual contributor, force yourself to develop a few solid alternatives. Open mind, my friend, is a huge asset. As they say, fall in love with the problem and not the solution.

Looking at other options and documenting your assumptions for each of them clarifies your thinking.

Now you have a proposal. Critique it: do it better than the usual devil’s advocates in your organization. You’re ready to present it to the execs. Go for it.

Recording your decisions

There's no better teacher than your own experiences. If you haven't so far, start now with a Decision Log: a log with the details of your decisions, what options you considered, and the outcomes you’re expecting. Trust me; it is a gift you're giving to your future self. The discipline of writing it down will memorialize the decisions for your team regardless of any org changes that happen down the lane.

Write down every consequential decision in a journal. It's not an exaggeration to say Context is the king when it comes to decision-making.

A few months or years down the lane with a faded memory, you want to reflect on the decisions. You may have a different take either because of more experience or better expertise. An unbiased future can learn what bets you made that worked and which did not.

More experience may not avoid future misplaced bets. At least you know which ones did not work in your specific environment under what conditions.

If you're like me and agree that writing clarifies thinking, see a related post.

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Cultural aspects

Some areas I did not cover here explicitly, but hope to do so in the future issues:

Ambiguity is much higher in certain organizations—the proverbial several shades of gray. Is that due to the necessary complexity or an accidental one?
Incentives play an important role in the decision maker's behavior. However, are they designed well enough to align and drive the best behavior?
The decision-makers move on to different roles, internal or external, that limit a comprehensive view of their decisions. Do you maintain a tracker regardless of the individual moves?
Power struggles cloud the decision-making abilities leading to the zero-sum game mentality. This is a much broader topic, but do you have a system to blunt the impact?

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Product Insights