In the early days of a start-up, almost all decisions in the company are driven by the judgment calls of the founding team. During this stage, there’s a limited set of experiences to draw from and no playbook. Most of the situations and questions are occurring for the first time, and founders need to quickly decide what’s best for the company. This makes for super fast decisions – and mostly right decisions if the intuitions of the founders are good.
But as companies scale, process and policies are introduced – and judgment calls are moved down the priority ladder.
Process takes over judgment for a few reasons. First, founders can’t scale beyond 24/7 and they cannot weigh in on every single situation a company faces. Then, as senior managers join the company, they bring along playbooks they have seen work in other companies. And third, some areas require formal policies as you scale (e.g. HR, finance, etc.).
However, process and policies have one well-known disadvantage – they slow everything down. Let’s take an example from product management. The process for introducing a new feature usually involves multiple steps: conduct user interviews, write the spec, get internal buy-in from stakeholders, plan out the resources to build the feature, build the feature, run a/b tests, review the results, and then decide to launch (or not launch) the feature.
But there are times when a person with great judgment abilities in product design can clearly see the upside of a feature. In this case, he or she might skip a few steps in the process and bring the feature to market much faster.
As you scale your organization, think about putting people with great judgment into positions where they can create tremendous value by applying their judgment. And then give them the freedom to make these judgment calls. The decision-making and speed of execution still might not be as fast as those days when only the founding teams was around. But you keep a lot of the agility of the early days while still having a scalable process.
P.S.: Thanks to Tobi for clarifying my thoughts on this post.