For the last few weeks I’ve been trying to make a decision I’ve been dreading – choose a new fulfilment centre for my side business – Oishya. The current provider has been mistreating our parcels, sometimes choosing way too big card boxes for the products and not protecting them well (hello sustainable businesses?)… and much more.
This made me think about the decision making itself.
I remember that Jeff Bezos once said that he sees decisions as if they were doors; a one-way door or a two-way door. When you walk through a one-way door, you can’t come back. It’s irreversible. With the latter, you can walk through, see what’s on the other side, and easily come back if you don’t like what you find there.
In a shareholder letter, Bezos wrote:
Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.
As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention. We’ll have to figure out how to fight that tendency.
Therefore I thought, what’s the worst that can happen if we choose an even worse fulfilment provider? Sure, it would be a costly pain; arranging to move all the stock, hoping nothing gets missing or damaged during the transit, making sure all barcodes are recorded correctly, integrating our store with the new system, testing it etc and then doing it again. But it’s not the end of the business if it doesn’t work out with a new provider.
So once I gathered and compared all the data there is about possible options, I knew I should just make a decision and move on, making head space for new challenges.
Just do it
Making decisions usually involves some level of uncertainty. Sometimes you can make a quick decision because you know that uncertainty is acceptable or even desirable. Like trying this new restaurant you heard so much of, or buying a new soap scent. Go crazy. Other times, you want to take it slow and consider all aspects to remove uncertainty as much of it as possible. Do I really want to have a kid with this person?
You can tell where a decision lies on this spectrum by asking how much it would cost to undo. While you you can decide not to return to that restaurant, you pretty much can’t undo that child.
So when you stop gathering useful information and there is no prospect of any on the horizon, make the decision and adjust as you go.
Don’t be like most people who don’t act. They sit waiting for some magical piece of information that could make the decision clear. Once (if at all) it comes, it’s often too late and the opportunity is gone.
What’s the worst that can happen?
I made a decision about becoming an entrepreneur fairly early on. I didn’t have kids or any dependents. While some people still saw this as a huge risk, I didn’t. I realised that if my company failed, I would still have learned a lot and could pretty easily return to the market, maybe even being more appreciated for the risks I took and opportunities I created.
While for a long time I didn’t enjoy stability and safety, I learned and experienced things that other people will never do. And I know that the best is yet to come.
That’s why I’d love to inspire other people to take more calculated risks; to try new things like starting a business or changing a job. Learning about themselves as they try different things.
There are very few things in life that can’t be reversed. Everything else should be challenged and played with.
Sure, the future is unpredictable, especially in the current economic climate. I’m not naive. I’ve also seen or read what happens when you stay idle instead of making a calculated risk and trying something new. Companies delay making a decision to innovate, to reinvent themselves, and that’s why they don’t grow. The market is uncertain, so they stop investing in R&D trying to protect the bottom line. Take for example Polaroid or Kodak. They could have probably commit part of their budget to understanding and responding to changing market needs, but the higher management chose not to tell their emperor that he’s naked.
More information does not always translate to a better decision.
Of course, reversible decisions are not an excuse to act recklessly, but a concept making people more comfortable with imperfect decisions.
Fast decisions are a competitive advantage. Warren Buffett has famously given a yes/no decision on acquisitions in less than 48 hours. Fast decisions are one advantage that start-ups have over incumbents.
A good plan, violently executed now, is better than a perfect plan next week.General George Patton
Bezos considers 70% certainty as the cut-off point, where it is appropriate to make a decision. Making a decision with such certainty and then quickly course-correcting is much more effective than waiting for the perfect moment, that often never comes.
Once you understand that reversible decisions are a great way to welcome randomness and novelty, gather information, or even delegate to others, things change (and usually for the better!).
Welcome that change. Act accordingly.