Minimum Viable Decision

Every organization I’ve ever worked with has struggled at some point with decision-making. Decision-making is tough. But there are ways to do it better.

Here some common problems we encounter in decision-making:

  1. A decision is never made
  2. Decisions don’t get enacted
  3. Decisions get revisited at random

It’s clear why any of these three things can be majorly disruptive to an organization. A decision is a commitment to a certain course of action. If there are no decisions, it may be unclear what course of action is being pursued. If the commitment is not followed, the commitment was worthless in the first place. And finally, if the commitment is always up for questioning, it holds little value (it’s hardly a commitment at all).

Why can decisions be hard to make and maintain? Here are a few common reasons (among many more):

  1. There’s a lot riding on the decision
  2. The consequences are highly ambiguous
  3. Lack of buy-in across actors responsible for carrying out decision

The more that’s riding on the decision, the harder it may be to make. The more pressure there will be to “get things right”, and therefore to spend a lot of time preparing. When consequences are ambiguous, it is harder to evaluate the available options and therefore to choose amongst them. In both cases, there is a strong temptation to revisit decisions before they’re carried out. We have an innate tendency to abhor paths that may contain regret. And of course we’ve all seen people exercise personal “pocket vetoes” on decisions by simply ignoring them.

How do we address these issues in organizational decision-making? Many tangential arenas have codified practices that address similar concerns: agile software development, design thinking, and the validated-learning approach to product/startup development. Many areas of business fall outside these domains, but the approaches pioneered there can be applied more widely.

Inspired by them, I’ve toyed in my head with the concept of a “minimum viable decision” (MVD).  A minimum viable decision is the smallest decision of any consequence that can be taken as early as possible in any process. Instead of waiting to make the “right” decision, see if an MVD is available. Your team might never agree on what the “right” decision might be, but an MVD will help you chart a path forward and gain critical information about your problem domain.

More broadly, it’s about applying the concept of rapid iteration, feedback, and agility to decision making across all aspects of an organization, rather than just the areas where these concepts have gained the most traction.

What are some examples of an MVD?

Instead of making a big decision You make a small one
Promoting a junior developer to a management role Have a junior developer manage a small project
Commit to a direct marketing strategy Try direct marketing in one neighborhood
Get an accountant Talk to an accountant
Hire a telesales role Make 100 cold calls yourself

What are the advantages of a minimum viable decision?

  1. MVDs require less organizational capital to take
  2. It is easier to come to an agreement to an MVD than a Big Decision
  3. Often MVDs are almost always reversible
  4. MVDs are not “bet the ____” moments (e.g., the company, my career, this product, etc.)
  5. By reducing the impact of the decision, it’s easier to implement
  6. Smaller decisions are easier to measure

I’m not advocating that you don’t make big decisions. I am advocating that you arrive at them through a series of smaller, micro-decisions. As Jeff Bezos puts this whole concept brilliantly:

When you look at something like, go back in time when we started working on Kindle almost seven years ago…. There you just have to place a bet. If you place enough of those bets, and if you place them early enough, none of them are ever betting the company. By the time you are betting the company, it means you haven’t invented for too long

Concluding thoughts: 

  • Make smaller decisions
  • Use smaller decisions to get information to feed into future decisions
  • Start making commitments early on in any deliberative process.
  • If you get to a point of deep divergence in your team, you have waited too long

Get to Yes.

I recently listened to* Getting to Yes: Negotiating Agreement Without Giving In, by Roger Fisher, Bruce Patton, and William Ury. (Amazon Link)

A negotiation is a process by which multiple parties with shared and diverging interests come to an agreement. This could be two nations at war, or it could be two friends figuring out where to eat for dinner. At an abstract level, both situations involve multiple parties figuring out how to meet their needs. The skills the authors discuss apply widely.

This is why I think this book is a must-read for everyone. Everyone. Most people, I think, will casually dismiss the domain of negotiation as belonging exclusively to the legal and business communities. But as the authors argue convincingly (but also somewhat briefly – I wish they’d gone further), everything done with more than one person involves negotiation in some sense.

As communications technologies and the zeitgeist is drive organizations to a flatter, more loosely-coupled network of individual agents, effective negotiation becomes ever more important as a personal skill.

I’m so glad I came across the book. Here is my interpretation of the lessons they teach:

The Bogey.

The enemy of the book is “positional bargaining” – the form of negotiation that most of us are familiar with. You want ten, I want twenty, we settle at fifteen. You and I start with a position (a statement of the outcome we desire), and we move along a linear path between the two positions until we find a point somewhere in the middle that is acceptable to both parties. Or – nothing on that “line”** is acceptable and either the two parties give up, or one “wins”.

