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Here are six research-backed methods to help entrepreneurs make smart, well-informed decisions.
9 min read
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Dark roast or light? Window seat or aisle? Whole wheat or rye? Every day brings an onslaught of new decisions — about 35,000 for the average adult, according to studies. If we account for seven hours of sleep, that’s 2,000 decisions per hour, or one choice every two seconds.
The vast majority of our daily choices are inconsequential, from liking an Instagram photo to declining that pushy limited-time offer. Tough decisions, however, can be daunting — and a real dilemma usually indicates that something meaningful is at stake. When we struggle to choose, it often feels like our livelihood, relationships, or wellbeing are on the line. Thankfully, science is here to help.
“Over the past few decades,” writes author Steven Johnson, “a growing multidisciplinary field of research – spanning areas as diverse as cognitive science, management theory and literary studies – has given us a set of tools that we can use to make better choices.”
It’s vital to note that the key word here is “better.” None of these tools can actually choose for you. “They are prompts, hacks, nudges,” explains Johnson. Decision-making techniques can, however, help you gain a new perspective and imagine fresh possibilities. Most importantly, research shows you can get better at making decisions. That’s great news for entrepreneurs, because I would argue that starting and growing a business requires even more daily choices, many of which have real consequences.
As a CEO, I often advise my teams to make quick decisions. Move forward and adjust as you go. Yet, even 13 years after starting my company, JotForm, I still struggle with tough choices. I’ve tried many different decision-making techniques over the years, too. Some have been useful, while others feel like a waste of time. Here are the six methods that I return to when I’m facing a challenging decision, both in life and in business.
1. Bring your values to the table
Imagine you’re considering a new product line. It seems like a great opportunity, but it also means added costs, time, and even new hires. Grab a sheet of paper and write out a classic pros and cons list. Now, assign each entry (on both sides of the line) a number from 0 to 1, based on your personal and entrepreneurial values. For example, if reaching new markets is a key goal and something you’re striving to achieve, you might score that point at 0.9 or 0.95.
If you listed “juicy new challenge” on the pros side, but you’re trying to manage out-of-control work hours and prioritize rest, it might rate 0.2 or 0.3. Apply the same scoring method to the “con” side. Hiring new team members could score 0.8, for example, if you’re already struggling to fit everyone into your office, and you value a calm, laid-back workspace. A high number on the “con” side means it’s a serious drawback. Once you’ve scored every entry, add up the totals on each side, multiply by 100, and see which option wins out.
You can also make another list outlining the pros and cons of not starting the new line. Sometimes that subtle shift in perspective can further clarify your values. And take note: how do you feel about the outcome of this exercise? If you’re energized or disappointed by the final score, it’s worth exploring why you feel that way.
Related: 9 Ways to Combat Decision Fatigue
2. Avoid black-and-white decisions
The pros and cons list projects a stark world of good or bad – and often, certain elements are clear cut. But there’s often a lot of grey in the middle. Maybe your choices aren’t just limited to starting the new product line or abandoning the idea entirely.
For example, you could release one item instead of a full line. You could dig further into the research and survey customers to gauge their appetite for the expansion. Or, you could set the project aside for three months and return with fresh eyes. Often, the best choice is not one of two opposites; it’s a more creative, nuanced or open-minded solution that leverages the best of both worlds.
3. Predict the future
As we face a nail-biting choice, it’s natural to imagine the best- and worst-case scenarios. For example, what if the product line is a runaway financial and critical success? Or what if it lands with a thud, draining valuable time and bringing your company to the brink of extinction? Imagine both possibilities and explore how you feel.
Next, take it a step further. Psychologist Gary Klein recommends a technique he calls the “premortem,” which is the hypothetical opposite of the familiar, end-of-project debrief. “A postmortem in a medical setting allows health professionals and the family to learn what caused a patient’s death,” Klein wrote in 2007. “Everyone benefits except, of course, the patient. A premortem in a business setting comes at the beginning of a project rather than the end, so that the project can be improved rather than autopsied.”
Envision that full crash-and-burn scenario. Then challenge yourself explore all the possible reasons for failure. List what went wrong. Next, work backward to create steps and tactics to prevent this outcome from occurring. Research shows that this process does more than soothe your frazzled brain and make you feel better about the choice. Premortems, which are also called “prospective hindsight,” can boost our ability to identify future outcome causes by 30 percent.
The premortem method also works for decidedly less disastrous outcomes. Visualize the ultimate, best-of-all-worlds scenario, and see how you feel. If you’re not thrilled and energized by the vision, it’s important to explore why you feel that way. You might end up reconsidering the decision, not because it might not work, but because it doesn’t lead to a destination you’re truly psyched to reach.
On a side note, Amazon also uses a variation of the premortem. Company developers are asked to write hypothetical press releases and product announcements before they even dig into the code. The process encourages the team to address difficult decisions upfront. It also brings the value proposition into sharp relief. “If the team can’t come up with a compelling press release,” writes reporter Jillian D’Onfro, “the product probably isn’t worth making.”
4. Get some (expert) advice
When grappling with a decision, it’s tempting to ask friends and family members for advice. There’s nothing wrong with this approach, but it’s good to remember that your inner circle will be biased – and they might even have their own hang-ups or reasons for swaying your choice.
Instead of relying on those close to you, try to find someone who’s made the same decision, or a version of it. Ask why they made that choice, how it turned out, and how they feel now. Would they make the same choice again? Consultants can also be extremely helpful in this situation. Look for people with deep expertise in the area you’re considering and learn everything you can from their experience.
5. Don’t rush it
You’ve probably seen motivational startup quotes like “leap and the net will appear” or “jump into your passion.” We all need a good push now and then, but a blind leap is rarely the right way to make a challenging decision.
Before I started JotForm, I worked as a developer for a New York-based media company. I was also tinkering on several products before and after my 9-to-5 job. Eventually, those side projects were reliably paying the bills. The money I made from those digital products matched, and over time, even exceeded my salary. Still, it took two full years before I decided to leave my job and pursue my idea full time. I didn’t leap into the abyss because the net was already there.
We’re all different. For some people, two years might seem like an eternity – and many would I wasted months that could have been spent growing the company. But taking my time was empowering. Sometimes, your decision does have a looming deadline, or a hard-and-fast cut-off point. Other times, there’s a self-imposed sense of urgency. Whenever possible, give yourself the space and time you need to make a smart choice.
6. Beware of hidden decisions
Taking enough time to decide has value. But procrastinating and avoiding a decision is still a choice – and it rarely turns out well, even if you believe that you’re just keeping your options open. “It’s hard to see at the time, but optionality has a hidden tax,” writes Brian Halligan, co-founder and CEO of HubSpot.
“As the company has grown, I’ve learned to listen carefully to all the inputs, engage in healthy debate with my team, take my time, make a decision, and ‘sail the ship.’ Sailing the ship means that decisions are final.”
Non-decisions have the same potential consequences as quick, resolute choices. Don’t leave big calls up to chance. And if you’re an early-stage founder drowning in decisions, know that it does get easier. Once all the building blocks are in place, equilibrium sets in and you’ll come up for air again. Making the right call also gets easier with practice, so keep building and flexing your decision-making muscles.
May 15, 2019 at 08:41AM