The ability to make fast decisions often means the difference between good and great – this is true for both entrepreneurs and investors.
At Version One, we usually know within a few days whether we should invest in a company or not. After we get this initial feeling, we can spend weeks doing more due diligence, but the benefits will only be incremental. If we know the company probably isn’t a good fit for us, delaying the decision with added research and deliberation just eats up everyone’s time.
It’s the same for entrepreneurs. It’s usually better to make a decision quickly – even if it’s the wrong decision – than sitting too long. When you try to reach 100% certainty before acting, you slow everything and everyone down. And most likely, your decision won’t be any different or better than the action you would have taken at 80%.
Of course, not every decision can and should be made quickly. Jeff Bezos refers to two types of decisions. Type 1 decisions are consequential and irreversible, or nearly irreversible. Type 2 decisions can be easily reversed; they’re like walking through a door…if you don’t like the other side, you can always go back.
Bezos’ message is that business leaders often use the heavy-weight Type 1 decision-making process on too many decisions, including those that could be easily changed. As a result, organizations are too slow and risk averse to truly innovate.
I couldn’t agree more, but what about those decisions that really belong in the Type 1 category? How should we approach the major decisions that will have a big impact on our personal lives or business? For example, a business model change, pivot, branding decision, or major career change.
The common approach is heavy deliberation involving a pro/con list – it’s often a very internal process. However, I’ve found it more helpful to seek out people with very different perspectives on the situation. The biggest (and least obvious) insights have always come from a conversation with someone else.
When you’re faced with a major decision, look inward, but also be sure to see the situation through multiple eyes and perspectives. The right path to take will become obvious.