It does not matter whether you are in the early stages, later stages, or already a BigCo. As the entrepreneurial CEO, you will always have to make decisions. I seldom had black and white decisions, or they were just so easy that my memory has faded over time. These are not the topic of this article anyway. If it is easy, most everyone you talk to would have made the same decision. My issues always arose from the multiple opinions on current or future directions; e.g., should we change direction, pick a different vendor, retain a different financial advisor, change our product development priorities.
What has plagued me over the years has been the constant advice and feedback from advisors, board members, and most everyone else. The differences in opinions always helped generate confusion by causing me to rethink direction. It is always easy to keep moving along the same path and it can take a lot of energy to change direction. After all, Newton's First Law relating to inertia says “an object at rest tends to stay at rest, while an object in motion tends to stay in motion.” This tends to apply to people and to change in direction as well.
Most entrepreneurs and CEOs are driven to ensure the company is doing the right things to create the greatest value in the shortest time. Undoubtedly, this leads to decisions on most everything in the business; e.g., selections of an investment banking firm, routes to get funding, choosing a contract manufacturer, determining if the recent vendor’s quote is from best vendor, selecting the design for the best proof-of-concept study, etc. It like being a member of congress on Capitol Hill; too many ideas and concerns of offending, so nothing gets done. The advice and comments are really great and helpful, but they add new dimensions and cause you to rethink direction.
What is usually missing is a great filtering mechanism, and you will want to develop your own. Keep in mind that you really want to do this sooner than later because the decisions get more complicated as the startup grows. The most difficult issues to resolve are those with short time limits, but they tend to go away fast for the same reason. I am not able to offer any simple rules about how to adapt or even resolve the short time decision dilemma, but I can suggest a few suggestions to aid in your decision making strategy. Yes, I’m another kibitzer to your decision process!
1. Stop & Look: If it is not an immediate need, don’t feel obligated to make a decision or change paths right away. Most of the time you can think it over until you feel you have the answer that best suits the business. Just because someone gave you an idea sounding great, does not mean it should be enacted without though and/or modification. Make sure you consider all angels before finalizing the decision.
2. Listen, and Think: Hopefully you had or have a solid business reason to follow the path you are taking or planning to take. Simply because several people gave advice to change direction does not make the advice right for you or for your situation. Discuss the issues with advisors or board members and make sure you understand all aspects of the area; what is the the upside and downside.
3. Review the Facts: When you originally made the initial decision to go in a direction, your rationale was based on facts at the time. Review the facts and determine if they have changed. If the facts remain the same, has the landscape or other parameter changed? Determine what you believe makes the situation warrant a new direction.
4. Improve the Business Model: Will the change improve performance, increase revenues, decrease costs, decrease risks, shorten time to market, or some other improvement? It is always easy to decide to switch when you believe you will increase the valuation of your business. Why change direction or models if you do not have a decidedly better potential return or risk reduction.
5. Improve Potential Future Performance and Function: Sometimes this is a guess because you are looking in the future rather than the present. For example, you are planning to do a public offering. You have retained a specific banking group, but an advisor told you that perhaps a different group is better. The statement may be true, but do you believe the alternate group will improve your chances of getting a deal done. As a second example, someone has indicated there is a better contract manufacturer to develop your product but the one you have is excellent. Can you identify solid business reasons for making the switch; will the new group get you to market faster, co-invest in the product, or provide some strategic advantage?
6. Tangible Benefit: Any time the change or decision provides the business with a real tangible benefit, the decision becomes easier, but there still may be complications. When someone is ready to put money on the table that is pretty easy to evaluate. What if they are not your best partner, or only want to invest in-kind services, or if a contractor they wants a second party invest but only if you chose the contractor? You need to evaluate the investment potential and separate that part from your belief that they can be the best to do the job.
7. Stay Vigilant: Even though you make a decision, you must continue to monitor and be prepared to make mid-course modifications. Fine tuning and improving the activities is a great way to enhance value. If for some reason, the new direction is just not working, have a back-up plan to execute in a moment’s notice. That way you have a hedge that will improve your chances of succeeding.
Sometimes, there is no clear cut decision. I have found that remaining on the current path was best and that sooner or later, a decision of what to do became clearer. I always know I have the right choice when I could articulate all of the reasons it made sense to alter direction. With that information, I can defend the decision and help bring about consensus with the Board and team. I prefer to use the same business evaluation process as when I made my first decision. Sometimes, it is better to make no decision for a while and to continue to evaluate the problem and direction. There may be other directions that would be better.
What are your thoughts on this?
Taffy Williams is the author of: Think Agile: How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon