The Difference In Making Decisions In Startups and Corporations

If you compare big corporations to startups, you can find big differencies in the decision making processes. What should you consider before judging a decision a company has made?

I bumped into Brian Tracy's video blog about decision making processes, and it made me think. Decision making processes are an interesting topic, because there really is no right or wrong. The only way to judge a decision is based on the end result, which isn’t even determined by how the decision was made.

Circumstances

I’ve always been a very fast thinker, who makes decisions at a glance. This is something I’ve been criticized for multiple times, but mostly by people who have themselves had very different circumstances when they’ve had to call the shots.

Most people with a corporate background are used to months of thinking before making a decision, but the circumstances they are in are normally the following: there is a lot of cash flow even when it might be decreasing, there is cash in the bank and there is time to plan a longer term plan which they call “vision”.

In a startup, on the other hand, the time we need to make decisions is not measured in months but in days. We can’t plan the next 24 months ahead, but we need to focus on the next 1–3 months to make sure the company stays alive.

You can judge a person's decision, but only after you understand what were the circumstances he had to make the decision in. I will give an example: Roughly 1,5 years ago I had to take a very tough decision regarding one of my startups.

The startup was facing a terribly difficult financial situation due to a very quick change in the market, and a major player simultaneously entering the market very aggressively. I literally fired myself and a few other people of the startup to save cash and to allow the startup to keep expanding.

I also had to make a living, so I started working in an other project, not because I wanted to, but because I either could save the company and face the anger of the investors, or bankrupt the company, which was something I would never let happen.

You can judge a person's decision, but only after you understand what were the circumstances he had to make the decision in.

At a glance, it looks that the CEO leaves the project, but without knowing what’s behind the decision, you shouldn’t judge. This is something people often forget.

Afraid of being wrong

Can you imagine anything worse than a co-worker pointing at you and saying “I told you so”? Personally I feel that in many companies people are very afraid to make decisions and especially to take responsibility over the decisions.

People are very afraid of being wrong, though it's completely natural. Making the same mistake twice is stupidity, but making fast thought decisions in todays highly competitive world can create a big competitive advantage.

In the digital era the windows of opportunity are very limited, and often a corporation's decision making process doesn’t even allow them to try it out. Normally, when corporations decide that a project is a go, it’s already too late.

Making fast thought decisions in todays highly competitive world can create a big competitive advantage.

Data

Corporations want to base their decisions on data, but for a startup there often isn’t any data available. I love data myself, and if I could, I’d also always base my decisions on data, but usually I need to trust my gut instinct.

If corporations want to make decisions based on data, they should at least develop a standardized piloting process to gather data to make the actual decision. Currently having the same process for pilot and actual decisions is the same, even when the bets are very different.

Replace thinkers with actual decision makers

A startup needs a general who is able to make even hard decisions fast. Someone, who is not afraid to take the blame and go against all odds.

The hierarchies developed in corporations during the 20th Century don’t work in 2016. Especially in the media industry, which is suffering a hard time during the digital disruption, some media companies are just watching their business sink.

There is no going back or someone coming to rescue. Someone needs to stand out and make a stand!