The Importance of Decision Velocity

Originally, I had included my reflections on decisions and decision velocity as part of my 250-day reflections. However, I quickly realized two things: first, it would have made the article far too long for my liking; second, and most importantly, I believe it is a topic worthy of its own discussion.

As a CEO, especially within a Private Equity (PE) operator role, the sheer number of decisions that come your way can be daunting. The temptation to get the decisions "right" can quickly become the primary focus. But through my experience, I’ve come to understand that making a decision and moving forward is often more important than making the right decision.

The Value of Decision Velocity

With the right decision velocity, wrongs can be made right with minimal impact, and the compounding value of decision velocity is extremely underestimated in my opinion. Decision velocity refers to the speed and frequency with which decisions are made and implemented. This concept emphasizes action and progress over perfection.

One-Way Doors vs. Two-Way Doors

A helpful framework for understanding the impact of decision velocity is the concept of one-way doors and two-way doors.

• One-Way Doors: These decisions are irreversible. Once made, there is no turning back, and the consequences are permanent. Because of their nature, these decisions require careful consideration and a thorough evaluation of potential outcomes.
• Two-Way Doors: These decisions are reversible. If you make a mistake, you can step back and choose a different path. These decisions are less risky and benefit greatly from quick decision-making.

Understanding whether a decision is a one-way door or a two-way door is crucial. Few things can stifle the growth and progress of an organization more than paralysis by analysis. Overanalyzing every decision, especially those that are reversible, can lead to missed opportunities and stagnation.

Overcoming Paralysis by Analysis

To avoid paralysis by analysis, it’s important to foster a culture that values decision velocity. Here are some strategies to achieve this:

1. Empower Your Team: Encourage your team to make decisions within their scope of responsibility. Trust them to handle two-way door decisions and escalate only the one-way door decisions that require higher-level input.
2. Set Clear Guidelines: Provide clear guidelines on decision-making processes. This includes defining what constitutes a one-way door versus a two-way door and establishing criteria for evaluating decisions.
3. Encourage a Bias for Action: Promote a culture that favors action over inaction. Remind your team that most decisions can be adjusted and corrected if necessary.
4. Reflect and Learn: Regularly review decisions and their outcomes. Use these reflections as learning opportunities to improve future decision-making processes.

Reflection

I'm still struggling with decision velocity. If you asked me what I would change looking back on the first ~250 days, the vast majority of my answers look something like:

• "I wish I trusted my gut and signed that lease sooner"
• "The money saved here pales in comparison to the opportunity cost this decision's latency produced"
• "If I had just responded immediately, instead of letting great get in the way of good, time may not have killed that deal"

Rarely have I reflected back and wish I took more time to make decisions during these early days. Decision Debt can stack up in both directions, but I'd argue that more often than not, the "lack of decision" debt stacks up much quicker in the world of Private Equity Operations.

Conclusion

Decision velocity is a critical component of effective leadership. While making the right decision is important, the ability to make timely decisions and maintain momentum is often more valuable. By understanding the nature of the decisions you face and fostering a culture that prioritizes decision velocity, you can drive growth and progress within your organization.

Whether you’re a CEO, a manager, or a team leader, I encourage you to reflect on your approach to decision-making. Are you empowering your team to make quick, informed decisions? Are you distinguishing between one-way and two-way doors? By focusing on decision velocity, you can unlock new levels of efficiency and innovation in your organization.