High-Velocity Decision-Making
Good decisions are hard, but fast decisions are good.
The Jeff Bezos 70% rule from the Amazon 2016 letter to shareholders:
“Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions.”
Slow decision-making is dangerous. The time spent deliberating carries opportunity cost. Delaying a decision is a decision unto itself. That doesn’t mean hasty decisions should be made. Knowing when and how to invest in decision-making is a crucial skill for any leader and a powerful tool in any culture.
The Three Types of Decisions
I like the way that James Clear defines the different types of decisions:
Hats: You can put a hat on, decide you don’t like it, and take it off right away and try another. These decisions are easily reversible.
Haircuts: You can get a new haircut, and if you don’t like it, you are stuck with it for a while, but can change it soon enough. These decisions are reversible but you need to live with them for a time.
Tattoos: You can get a tattoo, and if you don’t like it, it is effectively permanent or extremely hard to remove.
How to Diagnose and Act on Decisions
As a leader, your job is to make sure your team knows which kind of decision they’re making and get them to act accordingly.
Hats: Most decisions are hats. There should be no penalty for choosing the wrong direction as long as you pick the right one quickly. You can tell a hat decision by the fact that you can get fast feedback on if you are wearing the right hat, and if you are not, you can easily switch to another one. Empower individuals and small teams to make these decisions, get feedback quickly, and iterate.
Haircuts: Haircuts are deceptive. You wouldn’t want to get a bad haircut the day before your wedding. Haircut decisions either take a while to get feedback on or will take a while to change once you receive the feedback. If you are facing a haircut decision establish the timeline after the decision and have a clear metric that you will check to determine success.
Tattoos: Tattoos are rare. This type of decision is one where even when you get feedback you cannot make a change. When a decision seems irreversible ensure you interrogate how real the pain will be to change directions. If you think you are facing a tattoo decision you should scenario plan around the ways this decision will impact your future strategy.
Too many decisions are treated like tattoos. Endless meetings, approvals, and risk-aversion slow everything down. Great teams reserve deep deliberation for the truly irreversible choices and empower people to move quickly on everything else.
How to Build a High-Velocity Decision Culture
Clarify who decides: Ambiguity kills speed. Every project or initiative should have a single final decision-maker. Everyone else’s job is to advise and be enrolled in the decision, but not to approve.
Diagnose the decision: Call out the type of decision the team is facing and shift everyone to the proper mindset.
Encourage 70% confidence: Teach your team that waiting for perfect information is too slow. Constantly push them to be decisive, especially when dealing with hats and haircuts.
Have Decision Transparency: Clearly break down the decision cycle to everyone on the team and allow them see the process end-to-end.
Disagree and commit: Healthy teams debate ideas vigorously, then align fully behind the final decision.
Normalize course correction: High-velocity decision making only works if people aren’t punished for reversing a bad call. If changing your mind feels like failure, no one will take smart risks.
Do post-mortems: Did you think a decision was a hat when it was really a haircut? Could you have made a decision faster? Should you have waited for a little bit more information that would have changed the decision? These are all important questions to answer to constantly improve your team’s ability to make better decisions.
Final Thoughts
The goal of any team is to make better decisions. That means understanding when to take a risk, and the tradeoffs and cost that the risk will incur. Being too risk averse, like treating a hat as a tattoo, is a problem. But often the issue is that every decision is treated the same way. Once teams realize that they can categorize a decision and run a tailored process it can unlock tremendous velocity.
One of the highest leverage things any leader can do is create a culture where their team constantly improves on decision-making. I have found that too many teams never talk about their decision-making process and don’t consider formalizing it. Decision-making is a skill, and every team should put focus on growing that skill.