What’s the Worst That Can Happen?
What’s the Worst That Can Happen?
Spend your time on the really important decisions, not the noise. Here’s how.
I’ve been a CEO for most of my career, and during that time I estimate I made a few dozen decisions a week. Some of those were big decisions like who to hire, and some were small like which flight to take on a trip. With thousands of decisions made, it’s not surprising that leadership is a hard job.
However, looking back on my career, each year there were only 3-4 decisions I made that determined how the business performed that year. I call those decisions the critical set, and they are the moments you look back and realize are pivotal in their life of the business.
It’s not that all of those other decisions were not important, they just were not impactful. The critical set changed the trajectory of the business, or avoided big mistakes, while the other decisions just kept us on course. Interestingly, I doubt it would have been possible to determine which decisions would fall into the critical set while I was making them.
The critical set are the small set of decisions that shape the success of your business in a given year.
You might have seen this decision matrix, a somewhat famous framework called the Eisenhower Matrix for decision making:
The framework says that anything urgent and important should be done immediately, while things that are urgent but not important can be given to someone else. Anything important but not urgent can be scheduled for the future, while things that are not urgent and not important should be ignored entirely. It’s a useful way to think about decisions in a normal business and can help cut through the noise.
The problem with this framework is that at a high-growth startup company, it’s impossible to know which category a decision falls into. Everything is urgent, everything is important and there isn’t enough information to efficiently tell them apart unless you do the work to actually make the decision! As a result, this framework is useless for us.
For example, let’s say our growth rate drops from 10% to 7% month over month 10 months after launch. Is that bad, an indication that growth is stalling? Or is it normal, just seasonality that we should expect? We don’t have enough data to know, as our product is only about a year old! We don’t know if it’s urgent, important or neither.
You can easily imagine how leaders can suffer from decision paralysis, worrying that every decision could be in that all-important critical set. There simply isn’t enough time in the day to consider each and every decision with as much time and detail as it might require. As a result, mistakes are made when time is spent on the wrong decisions.
So, how do you decide which decisions require significant time investment?
While you can’t know what decisions fall into the critical set, we can use some shortcuts to identify which are not. By identifying non-critical decisions, we can ensure we don’t waste our time on them. We can identify them by asking a simple question: what’s the worst that can happen?
Let’s take the following decisions a CEO might face and think about what the worst possible outcome of the decision might be:
Decision 1: Which candidate should we choose for the VP of Sales position?
Worst Case Scenario: We choose the wrong candidate and need to fire them and hire someone new. That costs us the 4 months of the search, the 4 months to figure out they aren’t working and another 4 months to hire someone else - so we lose an entire year without a sales leader!
Decision 2: Should we implement a custom feature for a customer?
Worst Case Scenario: Whatever we do, we mess it up and the customer is unhappy. They decide to churn with no chance of winning them back.
Decision 3: Should we offer a free trial?
Worst Case Scenario: The free trial leads to low-quality leads and our competitors use it to learn about our product. We disable it after a few months.
Of these three decisions, only Decision 1 has a worst case that would really damage the long term prospects of the business. Losing a single customer or testing a free trial aren’t really going to damage the business if we’re successful. We should spend a lot of time on the VP of Sales hiring process and less on the others.
While this kind of heuristic isn’t perfect, it helps eliminate a large portion of your decisions from the critical set. As a result, you can spend more time on the decisions that might be critical and hopefully make better decisions as a result.
Will you still spend too much time on some decisions that end up not being critical? Yes, that’s unavoidable in a highly dynamic environment. The question isn’t whether you get everything right, it’s whether you get those 3-4 decisions right. Anything that increases the chances you do is a win.