Because of the narrow range of outcomes, positional bargaining tends to create win/lose scenarios, which in turn breeds those expectations at the outset of a negotiation. Negotiators may go into a discussion really wanting to “win”; others may accept “losing” to preserve the relationship. The authors rightly reject win/lose or lose/win mentalities; if one party walks away from a negotiation feeling like they “lost”, it’s likely the agreement won’t produce a “win” for either party.

The People and the Problem.

The authors repeat, as a mantra “separate the people from the problem”, but I think this is actually fairly inaccurate relative to the substance of their arguments. I would say it’s more accurate to describe their conclusions as “treat the people as an entirely separate problem”.

There are essentially two problems on the table during a negotiation: the central problem of how to satisfy the interests of both parties, and the emotional health of the people and relationships of the negotiating parties. There’s the “problem” and then there’s the “people problem”. The authors do not advocate ignoring the people problem – in fact they argue that it’s critical to spend real time and effort strengthening relationships between the two parties.

Positions and Interests. 

Positions are statements that outline one possible way of meeting the interests of a negotiating party. What’s not important is the specific mix of things in the position; what’s important is that the mix is acceptable.

Positions are usually expressed as a single point in a space of interests – but often they don’t hint at the dimensions in the negotiator’s interest-space (i.e., the things they care about). So look past the expressed positions to get to the underlying interests behind the position.

Understand their interests better than they do. This should be your goal. Not only will you gain serious “people points” by showing that you care about solving their problem, but you will be better equipped to find a mutually advantageous solution.

 

For example, if you’re dealing with a landlord that wants you to move in quickly, understand why exactly that is – is it because there is a mortgage payment looming, or is it because she’s going away on vacation in a month and won’t be available to handle things while she’s away? The different underlying interests permit different ways of meeting those interests. Get past the positions and understand interests.

The interest space.

It’s likely that both negotiating parties have a very high dimensional interest space, although from the stated positions it may not appear so. After understanding the dimensions of the space you’re working in, “probe” the space by inventing options (“positions” pulled out of thin air) as a way of determining which regions of the interest space are acceptable (i.e. move in in a month and pay more rent vs. move in today and pay less). Make it clear that there are not commitments at this stage.

This is the natural consequence of getting off the “line” of positional bargaining. Once you open up space by looking at the interests behind the stated positions, explore it.

The BATNA.

The Best Alternative To a Negotiated Agreement. Every negotiator should go into a negotiation knowing both their own BATNA and the other side’s. Because a negotiator will only accept an agreement that improves on her BATNA, BATNAs are the source of relative strength in a negotiation – not “power” or resources per se. A very powerful company has little leverage over an employee that has received a competitive job offer from someone else.

So understand your own BATNA, and work to improve it, before going in. Also understand their BATNA, and work to worsen it, if you can and need to. Filing suit against the other side is a common way of lowering their BATNA; now their BATNA includes defending themselves against a lawsuit. Improving your own BATNA and impairing the other sides changes the landscape of the negotiation in your favor – perhaps even before it begins.

Conclusion

I hope you will read the book. For me, it was an instant classic. Negotiation is such a common thing in life, it’s shame it’s not taught more widely. 

*yes, I’m a shameless audiobook fan. 

**In my head, I converted pretty much all of their discussion about positional bargaining, issues, etc., into a discussion about the benefits of operating in n-dimensional space as opposed to operating on a line (2d space).

A “Third Way” in Entrepreneurship

Entrepreneurship is often portrayed as an endeavor in which the entrepreneur has to essentially go crazy to succeed. Extreme dedication, total distortion of the work/life balance, and very high risk are some of the hallmarks of our conception of starting a new business (or even more risky, starting a new business with a new business model or product).

Moreover, entrepreneurs are pressured to maintain a totally positive face to the outside world about the state of their company. In San Francisco, “we’re killing it” is almost now an inside joke because of the ubiquity of that response when someone asks an entrepreneur how their company is faring. Most of these companies are not “killing it”, and the entrepreneurs probably know that.

It’s actually almost folk-wisdom that this quality (believing your company is “killing it” at all times) is a necessary mental quality for an entrepreneur. If they could be completely honest with themselves, the thinking goes, they would never be able to face the consistent stream of failures and setbacks without giving up. But maintaining this facade is hard, and it only makes the risks higher; a less than satisfactory end result now means abrogating promises and not meeting expectations that you yourself helped create. 

One has to think that there is a way to run a company that doesn’t exact such a toll. Leaders in the field of startup management, especially Eric Reis, have outlined new ways of thinking about starting a new business that permit new ways of behaving. Instead of being deterministic (i.e., the entrepreneur is in control of what the company will be and do, and effort will determine success) and linear (i.e., there is constant progress towards success), most startups are nondeterministic (you may succeed but you will not control how) and nonlinear (you will experience small failures constantly until you succeed, perhaps wildly). Deterministic/linear thinkers (or those who perceive that others think that way) are under more pressure to maintain this facade relative to nondeterministic/nonlinear thinkers.

