No pressure or anything, but your business is going to have to start making faster decisions ASAP or it's going to become extinct.
That’s the key message of a recent Harvard Business Review (HBR) article. The TL;DR is this: Speed and adaptability are the new competitive advantages in our product-centric world. Companies that can “pounce” on opportunities are going to steamroll over orgs that take too long to move. Eventually, those slow movers are going to go the way of the dinosaurs.
In other words, analysis paralysis won’t just slow your business down; it will kill it.
So how can startups obliterate analysis paralysis and make faster decisions in a high-stakes, ever-changing environment? To find out, we turned to Dr. Annie Duke, a former professional poker player turned best-selling author and leading expert on decision science. She has a PhD in cognitive psychology from the University of Pennsylvania and is the Cofounder of the Alliance for Decision Education.
Analysis paralysis: meaning and impact
Analysis paralysis is the inability to make a decision when there are multiple probable outcomes. In other words, it’s being unable to act in the face of unknowns.
In team settings, Duke says that people often get bogged down in analysis paralysis because of one thing: fear of being wrong.
“People will start to collect information past the point where they should’ve made a decision already,” she explains. “They’re imagining being in the room when things don’t work out,” Duke says. “They want to be able to say, ‘Here’s all the work I did.’”
So then a team that has 70% of the info they need to make a decision may stall until they get to 90% confidence. To that strategy, Duke says the quiet part out loud: “If you have to get 90%, you’re too late.”
What causes analysis paralysis in teams? Some real-world examples
So what, exactly, prompts the need to prioritize covering one’s arse over pouncing on opportunities?
According to Ram Charan, a world-renowned business strategist and the author of the “decide or die” HBR article we quoted above, analysis paralysis is driven by company culture, which is fed by actions and decisions from leadership.
Duke has a prime example: the retro or post-mortem. While these exercises are intended to be neutral, they often carry a subtext of “What went wrong?” People feel they have to justify their decisions so they naturally get defensive.
“They get the message that being wrong is bad,” Duke says. “However, if you exceed your target by 15%, that’s an equally incorrect forecast, but then there’s no meeting. Then you’re popping the champagne.”
This type of scenario can lead to a culture of risk aversion. Next thing you know, people are sandbagging. Instead of going after a stretch goal, they’re making forecasts based on what they know they can achieve. “When people feel like they’re not allowed to miss, they don’t want to tell you they’re missing,” Duke adds.
Ultimately, what gets missed is opportunity.
How leaders can reverse a culture of analysis paralysis
Here’s the good news: Leaders can have an outsize impact in creating a healthy, proactive decision-making culture.
Let’s turn to Ram Charan one more time, because he authored a classic HBR piece on indecision in business. He prescribes three strategies to turn things around:
- Creating an environment where intellectual honesty is prized
- Prioritizing transparency and honesty in meetings, reviews, and business dealings
- Rewarding high achievers, coaching those who are struggling, and discouraging behaviors that block decisions
Duke suggests a similar framework that echoes those concepts. She calls it the “3 Ds”: discover, discuss, decide.
“We think we’re already doing these things, but we tend to do them all at once,” she explains. Without separating these phases into distinct parts, it’s easy to lose focus. “We can drive better decisions by focusing on process instead of outcome,” she adds.
Here’s how to implement the 3 Ds with your team.
The discovery phase is all about information gathering. However, it’s important to structure this part of the process so that team members can contribute information, insights, and opinions independently and asynchronously.
“If we try to discover facts as a group, the modeling of those facts is subjective and open to interpretation in the context of a meeting,” Duke says. “If people disagree, the implication is that someone is wrong. If leadership has already expressed an opinion, that could also sway people.”
Research from Stanford University supports this, showing that creating pockets of individual isolation within a team increases the quality of decision making.
Plus, allowing people to contribute input in a considered way, without the pressure to “perform” at a meeting, demonstrates that their opinions are genuinely welcome. It also ensures that the more extroverted or dominant team members don’t overshadow the equally important contributions of other teammates.
The discovery phase also needs support from another “D”: documentation.
“Creating an artifact for decision making is the route to creating a safe atmosphere for people to be able to express their opinion,” Duke explains.
If a team misses the mark, it’s easy to look back on the documentation and see what the decision was based on. The same holds true for a decision that was the right call. The idea is to use the decision artifact as a tool to formulate better future decisions. This helps foster a culture of learning rather than blame.
After the async information-gathering discovery phase, it’s time to meet and talk through different points of view. Because everyone has already weighed in, the meeting can progress efficiently and dispassionately.
“If I’m the leader, I can go into the meeting already knowing what everyone thinks and how they separately model their opinions,” says Duke. Not only does this eliminate any unintentional bias in the team’s input, it also helps center the discussion on the most important elements: those areas where people disagree.
For example, if there’s a disparity in recommendations for a sales target, the leader can probe that topic for further discussion. Perhaps one team member has insight that another doesn’t have. Or maybe people are basing their targets on two different sets of numbers. Investigating these areas of dispersion provides an opportunity to refine the parameters and the basis for the decision.
But that’s not all. “This kills many birds with one stone,” says Duke. “It creates the psychological safety that allows people to speak their minds. It encourages the idea that disagreement is fine. And, it improves the quality of the judgments you’re getting.”
That’s because team members will eventually build the understanding that the discussion phase is truly about discussion rather than debate. If there’s no obligation to reach consensus, it frees people up to express opinions without feeling like they need to adopt a black or white stance. Instead, it’s about coming to a shared understanding of the context in which the decision will be made.
After the discussion phase, there should be a clear framework for the leader to make a decision. That decision may come during the meeting or it may come after a period of additional information gathering. However, if additional facts need to be hunted down, Duke recommends setting a firm deadline for the final call.
Then, the chips fall where they may. And sometimes, even solid, well-informed decisions don’t yield the hoped-for outcome. “The world is probabilistic and things don’t always go my way,” says Duke. But she points out that with a decision artifact, you can conduct a forensic analysis of how you arrived at the outcome.
“You can look back and ask ‘Is there anything else we could have known?’ There’s no blame in that. It just goes on the checklist for next time. We’re using what’s happened in the past to build a better process going forward,” Duke says.
Again, this reinforces psychological safety because leadership is modeling a predictable, repeatable, and blameless process for making informed decisions. The focus is on the process of making the best decision you can make based on the conditions that were known at the time, and then using that information to refine your next decision, and the next.
Creating a culture of healthy decision making may take time, but focusing on process instead of outcomes means your company can move faster, see continuous improvement in your decisions, and be ready to pounce on that next opportunity. Decide to start today.
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