The organization’s infrequent, low-stakes decisions are deliberately ignored in this article, in order to sharpen our focus on the other three areas, where organizational ambiguity is most likely to undermine decision-making effectiveness. These frequent and low-risk decisions are effectively handled by an individual or working team, with limited input from others. In these frequent and high-risk decisions, a series of small, interconnected decisions are made by different groups as part of a collaborative, end-to-end decision process. These infrequent and high-risk decisions have the potential to shape the future of the company. In our work, we’ve observed four types of decisions (Exhibit 2): As we’ve described elsewhere, agile organization models get decision making into the right hands, are faster in reacting to (or anticipating) shifts in the business environment, and often become magnets for top talent, who prefer working at companies with fewer layers of management and greater empowerment.Īs we’ve worked with organizations seeking to become more agile, we’ve found that it’s possible to accelerate the improvement of decision making through the simple steps of categorizing the type of decision that’s being made and tailoring your approach accordingly. High-flying technology companies such as Google and Spotify are frequently the poster children for this approach, but it has also been adapted by more traditional ones such as ING (for more, see our recent McKinsey Quarterly interview “ ING’s agile transformation”). Failing to plan for an eventual exit can make for a messy separation once that day arrives.The ultimate solution for many organizations looking to untangle their decision making is to become flatter and more agile, with decision authority and accountability going hand in hand. Others, however, see themselves landing an acquisition offer and leaving to perhaps start the process over again. They can’t envision leaving the company that they stared until they retire. Not everyone’s goals are the same in starting a business many entrepreneurs love the grind and hustle. ![]() Running any business is a balancing act, but recognize what you can compromise on and what you need to hold firm on.Īny business that hopes to make it past their earliest stages needs to have long-term plans, but some founders fail to make the same long-term plans for their own future. Perhaps they’re asking for a bigger stake than you were initially comfortable giving up, or have a more aggressive plan for growth and expansion than you thought was feasible. In contrast, the largest and most enticing fundraising offers might come with strings that you convince yourself you can live with but which serve to hinder your ultimate vision for your company. The optimal personal match of VC to founder might not be the largest dollar figure, and if you’re simply looking at the numbers, you might miss out on the other intangible benefits that aren’t on the term sheet. More than just dollars in your bank account, the best offer includes guidance and wisdom plus connections that the right venture capitalist or other funders can provide. Not every funding offer is the same and choosing the wrong one simply because it’s the largest dollar figure or the first one to come along may not best serve your ultimate goals for your company. That isn’t to say that all companies should bootstrap and self-fund every company has to decide what’s best for their own future, and for many, fundraising is the best option for growth. ![]() If you’ve taken your product or invention around and discussed in detail many of the specifics that make it unique and set it apart from competitors, then chances are that others might be able to copy those details and create a product that is similar enough to yours to create a mess of ownership rights.Īnother area where poor decision making can have lasting impacts is in fundraising. One of the bigger problems that can arise when trying to obtain a patent is the possibility of public disclosure. But that impulse and enthusiasm can be harmful if it isn’t tempered with caution and awareness. The impulse to discuss talk about your business with anyone who might listen can be a valuable trait for entrepreneurs you never know when an opportunity will present itself, or who might offer it. It is those bad decisions that can haunt businesses for years to come. Bad decisions shouldn’t be confused with sound decisions that simply didn’t work out as expected a truly bad decision is one in which the process is flawed, or too little thought and consideration is paid to the potential outcome or consequences. Perhaps hardest to overcome are the seemingly innocuous bad decisions that you can’t recognize as such often until it’s too late. ![]() It’s one thing to be waylaid by outside forces, and another entirely to be the source of your own headaches. What might be harder to protect against is self-inflicted damage.
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