89 - Decision categorization



The beauty of having a sound framework for decision-making is that it can clarify your approach to work both at a day-to-day and long-term level.

The one I subscribe to makes explicit the time-accuracy tradeoff. By doing so, it helps you eliminate poor choices quickly and devotes the time (and attention) saved from having escaped the undifferentiated demands of work and life at the service of your biggest decisions.

Not surprisingly then, I’ve a thing for not treating all decisions the same. Any longtime subscriber would know this. For those new to this newsletter, here are a couple (1 and 2) of previous posts on the subject. E-Book I of the Decision Decoder series devotes considerable pages to it.

In this piece, I want to connect the dots between a habit of decision categorization and your impact as a leader, founder, executive, and knowledge worker.

To do that, allow me a simple switch. Start not with decisions, but tasks. A number of people I’ve had the chance to discuss decision-making with have said to me that they don’t see their day in the unit of decisions but as a list of tasks. They’re more comfortable thinking of our work in the currency of tasks, not decisions.

Introducing: product leader Shreyas Doshi’s LNO framework.

Doshi’s premise is simple. For those who love satisfying their inner perfectionists, getting every task done well is important. But often these poor souls tend to max out as they move up in their careers. They find themselves busier but also increasingly dissatisfied with the impact (or lack of it) they’re having.

Here’s Doshi explaining it:

I just joined Google as a relatively new PM, this is back in 2008, for the first three years, I was overwhelmed and stressed. And that was because, one, I was a new PM in this really high performance environment. I was working on some important products and launches and I just had too much to do. And I looked back at that time and it was perhaps the most stressful time of my career, where I would long hours, etc. But even at the end of the day, I'd feel highly dissatisfied because my to-do list was endless and I wasn't able to make a dent on it, and I was also a little bit of a perfectionist, so I was like, “No, no, no, I need to do this well.”

…It was just constantly I would come home and talk to my wife and basically just complained to her about how I'm not able to make progress or as much progress as I want, then that was accompanied with not being able to sleep very well because I was concerned about how much output I was producing and whatnot.

Many of us, if not all, have been here. Busy and stressed seems like the mantra of those who treat all decisions the same and dive into each as if it were the biggest needle-mover on their list. So there you have the parallels in symptoms.

That sets the stage for us to ask: So what is the LNO framework?

Doshi explains:

So there are L tasks which are leverage tasks. And the L tasks are such that when you put in a certain amount of effort, you get 10X or 100X in return in terms of impact. So those are L tasks, leverage tasks. Then there are neutral tasks, so that's N. And those are tasks where you basically get what you put in, or just a little more than that. So you put in 1X and you get 1.1 X, those are neutral tasks. And then there are overhead tasks where, again, in terms of impact, you get back a lot less than you actually put in.

Typically, there are only a few L tasks. That makes sense just by the outsized reward ratio they promise. We may have an instinct about them but unspelled-out they slip through the cracks, as we get busy grinding out an N or O task.

Here’s where we can synthesize the 2X2 decision matrix with Doshi’s framework.

Much like breaking down your Lead Domino decision yields a bunch of less consequential and/or easier-to-reverse decisions, an L task could birth a bunch of N and O tasks.

For example, your product strategy will lead to a cascade of tactical choices, each of which may have marginal-to-neutral impact.

An instructive example shows up in E-book I where I talk about how Tobias Lutke, Shopify founder, made the decision to go for VC funding. What I don’t tell you about is the struggle Lutke had to endure before deciding to tackle this big decision.

This is Lutke describing his internal strife:

So, the decision I didn’t make was, can I and should I transition Shopify from being a lifestyle business to a growth business? And the reason why I ended up—I feel now that I was the limit—I was the bottleneck on potential for Shopify for like a good year-and-a-half period, in which I just dragged my feet making this call. I’m so traumatized from that. I never want to be a bottleneck of a company again. This was another one of those things that just pushed me into like, I need to look after my own personal growth, I need to be ahead of where the company needs me to be at, and so on.

Why was the decision so hard for Lutke?

