The Entrepreneur Insider network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “When making a tough business decision, how do you know when to trust your gut?” is written by Tim Flannery, a venture partner at Pilot Mountain Ventures.
Making perfect decisions is overrated.
When founders face tough business decisions, it’s more important for them to make a good decision quickly than it is to find a flawless solution. Facebook (FB) got to where it is today by moving fast and breaking things. Investors like that approach. Fred Wilson believes founders should be action-oriented if they want to be successful.
On the flip side, Y Combinator’s Paul Graham has written that founders can easily kill their startups by moving too slow.
Dave Girouard, CEO of Upstart and former president of Google (GOOG) Enterprise Apps, has a method you should adopt: Embed speed into your company’s culture. “All else being equal, the fastest company in any market will win,” he said.
That’s why I advocate reviewing data, deciding quickly, and then focusing on execution.
A word of caution before speed
Different problems require different amounts of thinking. You want to read a book on management theory. Do you go with something from Peter Drucker or Andy Grove? This choice requires zero brain cycles. Pick whichever book is on top. But should your company integrate with product A or B? That deserves time and may require some meetings. Sometimes you need to take a break to think things through. Wait a day, let your opinions settle, and then move forward.
But for the most part, your decisions shouldn’t take more than 10 minutes.
Data isn’t enough
It’s unlikely you’ll get enough meaningful data to make the perfect decision. But that’s okay. Using data is one important way to view a problem, but on its own, it isn’t sufficient. Good data does not guarantee good decisions.
In marketing, you determine the winner of an A/B test through statistical significance. It’s hard to apply the same approach to most choices. When you’re faced with decisions that data won’t solve, it’s important to understand that any decision is better than no decision.
Here’s what the leaders I trust most had to say about making tough decisions:
Trust your gut
Alberta School of Business researcher Sarah Moore and her colleagues found that trusting your gut leads you to make decisions that ultimately help in achieving long-term goals.
Linda Yuan, general manager at Roomi and former VC, suggests, “In stressful times, I’ve found that my first reaction is often correct. Mulling over my decision is actually my brain’s way of trying to convince myself I’m wrong. If I haven’t thought of every single possibility, how could I be 100% sure? In my experience, trusting my instincts has been the hardest lesson to learn.”
Linda is right. You should trust your instincts because of pattern recognition.
Rely on past experiences
Does this decision feel familiar? What did you do last time? Did it work? This process is called pattern recognition, and it should factor heavily into your thought process.
Michael Affronti, vice president of product at ThinkingPhones, told me, “I’ve been building enterprise software for 14 years, and I rely heavily on pattern-matching against my past experiences and decisions to make business decisions. Using real examples from my past helps me confidently trust my gut, and more importantly, provides context to my team around why and how I made my decision.”
Tami Reiss, founder of Cyrus Innovation, says, “I trust my gut most when I’ve had a similar experience before. If it’s a totally new situation, I’ll review a little more data to inform my intuition. In the end, generally the worst decision is no decision. I take the what’s-the-worst-that-can-happen approach, trust my gut, and move on.”
Founders don’t need to make perfect decisions to build a world–class company. And it’s okay to make incorrect decisions. But great founders follow their instincts, set intelligent plans, and can adjust their plans midstream.
Instead of focusing all of your time on making the perfect choice, trust your gut, then execute. Just follow the advice of General George Patton: “A good plan, violently executed now, is better than a perfect plan next week.”
Tim is a venture partner at Pilot Mountain Ventures and the head of growth and operations at BEMAVEN. You can rock climb with Tim at Startup Climbing, a community of people interested in rock climbing and tech.
Read all responses to the Entrepreneur Insider question: When making a tough business decision, how do you know when to trust your gut?
This is How the Most Successful Leaders Make Tough Decisions by Simon Berg, CEO of Ceros.
The Best Way to Make Fast Decisions by Vijay Ramani, cofounder and CEO of Totspot.
What Every Leader Can Learn From Alfred P. Sloan About Tough Decisions by Frank Fabela, Vistage CEO peer advisory board chair.
Proof Data Can’t Always Help You Make Decisions by Morgan Hermand-Waiche, founder and CEO of Adore Me.
Doing This Will Help You Make Tough Decisions by Suneera Madhani, founder and CEO of Fattmerchant.
Here’s What Happens When You Don’t Trust Your Gut by Gesche Haas, founder of Dreamers//Doers.
Here’s What You Should Do When You Have to Make a Tough Decision by Alexander Goldstein, founder and CEO of Eligo Energy.
Never Make a Big Decision Without Doing This First by Feris Rifai, cofounder and CEO of Bay Dynamics.
Here’s How Questioning Decisions Can Ruin a Business by Pat Peterson, founder and CEO of Agari.