The Speed of Decisions
Recently, someone asked for approval for a $1,000 annual software license that obviously everyone needed. Later I asked the team why they didn’t know how to get an approval and whom to ask, which sparked a whole discussion around expenses, decision-making, and approvals. Here’s my attempt to share my philosophy on decision-making at Lucid.
Ultimately, a company’s value is just the sum of the decisions it makes and executes. — Harvard Business Review
One of our biggest assets culturally is fearless decision making. In our younger days, we would make decisions, big and small, quickly. Not all of these choices ended up being ‘correct’ but the speed was the most important aspect. Additionally, decision making is the key difference maker in good leadership and management. The only way to learn how to make good decisions is to make them and then see the consequences. Lots of mediocre choices early in a career will create the necessary experience to make better decisions in the future when the stakes are higher.
As our organization grows, inertia will push against the speed of decisions. In order to remain nimble, we have to spread the speed of decision making throughout the organization. Historically, we would do this through organic learning, but now we are too large to learn “as it happens.” First, we need to train and educate our entire staff on how to make decisions the day they walk into the building. (Speed as a Habit) Secondly, we need our more senior team, think directors and VPs, involving themselves in the right scale of decisions. If we are constantly being bombarded with small decisions, then we are in the weeds and not spending energy on the big ones. Lastly, decisions are a muscle, (Do You Suffer From Decision Fatigue?), spending time on the wrong smaller decisions means important big decisions get less attention and energy.
We also need to make sure that our team isn’t using an approval to cover their asses. Early in my management career, I was constantly being asked to weigh in on small decisions — I hated this — because the team member usually thought they knew the right answer, but either were afraid to be wrong or wanted me to say they were right. Hence my infamous question, “What do you think we should do?” I’d then say yes to WHATEVER they said, even if I thought it might be the wrong choice. Because the scale of the decision was such that a wrong choice was a learning experience, AND I’m often wrong, meaning there are many decisions that I think are stupid that turn out to be smart and right…
My first attempt at driving decision-making speed at Lucid was to tell every new hire that they could all make $500 choices for the business without asking for approval. This is a powerful statement to a new employee because it means that we trust them out of the gate to make good decisions. Now I recognize that we need decision-making guidelines across the org and at all levels.
The Lucid Cost Approval Pyramid
I took the $500 at the Team level and added zeroes all the way up to the Board creating an order of magnitude step change at each level. At Lucid, the Executive Team is the C-Suite, Group Leads run business units or functional areas and report to the Executive Team. Leadership is essentially Directors and VPs that manage teams.
How to use this? If you are in Leadership, you have authority to approve a $5,000 business expense without having to ask permission from a Group Lead. Don’t take this responsibility lightly, because you will quickly find yourself in gray areas of purchase decisions. And no, you shouldn’t buy a truck full of swag unless we need to buy a truck full of swag. Ha! Yes, that’s a koan. But really, make smart decisions because accounting will be reviewing all this.
Who to go to for advice? Your peer group. Don’t go to an Executive for a $50K decision — go to peers, then make a decision.
At the end of the day, this is about speed and trust. Be smart and make good decisions…and when you make mistakes, which you will, don’t worry… fix it and move on.
Onward and upward,
Patrick