There may be several reasonable answers to the question specific to Lutke. Yet, there’s one that applies across the board. L tasks are steeped in uncertainty. You don’t know if the outcome will be as desired but you do know that it will have a telling impact on your future. So, you procrastinate, you serve up excuses like ‘I just don’t have the time,’ or you tell yourself you’re waiting for the right moment without ever defining it.

The way Lutke met the challenge is illuminating. Once he knew he had a big decision to make and he couldn’t drag his feet any longer (his long-pending L task, if you may), he asked himself what evidence he needed to make this big decision. Then he designed suitable experiments to give him signals.

And where did the time to do any of this come from? It’s not like everything else ground down to a halt to allow Lutke to take his own sweet time to make up his mind about the future of his company. Perhaps he started working 100-hour weeks to stay on top. That’s unlikely too, as Lutke is avowedly not an Energizer-bunny CEO.

The time was squeezed out from the N and O tasks—that bunch of less consequential and/or easier-to-reverse choices. Being a great CEO doesn’t mean you’ve got to be a decision machine, being plugged in any time of the day so that you can keep churning out decisions. These less consequential and/or easier-to-reverse decisions are what you should delegate. The level of oversight will depend on the specifics of your situations but the determinants tend to be related to team size, competence, and nature of project. You should be flexible about the level of oversight/delegation and ratchet it up or turn it down as the situation demands.

At a meta level, you can look at all your delegation decisions through the LNO prism. Sometimes, delegation means grooming; at other times, it could mean putting it out of your mind. The object of delegation should change with the size and maturity of the team.

As a coda to my attempt to connect L tasks to Lead Domino decisions (consequential-irreversible) and N and O tasks to anything less consequential and/or easier to reverse, I urge you to imagine your L tasks in terms of outcomes and your N and O tasks as outputs. Outputs are the means to an outcome. They can get you the missing information that will help you make the big decision.

That doesn’t mean outputs by themselves are less weighty. Sometimes, you may want to double down on outputs. Pre-product-market fit your focus could be that the team ships every week and produces a bunch of outputs (like a feature list) that may not still lead to a positive outcome (customers acquired). But iterating over time and reflecting on your outputs, you may lay your hands on that non-obvious insight that then leads you to your desired outcome. That’s your signal to double down and scale up.

If you’re neck deep evaluating outputs, ask yourself what they mean. What does it mean to have launched a new campaign? Or hired a new engineer? To what end will that help?

We’ve hooked up Shane Parrish’s 2X2 decision matrix with Shreyas Doshi’s LNO framework, while throwing in Tobias Lutke’s method for breaking down big decisions. We’ve come far. Let’s go further.

It so happens that even when we know how to bucket decisions our choices could be predictably slanted.

When people think about a big decision, they're mostly thinking about the consequences. They're not spaying as much attention to its reversibility.

Firing an employee is a big decision because it is consequential and (mostly) impossible to reverse. Hiring an employee, on the other hand, is consequential but much easier to reverse.

Sell-side decisions are by definition consequential-irreversible.

Selling your business is a one-way door. Selling ownership to investors is the same. Tobi Lutke was stuck with a sell-side decision.

But starting a product line is a two-way door. Tinkering with the business model is the same.

The trick is to make more buy-side decisions early on and gather high-quality information about the world and about yourself that will help you make better sell-side decisions later on.

Often we neglect this and then when the time comes to cross that one-way door, our feet turn cold and our palms start sweating. Even a feather of uncertainty hangs heavy.

The ones who can make good bedfellows with uncertainty tend to show a buy-side action bias. They don’t stint. They throw a hundred things to see what could stick. Most of these things don’t. Andrew Wilkinson, founder of Tiny Capital, owns 40-odd businesses. He describes his buy-side action bias as ‘sticking forks in electrical sockets.’

If the best buy-side decision makers habitually take a lot of shots, those who consistently make good sell-side decisions track their results post facto. Because one of the most neglected practices is the practice of tracking the fate of sell-side decisions across time. We sell stocks from our portfolio, we drop a product line, and we forget about it. But how did that turn out? What did we read right, or didn't? These are habits of the best sellers.

So, where do you apply what you learn from a smart sale? In your next purchase of course. Being a good seller helps you become a better buyer, and the converse. You see how having a clear approach to deal with your decisions builds out a flywheel for you?

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