How should your product look? How are you going to make it? Who are you going to sell it to? What do you spend time and money on – and, more importantly, what not to?
Decision-making can be difficult, and while every business must answer these questions, some challenges are bigger in a startup. However, startups also have precious advantages over established businesses when it comes to making smart choices.
The truth is that our deliberated decisions are often worse than those based on a coin-flip, because we are prone to systematic errors. Our brain’s constant willingness to find patterns and explanations often leads us to make wrong arguments for one choice – we disregard new, contrasting information and selectively look for the information that proves our wrong choice to be right.
1. Keep emotions out of it
Our emotions get in the way, too. In a well-known experiment called ‘ultimatum game’ one person receives an amount of money, say $100, and has to decide how much of it to give to a second person.
The game is played once, and there is no communication or negotiation. The second person can only either accept the offer and therefore both players get the money, or disapprove the offer and then neither of them gets anything.
From a financial perspective, if you are the second person you should always accept. Even $1 is still better than $0, right? But the experiment has been repeated thousands of times and many people reject offers from the first person that are too low (if worse than a 20-80 split) and prefer to walk away with nothing.
This is something you must not do in your business and you definitely cannot afford in your startup!
2. Just go for it
In startups, the level of uncertainty is immense. The information available for two alternatives is often not only incomplete, but almost non-existent. It’s tough to choose, but indecision is costly. The time spent finding more data is time that could be spent on building your product and on finding customers.
The longer you postpone a decision, the more space it consumes in your mind. It keeps nagging and limits your capacity for more creative problem solving. Great ideas don’t necessarily need a lot of time, but they do need space. This makes a strong case for startup leaders to just go for it, take a decision, any decision, and move on.
3. Give everyone a voice
But bad decisions are costly, too… Luckily, startups have options that more established companies don’t.
More diverse teams take better decisions than groups of experts. Fact. In a startup, people with different mindsets can be involved quickly – have your logistics staff talk about your product design and hear what your developer thinks about your ad campaign.
In small teams, it is also easier to encourage people to contribute freely and without fear of being wrong. You can agree to change the way you think as a team by changing the way you speak. Simple things like, “How can we change this to make it work?” instead of, “This doesn’t work.”
To identify obstacles, actively ask people to find them, have them argue against their own ideas and experiment with game-like set-ups such as the Six Thinking Hats to get different angles quickly. Meeting by meeting, you can create your own best practices.
4. Spend your energy wisely
Some topics are so important, they can potentially make your whole business succeed or fail. If there are major doubts and disagreements, stop arguing and stop trying to convince others. Spend that energy on thinking about how to test the alternatives cheaply and quickly.
Shift the discussion from, “Who is right?” to, “How can we find out what works better?” Startups are in an advantageous position because they can temporarily reallocate resources quickly.
5. Make active decisions
Sometimes we realize there are fundamental choices with no way to cheaply and quickly test alternatives. You are faced with options where one alternative is clearly better in some ways, while the other one is better in others, but neither is better overall. As an individual as much as a startup, it makes us feel anywhere from torn to tormented.
Here is what I picked up from contemporary philosopher Ruth Chang and what works for me: Rather than looking at these situations with agony, they are opportunities to actively decide who we are.
6. Define yourself
There simply is no “better” based on external criteria. It is the other way around: by choosing one alternative over the other, we define what is better – better for us. It means we create our values every time we make one of these hard decisions.
Because these choices define who you are, you can use them to become who you want to be, as an individual as much as a company.