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 Randy Rayess, cofounder of VenturePact.
The key for any startup founder is to know which decisions to make and which decisions to delegate. If you end up making every decision, you’ll be overwhelmed with micromanaging when you should instead be focused on empowering the team to make their own decisions.
Any new innovative technology will have uncertainty, which is why standard return on investment or net present value calculations won’t work as well. It’s these cases where you’ll have to trust your gut and resist overanalyzing and delaying the tough decisions.
What I’ve found is that it’s always easier to delay the tough decisions and tackle the simpler problems first. But fearing making a mistake is much worse than trying something new and failing.
At VenturePact, we’ve focused on building a culture of experimentation, where everyone is incentivized to experiment and search for new ideas and ways to improve. To make sure there is some control, we set deadlines and objectives to assess how the experiment is running. We know that many experiments will fail and will need to be shut down, but this is the best way to find the ones that work.
One key gut decision we had to make was deciding who would lead our product team. Hiring an executive is a critical decision and has a big impact on any company’s performance and culture. Some companies try to create algorithms based on a variety of resume factors to predict performance, but given the importance of cultural fit, we decided to go with our gut for all hiring decisions. We look for people who we think can embrace our culture of experimentation and who align well with our core values.
Who to hire, promote, and fire are just some examples of tough gut decisions you’ll have to make on a regular basis to ensure you have the right team in place. Ultimately, we have experimented with our hiring process to see whether or not our instincts are good at identifying the right people. My team and I have found that informal settings such as a dinner or a lunch with a candidate prior to hiring helps us get a better feel for cultural fit.
Having a great discipline around experimentation makes you a lot more comfortable handling tough decisions and going with your gut, as it creates a more agile business and allows your entire team to improve.
Randy Rayess is a Wharton/Penn undergraduate alumnus and cofounder at VenturePact, a resource for on-demand vetted engineering teams.
Read all responses to the Entrepreneur Insider question: When making a tough business decision, how do you know when to trust your gut?
Why You Shouldn’t Think Twice About Firing an Employee by William Vanderbloemen, founder and CEO of Vanderbloemen Search Group.
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.