If you ask most people what CEOs do, you’ll hear various versions of “make big decisions.” The perception is that CEOs drive their companies’ make-or-break moments, like Steve Jobs’ bet on the iPhone or Jeff Bezos’ decision to expand Amazon beyond an online bookstore. But in my experience as a CEO, I’ve learned this isn’t quite true. Company success does not depend on one executive making a “ big call.” Today’s best executives make fewer decisions, not more, and instead focus on building a culture of accountability and quality decision-making throughout their organizations. If you want to scale as a leader, it’s critical to empower your employees to make effective decisions on a daily basis. Instead of making all of the decisions, you should spend your time doing these things.
Aligning on values, strategy, and ownership
First, communicate what’s important to the company so employees can use their expertise and judgment to optimize decisions. At my company Invoca, each year, we explicitly write down our vision, values, and strategic direction, so every team and individual can reference those priorities and goals when they have to make tradeoffs and tough calls.
Another important step in delegating authority is to explicitly articulate who “owns” a decision. I make five to seven big decisions a year, typically in consultation with the board of directors, on topics like business strategy (“What markets do we want to enter?”), executive hiring (“Who’s the best candidate to lead sales?”), and financing (“How much capital do we need to grow the business?”). Beyond that domain, I think of myself as an advisor, an intellectual sparring partner and sometimes a contrarian—but ideally not the decision-maker.
One of my favorite tactics is to say “this isn’t a CEO decision,” to be clear about my role in the process (you should see the looks in the room when people hear that). If I’m not making a call, I need to be conscious of my participation in a discussion to avoid swaying the outcome or betraying my assertion that the decision isn’t mine. I make an effort to speak toward the end of a discussion and ask questions as much as I provide answers.
Framing decisions as hypotheses
The most effective decision-makers choose a path based on the information available, then continue to collect and consider new data. Often, the simple act of making a choice provides experiential insights that are valuable regardless of the outcome.
I recommend a few tactics to encourage more flexible decision-making:
- Use the word “hypothesis” to provide a safe space for changing course. By describing a point of view as a hypothesis, you encourage others to maintain an open mind—whereas you can almost see the intellectual battle lines harden once someone has an “answer” or has made a “decision.”
- Think about your “data threshold” in relation to the consequences of being wrong. Jeff Bezos’ heuristic of reversible and irreversible decisions can help to gauge this threshold. For high-cost, “no going back” decisions, you need to collect a lot of data to maximize the probability of being right. The acquisition of another company, for example, is virtually impossible to reverse—so the deliberation needs to be exhaustive. But when a decision is reversible or doesn’t have a high upfront cost, you can lower the data threshold and avoid intellectual paralysis.
Blocking off rabbit holes
Good decision-making requires zeroing in on a few key pieces of information that determine the outcome. But when faced with a tough decision, it’s easy to get distracted by various other factors and feel overwhelmed by questions to the point of inaction.
Help people identify where they’re getting stuck and whether the data they’re missing is actually critical to forming a hypothesis. (Often, the unknown feels more important than it really is and takes up more mental space than it warrants.) Discuss what the decision would look like in the absence of that information.
Consider the example of releasing a new product. Predicting initial sales is often difficult, so one might spend hours forecasting and still feel stuck. Rather than focusing on the perfect forecast, make up logical outcomes and map out their likely impact. If high sales would lead to a radically different strategy than a tepid customer response, it makes sense to double-down on improving the forecast. But if the next step would be the same regardless, the projections are probably distractions rather than key drivers of your decision.
Building in a buffer
Time pressure will put your process to the test. The less time you have, the more likely you are to “save the day” by driving to an outcome—which undermines your goal of empowerment. Plan ahead by determining the “drop-dead date” for the decision and working backward to understand the steps needed to build a path to the answer. Then, add some buffer to the timeline (ideally at least 20%) so that if the decision goes off-road, you have time to course correct without taking over.
Learning and evolving
After your team makes tough calls and sees the results, don’t just evaluate the outcome. Reflect on how the process went. Look back and learn with the goal of building a company where every employee, not just the executives, is equipped to make decisions that move your organization forward.
Gregg Johnson is CEO of Invoca.