Early Decisions Are Better Than Later
Decide early. Delaying decisions destroys value.
It seems natural to defer a decision until you have the maximum amount of information possible, but that’s rarely the optimal path.
Imagine we have an option to persevere, pivot, or kill a project after one year of development, or make the decision early after only three months. In both cases, we’re going to run a lot of experiments on customer desirability, technological feasibility, and business viability. But we only have the option to make one decision.
Should we decide earlier or later?
Imagine we are sailing a boat and see something in the distance. It could be a rock, it could be a turtle, it could be seaweed. It’s unclear at this point. Do you wait until the last minute to change course or do it now?
Of course we could wait until the last minute. We could wait until we have the maximum amount of information and are very close to the obstacle. It could turn out to be nothing, so we can just keep sailing straight. But if the obstacle is quite large, we might have to put a lot of effort into a last-minute course correction.
If we change our trajectory by making a small course correction early, it requires little effort to bypass even a very large obstacle.
For a startup, the cost of a pivot becomes cheaper the sooner the decision is made. Click To Tweet
Part of the reason for this is that innovation projects have many dependencies. If we start optimizing a marketing channel with the wrong customer segment, then our business model will never work. If we have narrow margins and haven’t figured out our growth engine, then the business model may be unviable.
If there’s data that says there is no market for a potential product, gathering additional information on how to optimize the per-unit manufacturing costs doesn’t help. We should stop.
The moment we have information that tells us a business model is fundamentally flawed, we should make a quick decision to stop or pivot. Additional information is worthless.
If we do get information that we need to pivot because the consumer needs a different set of features, then obviously that will be much cheaper to do before we build a product.
By going after our critical assumptions first, we radically reduce the costs of pivots.
There is also organizational inertia that makes pivoting not just expensive, but sometimes impossible. If our product and business model is the sailboat we are trying to pivot, the boat actually gets less agile as we sail.
More and more people are boarding with supplies, additional rigging, and anchors. As we start spending CapEx, getting consultants involved, and getting stakeholders excited, it becomes harder and harder to pivot on short notice.
We should probably do more than pivot if there’s something in our path. Instead of just barrelling ahead at full speed, we should slow down to assess the situation.
In the case of a startup, this means run more tests! Yes, it slows down product development, but if it’s a risky situation with many unknown variables, you have to go slow to go fast.
Delaying a decision because of analysis paralysis or because we do not have the courage to shut down a poorly performing project is a bad trade-off. Delaying a decision trades control over our destiny for information that we can’t effectively use.
Fortunately, we don’t just have a single opportunity to pivot, persevere, or kill. We have many. So we can optimize our process by making these decisions as quickly as possible.
Just like sailing a boat, you are the captain of your startup. Smart captains don’t just stare at the deck beneath their feet — they are always looking towards the horizon.
- Earlier pivots are cheaper pivots.
- Go slow to go fast.
- Make courageous decisions early.
Need to evaluate risks on the horizon?