Deciding without all the data

You’ll never have all the data. Not you, not me, not the CEO of the world’s biggest multinational. Something will always be missing: how the competition will react, whether the customer will deliver, whether the market will hold.

Even so, many companies spend their lives waiting for the moment when everything will be clear. And that moment never comes. Meanwhile, decisions pile up and the company slows down.

Waiting is also deciding

When a managing director tells me “it’s not the right time yet”, I always give the same answer: it’s never the right time. What you need to do is go for it, with calculated risks.

Not deciding has a cost, even if it doesn’t appear on any invoice. It’s the customer who leaves while you debate the price. It’s the good person who gets tired of waiting for change. It’s the opportunity someone faster snaps up. As I’ve said before: today it isn’t the big that eat the small, it’s the fast that eat the slow.

Not all decisions weigh the same

The first question I ask myself before deciding is very simple: can this be undone?

Jeff Bezos explained it very well in his letters to Amazon shareholders: some decisions are two-way doors, and others are one-way doors. The first can be made quickly, because if you get it wrong, you go back. The second deserve more time and more analysis.

The problem in many companies is that they treat every decision as if it were irreversible. Changing your office supplies provider gets the same analysis as opening a branch in another country. And that wastes an enormous amount of time on small decisions.

In those same letters, Bezos gave another pointer I agree with: most decisions should be made with around 70% of the information you’d like to have. If you wait for 90%, you’re almost always too late.

My five questions before deciding

When I have to decide something important without all the data, I ask myself these five questions:

1. Can it be undone? If the answer is yes, I decide now and correct as I go.
2. How much does waiting cost me? In money, in customers, in the team’s energy. If I can’t calculate it, I at least estimate it.
3. What’s the worst that can happen, and can I live with it? If I can, the risk is calculated.
4. What piece of data would change my decision, and can I get it this week? If it exists and it’s quick, I go and get it. If not, I decide without it.
5. When will I review it? Every important decision has a review date with real data.

With these five questions, most decisions that had been stuck for weeks get resolved in a single meeting.

Analysis is ongoing, not a preliminary step

Another phrase I hear a lot: “I need to assess the risks more”. I agree, but with an important nuance. Risk analysis isn’t a preliminary step you have to finish before acting. It’s ongoing. It happens before, during and after.

That’s why I always suggest the same thing: a healthy period of analysis and reflection, with a start date and an end date. During that period, everything is up for discussion. When it ends, you decide and move on to execution, with what, who, when and how. And the risks keep being monitored during execution.

Deciding with data isn’t deciding with all the data

I don’t want to be misunderstood. I’m a firm believer in deciding with numbers. I’ve seen companies that thought an order cost them €30 when it actually cost them over €90. Deciding without data is dangerous.

But there’s a huge difference between deciding with the important data and waiting until you have all of it. The key data for a decision are usually few, three or four. Get them, and with them, decide.

When you get it wrong

You’ll get it wrong. So will I. It’s the price of deciding. What matters is getting it wrong early, realising quickly and correcting without drama.

That’s what the review date is for: it’s the moment to look at the real data and decide whether to carry on, change or stop. No blame. I tolerate mistakes; what I don’t tolerate is not deciding.

The Decide better tool compares your options against criteria and calculates how much each week of waiting costs you.

Reference: Jeff Bezos, letters to Amazon shareholders, 2015 and 2016.