‘A wise man makes his own decisions; an ignorant man follows the public opinion’ - Grantland Rice
The success of any organisation depends on the effectiveness of the decisions made. There have been many debates on the effectiveness of individual decision-making over group decision-making. My view is that ‘too many chefs spoil the broth’. Despite my strong feelings on this subject, I’m also of the view that you don’t want to build a team where everyone’s in agreement either. Having people to challenge you is something that a dynamic leader should welcome and embrace. After all, if you’re hiring A-players, they’re not there just to be ‘worker bees’. While you want a diverse team with different opinions on how a particular challenge should be approached, as the leader it’s your job to manage those opinions and make the decisions, not the group’s.
The problem arises when you allow yourself to be pulled in different directions to the extent that decision-making becomes delegated to a ‘metaphorical’ committee. It’s a classic ‘paralysis by analysis’ situation where you have too many views around the table, people debating, and a decision that should take three days ends up taking three weeks. According to Felix Dennis, entrepreneur and author, committees are ‘the death knell, in nine cases out of 10, for any new venture’. Dennis points out that committees are discouraged on the battlefield because prompt decisions, right or wrong, are far healthier than endless debate. For me, the business is a lot like a battlefield. The road ahead of you is pitted with checkpoints to slow you down, tripwires to derail you, and a whole range of other dangers designed to upend your business plan. You’re also battling against all of the other businesses competing against you, while trying to maintain morale in your own ranks during periods of intensity. In the hostile domain of business, decisions by committee simply don’t work.
Shun ‘Groupthink’ at all costs
The basis for the ‘committee conundrum’ lies in Irving Janus’ socio-psychological concept ‘Groupthink’, where thinking up decisions as a group results in unchallenged, poor quality decision-making. I advise my founders to avoid it at all costs. The roadmap of any business is a ‘collection of decisions’ – and the decisions that are made will ‘make or break’ a company. In my experience, decisions made by committee are always compromises and thus lack the vision of the entrepreneur.
Steve Jobs was someone that I emulate and his approach is one that I can relate to. He had a binary view of the world where something was either amazing or complete rubbish, with no grey in the middle. Harsh as it seems, that thought process enabled him to be extremely decisive. He would completely rule out any discussion on ideas that he deemed to not be brilliant. And, to avoid any doubt that other people were allowed to make decisions, Jobs would resort to perplexing techniques, such as rejecting someone’s idea only to come back a week later claiming that he had come up with a brilliant idea of his own.
Skate to where the puck is going to be
Sony is a classic example of a company that became too democratic and fell behind. Why didn’t it come up with the iPod? The Walkman and Discman were both Sony products and they had established relationships in the entertainment industry with Sony Entertainment, but it was Apple that developed the first widely used MP3 player. When the digital age arrived, Sony, despite its hardware and entertainment prowess, simply wasn't able to adapt quickly enough.
One could argue that, with the founders long gone, Sony didn’t have a natural leader who could bring the various departments together, someone who could look past departmental vested interests. What it needed was a visionary who could connect the dots across seemingly unrelated disciplines like music hardware and digital music licensing. And the same could be said of Apple itself when Jobs left in 1985. In Jobs’ absence, Apple went through a period where it was drifting. The company was near bankruptcy when he returned in 1998. To quote Jobs, when decisions are made by committee, you don’t have the speed to ‘skate to where the puck is going to be’.
Who is really conducting the orchestra?
When I was running my first business, Tribal Monsoon, I didn’t have any A-players to help me make the right decisions and that contributed to the company’s failure. Entrepreneurs in a VC situation have the advantage of an experienced board and mentors to guide them. Having that guidance can do wonders for a business – and I wish I had it at Tribal Monsoon – but, at the same time, founders need to be able to draw the line in terms of who’s calling the shots. The second a VC or investor is making the decisions, they are running the business and the dynamic has turned the wrong way.
Founders need to be able to coordinate all of their team members, investors, and stakeholders in a way that allows their vision to be realised. In a multi-stakeholder situation, decision-making can become overly convoluted and time consuming unless the founder steps up, acts as the centre point who processes everyone's (often differing) opinions, takes a commercial view, and leads the way forward. Think of yourself as the conductor of an orchestra – you listen intently to all of your musicians, but ultimately you lead and bring all the instruments together in harmony. Poor orchestration of the different sounds in business can lead to a cacophony, which could prove costly.
Sweat the big stuff
The waltz between 'decision-making' and 'delegating' is an important one for the entrepreneur to master. An entrepreneur faces a myriad of day-to-day decisions that must be made and he or she can easily get pulled into those that are of little commercial significance. The entrepreneur must master the art of ‘sweating the big stuff’. Who should we be hiring or firing? To what degree should we control burn rate? Should we spend £100k on a TV trial today or after our next funding round? It is the toughest make-or-break issues that require the entrepreneur to lead, but most other things can be delegated to carefully selected commanders.
For first time entrepreneurs, who are less confident, this balancing act can be difficult. It’s understandable to worry about investors blaming you for poor decisions or disenfranchising your team by going against them. What you have to remember is that you are the leader. Investors and VCs are unlikely to vote against what an entrepreneur wants to do because they know that he or she won’t be successful in implementing something that they don’t believe in. In my businesses, I’m there to help the entrepreneur to take a more considered decision, nothing more. Some of the highest profile VCs, for example Vinod Khosla of Khosla Ventures in Silicon Valley, reinforce my belief in the importance of the leaders of a firm making decisions, not boards or committees. In Khosla's own words 'The recipe for startup success is tough to intuit on your own without the help of good advisors. Those advisors don’t make decisions for management. Their only role is to assist entrepreneurs by giving honest advice, even when it’s uncomfortable to hear. They’re not there for governance, making decisions, or casting votes. They’re there to listen, argue, debate, and guide, but leave the final decision to the team that’s going to have to execute it.'
You will make decisions that are wrong, and that’s normal. Investors and people in your team should understand that, even if they don’t like it. You need to remember that you’re in business to make money, not friends. My father used to tell me that when you’re the head of a business, it’s inevitable that a lot of people won’t like you. 'Thick skin' is essential armoury from the entrepreneur's arsenal. Your decisions can’t be led by ‘emotional intelligence’ and the need to please others. A strong leader listens, digests his advisors' counsel, forms a view after having carefully considered the alternatives, and then acts. As Khosla wisely says 'Good entrepreneurship is like having a delicate recipe cooked by an expert chef with ingredients added in the right amounts at the right time.' But, for the broth to have exactly the right flavour, the head chef sometimes needs to tell the others to stand back.