Decision intelligence

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One of the latest spectator sports in the market analysis arena is the post-mortems on dot-com carnage.

As spin doctors speculate on the causes of death, those of us who lived dot-com failure from the inside out have never been mystified by the factors contributing to our unkind fates.

One thing that did not factor into many e-failures was the plethora of resources we had available. As we toiled in the fields of Web harvests, we wanted not for opportunities, talent or resources. With the help of eager vendors — also virgins to this new space — we burned through resources at unprecedented rates.

And yet, armed with the best funding and hottest intentions, we failed to deliver profits promised on Power Points.

It was always clear to us that our dot-com crashes occurred at the hands of bad decision-making — at all levels. Smart growth is a process of making one good decision after another. A scan of start-up successes reveals that early and sustainable profitability is the byproduct of hundreds of well-researched, well-timed and well-executed decisions.

In many cases, decision intelligence means smart marketing, pricing, investment, vendor, technology, fulfillment, finance, people and planning decisions.

In all, we saw the following five decision-making flaws at the root of start-up failures.

Assuming decisions are made in the order they appear

Although decisions emerge in our personal and collective consciousness in no particular order, there are logical dependencies that drive the right order for them to be addressed. Do we decide on our market first or our revenue goals? When and how do we start to build our sales organization? How much and in what direction do we invest in new technologies?

It does matter which decisions precede others. If we tackle decisions in the wrong order, we get to make the right one the second time — if we get the chance. It doesn’t matter who voices which issues loudest or first. If we fail to prioritize our decisions effectively, we waste time and resources having to revisit them.

Allowing decisions to be micromanaged by nonexperts

Senior managers are typically fluent in one or two disciplines, not master of most or all. No matter how much savvy they have in general, they are not experts in all areas and do not create value micromanaging decisions in other areas.

This is why one of their critical leadership tasks early on is to bring on managers in complementary areas of decision expertise. Then wise decision-making occurs at the hands of experts. Humility has always been a hallmark characteristic of wise leaders — the willingness to be honest about one’s strengths and limitations. In successful start-ups, wise managers make sure they’ve hired people they can empower to make the decisions they have the expertise to make.

Allowing decisions to be made inside silos

Along the same lines, it makes no sense to allow any discipline to dominate complex decision processes. Technical decisions that have significant budget and marketing implications need to be made collaboratively by all three disciplines.

Financial and sales decisions that impact operations need to be made by the three together. Otherwise, we lose ground trying to deal with costly implications that could have been prevented with more collaborative decision-making upstream.

Few decisions, strategic or tactical, have only local implications to one discipline or the other. Team decision-making can make the difference between decisions that are well executed and those that stumble and fail.

Basing decisions on passionate assumptions

Most who get involved in start-ups have passionate assumptions that may or may not be grounded in data. The stronger our innate optimism, desperation or ego, the easier it is to have confidence in that which has never seen the light of research. And being natural risk-takers, we aren’t intimidated by the gamble.

Whether technical, marketing or financial in nature, research drains time and resources away from moving full steam ahead in the direction of our best guesses. But it can make the difference between sustainable success and accelerated failure.

Being too attached to the decisions we make

Many start-ups emerge in dynamic environments –especially where new markets are being created. When the only change is constant and unpredictability is a norm, the most intelligent plan is an agile one — one that can change and adapt with the unpredictable turns in the road.

Being too attached to any decision prevents us from having the agility to move with rather than against change. With agility — the ability to let go of even ego-based decisions as they become outdated — we become capable of responding to and capitalizing on the kind of fast-moving opportunities that are part of every start-up landscape.

We can glean important lessons from the way many dot-coms failed to manage the myriad decisions implied in all start-up environments, online or off. Whether or not we succeed in any start-up is not a matter of luck — unless you consider that luck comes to those who stack the possibility deck with good decisions.

Lessons from profitable dot-coms reveal the same wisdom in reverse. In every case, we see organizations and their leaders making decisions with an appreciation for prioritization, humility, collaboration, research and agility.

Successful leaders are often not extraordinarily smarter than their failing peers. They simply approach their decision-making with a different set of intentions. Above all, they don’t blame their market or economy on their fate. They squarely put the onus of responsibility on the decisions that drive the direction of their fate.

Experts of new enterprise incubators have been least surprised by dot-com trends. They have long considered start-up success as a factor that transcends the speed of one’s technology or size of their investment.

At the root of start-up success is decision intelligence — the organization’s collective ability to make one good decision after another.

Jack Ricchiuto is a free-lance consultant, author and speaker.