In all, I think there’s a different way to be an entrepreneur. One that encourages work/life balance. One that doesn’t demand a stark dissonance between your public face and private reality. One that recognizes and embraces the nonlinear nature of startups – i.e., that it’s ok not to be “killing it” all the time.  

Products need three things

  1. To solve a pain point
  2. To be defensible
  3. To be scalable

Solving a pain point

A product must create value – but creating value is a subset of this criterion. Good products solve real problems – problems that people must solve one way or the other. OK products are “nice to haves”.

You only get paid if you solve a problem. Solving someone’s problem is why people would ever buy your product in the first place.

What about Facebook, the iPhone, Instagram? People got on just fine before these things – what pain point did they solve? Well, great products create new problems that can only be solved by the product itself.

When Facebook became popular and everyone got on it, you had a new problem: your friends were all sharing things on Facebook and you weren’t.

Defensibility

Ok, so you’ve ID’d a pain point. What’s stopping your product from becoming a commodity? Is it the technology – i.e., is no one able to replicate your product because of IP or trade secrets? Is it network effects? Is it economies of scale?

Without defensibility, you may still make money, but you’re going to be competing for scraps with the rest of the market. 

If solving a pain point is why people would buy this product at all, defensibility is why people would continue to buy your product.

Scalability

Scalability, in my mind, is the confluence of two factors: a large potential market and a viable growth model. Consider this: you are the sole owner of wedding photos for a recent wedding. Your potential customers really want to see the photos (pain point) and you’re the only provider (defensibility). So – you’ve got the makings of a great product. But, there were 100 people at the wedding, 50 more that didn’t know but care enough to see the photos, each willing to pay $50 for it. Too bad.

You fell over because the market was too small.  

Well what about a big potential market? You can still fall over if you don’t have a viable growth model to eat up the market. The growth model essentially means that your cost of user acquisition is lower than your customer lifetime value. I’m sure there are other nuances, but that’s pretty much it. Even if you solve a problem for someone, if you’re paying more to deliver the product to them (with “deliver” meaning everything from the averaged costs of developing the product to creating it to marketing it to supporting it and beyond) than you can receive for it, you don’t have a viable growth model. 

So if solving a pain point is why people would by this product, and defensibility is why people would buy your product, scalability is why you’ll be able to create a business around your product.

Concluding thoughts

So solving a pain point, defensibility, and scalability are all necessary. But are they together sufficient? I haven’t thought that through, but my hunch is that they are. 

 

Failure is how things are optimized

I read Paul Graham; I am a big fan of his writing. 

One day he wrote: 

Things are always breaking at YC [Y Combinator, his company], because our strategy is to find bottlenecks by hitting them. That may sound irresponsible, but in practice it’s the way most complex systems get optimized.

Let’s play with his words, though, and instead speak about “high performance” systems as opposed to complex systems. Until last night it had not occurred to me what the impact of that statement would be, if true. 

The statement is almost a tautology in the sense that it is self-proving. A high-performance system is, almost by definition, something that has reached, or almost reached, the limits of performance. If it hasn’t, then it isn’t high-performance. And something that is close to the limits of its performance will fail, periodically. And by failing, you can learn why it failed, and improve. But only by crossing the threshold of what was previously thought possible can one extend the boundaries of performance.

So, it makes sense, and it feels true. And if you concede that it is true, a number of things suddenly fall into place. But they come from one major thing: failure should be an objective in-and-of-itself. One should seek to fail.

On a personal note, this felt like a major insight for me. Of course, I’m not the first to this party. Thomas Watson’s quote about doubling your failure rate comes to mind. But for me these sorts of things never had a real grounding, and they never quite landed on me. But now, for me at least, the reasoning is more clear. Failure is not just an indicator of ambition or tenacity. More fundamentally, it is a sine qua non of outsized success. 

Fundamentally, this implies a shift from thinking “what do I want to do next” — the implication being of course: “what should I succeed at (or try to succeed at) next?” — to thinking “how do I want to fail? How do I want to purposefully reach beyond what I think I can do?” 

I’ve heard of the concept of a “failure resume” a document showing initiatives undertaken, but ultimately unachieved by the writer as something used to judge candidates in a hiring process — alongside a traditional resume, showing successes. What would the optimal balance of these two documents be? Full-up on one, and nothing on the other would indicate either a lack of ambition (no failures), or an inability to learn from mistakes (no successes). 

It seems that you would want these entries to be somewhat in balance. 

So what is failure, then? Is it an indicator? Is it a result? It seems to me that (like success, its sibling with a flipped sign) it is an instrument that you use (to advance yourself as a person), and that, by itself, it should carry no positive or negative connotation. But, for better or for worse, it seems to come with a personal stigma, which must be overcome.