How To: Effective Decision-Making

In entrepreneurship, it's survival of the fittest — and effective decision-making is the skill that separates those who adapt from those who don't. A framework for how entrepreneurs can build better decision-making habits under the constant uncertainty of startup life.

In entrepreneurship, it’s survival of the fittest. In terms of evolution, humans and entrepreneurs have learned to build tools, language and social structures. We’ve innovated and adapted to the challenges that arise in our environment. As entrepreneurs, we are especially adept problem-solvers - often the reason we became entrepreneurs in the first place is because we recognized a problem and identified a solution. As we know, the choices entrepreneurs make have a powerful and immediate impact on their organizations, and the ability to make smart choices quickly is a core skill that every entrepreneur must possess if he or she wants to be successful. Structures and strategies When attempting to improve outcomes for an organization, leaders with a bias for action may default to entire structural reorgs, leveraging SWOT (strength, weakness, opportunity, threat) analysis. While this ability to make quick decisions is often a benefit to most entrepreneurs in the early stages of an organization, it can be extremely detrimental during the scaling stage. A Bain study of 57 reorgs between 2000 and 2006 found that fewer than one-third produced any meaningful improvement in performance. When faced with organizational challenges, rather than overhauling structure, Bain and other thought leaders promote the idea of decision-driven changes, beginning with what they call a “decision audit.” It allows entrepreneurs to take a step back and assess what their ultimate goal is. The strategy for achieving team growth will be different than a strategy focused on increasing return on investment. From there it will be simpler to create a standard approach to large organizational decisions as well as small routine decisions. Individual considerations On an individual level, making important decisions is complicated by the biases and emotions we unconsciously bring to the table. Past experiences have inevitable impacts on the way we make decisions, but entrepreneurs that succeed are able to

By Fred Hoch at TechNexus Venture Collaborative