Making Bets
As a startup leader forging new paths into the future, there is always uncertainty about the consequences of significant decisions. We cannot see what will happen perfectly, so we have to gather the best information available, test assumptions when possible, and ultimately pull the trigger and make a bet.
We would all love to have perfect information and know exactly how everything will play out. However, that is not the reality of doing something innovative. And the costs of inaction or indecision can be enough to kill a startup, so a startup CEO must be able to decide on a path boldly and decisively, even when peering down the road into the fog of uncertainty. Startup leaders must be willing to make a bet.
One of my favorite fictional characters is Paul Atreides in Dune by Frank Herbert. Paul has the ability to “see” an array of possible futures extending out before him. That imagery has constantly reminded me of part of the job of a startup leader, which is to envision an array of possible futures along with the decision pivot points that will send the startup down various possible paths.
When I am thinking about where my startup team needs to go next and what are the critical path decisions, I find myself picturing how Frank Herbert described the futures fanning out before Paul – and then trying to fill in each potential path before us mentally. By thinking about different directions and envisioning where we might end up on each path, one can often define the essential options and identify the critical decisions. That enables data-gathering and analysis, which will always be imperfect and incomplete, to help derisk the decision possibilities to the extent possible. Once your options are defined, ultimately, the leader must be willing to commit and make a bet.
Of course, this process is too intense for every little decision. The kinds of decisions I am talking about are ones that require a significant commitment of limited resources, not something that is a trivial investment since, for small investments, you may be able to place bets on multiple options. For significant resource commitments within small teams, you must choose so that the team can focus on making the bet as successful as possible.
As a leader, I find it helps to mentally frame my decision as making a bet because the concept of a bet captures the inherent uncertainty embedded in the process and helps me commit to making a decision under conditions of imperfect information. Of course, I want to get my team’s best input and knowledge to leverage all of the available information and derisk the bet to the extent possible. But, you cannot wait too long nor strive for perfect information. If you do, you risk paralyzing the company and wasting all the resources you use daily just to keep the lights on and the plates spinning while you seek perfect information.
Finally, as a leader, I must be willing to own the consequences of making my bets. Some bets I make will be winners, and some will be losers. When I make a losing bet, I need to recognize that as quickly as possible and cancel the bet by jettisoning the investment already made and changing direction once it becomes clear that the bet was the wrong call.
Ultimately, making smart bets and living with the consequences is on me, part of my job as the CEO, even if many others are helping contribute input and execution along the way.
