Decision Making: All You Need is 75%

by Dec 2, 2021Decision Making, Java with Jim

Decision-Making with 75% of the Information

That is all you need.

The next management secret of the lazy CEO is information. And when can you make a decision? And I will tell you that for the info maniacs reading this, you are not going to like this one too much, but you should be making decisions when you have 75% of the relevant information. Seventy-Five percent, not 25%, that’s a bad place to be. Cause you probably don’t have enough data to really make a decision, unless you gotta, gotta, gotta, cause you don’t have time. But if you drive to a hundred percent of the information to de-risk the decision, which is what people are trying to do, they’re trying to totally understand. So you can take all the risk out of it then I can make the call and we’re gonna go left or right. Or center or whatever it is.

There’s a real cost to going to a hundred percent information organizationally like people are going to be spinning to create and find that information so we can de-risk it. The second is, that it may or may not be worth it to take out the last 25% of the risk to get all the information to do that. It gets a heck of a lot harder to get all the information exponentially needed to get to 100%. And so it isn’t one-for-one to go from 75 to 100, it probably takes as much effort as it took to get to 75.

So just think about if you really need that information to take the risk out. The other issue is speed. It takes time a lot of time to get to 100% risk down. Now, go back above the waterline. I may want to get closer to a hundred above the waterline. I sure as heck want to make the call at 75% or maybe even less. If you go to the point of having a hundred percent information, for example, about introducing a product or opening a new market, or going after a client or geography, you’ve lost all competitive advantage in the market because the guy or gal who gets there first wins, right? First mover advantage. Well, if you’re, if you’re waiting for a hundred percent information, you will never have a first-mover advantage on anything ever, but somebody else is going to make the call at 75%.

So when you’re making decisions and you’re like, all right, we need more data. We need more data. Stop. Do I have 75% of the relevant information? Then I use my belly meter. You are all seasoned, experienced executives – make a call. The only other thing around that is to try it, try it small. So if you screw it up, you can change it. So experiment small. Once you’re making the move, that’s the other de-risking model, but make the call at 75%. Don’t wait for a hundred. Now my spouse is an info maniac. So she wants a hundred percent of the information. And there is a dynamic between where I’m ready to make the call and where she’s ready to make the call. And there is tension. You’ll have the same tension in your organization. Your CFO will tell you that you do not have the information to make this decision because they are, they want a hundred percent.

A crisis is a great example of where you need to put this management principle to work. COVID was a great crisis by the way, for those that were paying attention. But as a leader, when you get into crisis mode, whether we’re missing numbers or major competitors entered, or there’s a downturn in the market or whatever, our normal reaction is to try to go fix it directly. And that’s potentially a mistake because a crisis allows you to unfreeze the organization. I talked last week about change management and about your freeze unfreeze refreeze, as a simple change model crisis is allowed to unfreeze anything you want to. And next time you find yourself faced with a crisis, just think through your wishlist of things you wish you could change in your organization and use the crisis to change them.