Startup Mind: Avoiding Fear-Based Decisions

One of the most difficult things for startups is keeping an objective and rational viewpoint during the decision making process.

Due to the very nature of the startup environment there is a tendency to view most decisions as a zero-sum game: “if we make the right decision we’ll be fine, but if we make the wrong decision, we will fail.” Because startups operate “on the edge” with limited financial and operational resources, the consequences of failure are very tangible. There exists a natural tendency to fear even micro-failures and to avoid the unknown; being on such a short leash means mistakes are often magnified. The net result is that startups over analyze the hypothetical consequences for almost every non-obvious decision. Also depending on the number of decision makers involved — and the desperation of the situation — the decision making process can be dragged out and argued to the ultimate detriment of the collective.

Similarly, the same fear that promotes lengthy, exhaustive decision making sessions also leads to the opposite effect: reactionary decision making. Reactionary decision making is a slippery slope and one I have found to generally be worse than over-analysis.

The truth is, any number of things can always go wrong for a startup. The trick is to remain focused on what will advance the product and what will lead to the next major milestone. For example, fear and reactionary tendencies lead to questions such as: should we spend the money for the top hosting solution? Should we spend money for a patent? Do we spend money to fly to San Francisco for a pitch? Do we hire this guy who says he will solve all our problems?

While it can be difficult in heat of the moment to stop, breathe and consider the motivations behind a decision, it is important to understand whether the decision has any of three characteristics I see as underlying reactionary/fear-based decisions:

1) Expensive. Reactionary decisions tend to be expensive, consuming valuable resources and..

2) Not Advancing the Product. Reactionary decisions generally do not advance the product, a startup’s number one responsibility. Instead they function as…

3) Un-Claimable Insurance Policies. Reactionary decisions are often based on the false premise that startups can buy insurance policies…they can’t.

In my experience focusing on what will advance the product the most leads to the right decision in most cases.

Tagged as: decision making, Entrepreneurship, failure, psychology, Slippery slope