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How to Make Difficult Decisions

How do you make difficult decisions?

In the context of the gaming industry some of these kinds of decisions could include:

  • What genre to enter with a new game
  • Should we launch a new game? Expand? Or just invest in our current games?
  • What bold beat to create?
  • Should we kill a game with mediocre KPIs?
  • Who to hire or fire?

On a personal level, very common decisions could include:

  • Should you leave a company for a new opportunity?
  • Should you have a difficult or very direct conversation with someone? How about with a manager or leader at a company?
  • Should you tell the truth about a mistake that you (or a coworker) made or try to hide the error?

Decision-Making Models

At a high level, I highlight four popular decision-making models below. In my opinion for the games industry, I believe either a Leader Driven or AORs based approach is the most viable.

Source: LILA Games Company Values 2020

One of the biggest problems at companies is actually not knowing how decisions are made or having multiple, conflicting systems in place. This kind of situation often leads to inefficiency, politics, and generally a lot of bull shit.

Be careful of organizations in which decision-making is not clear or purposely obfuscated. On the one hand, it can be an honest issue that just needs to be addressed. On the other hand, it can be a purposeful intention that helps politically oriented managers and leaders escape accountability and blame.

Types of Decisions

It’s important to understand that decisions are not all the same. For example, some decisions are hard to walk back from and others are more easily correctable.

Jeff Bezos popularized this concept in his 2015 Amazon annual shareholder letter:

Some decisions are consequential and irreversible or nearly irreversible—one-way doors—and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. 

But most decisions aren’t like that—they are changeable, reversible—they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups. 

As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.* We’ll have to figure out how to fight that tendency.

Amazon annual shareholder letter, 2015

The Type 1 vs. Type 2 decision-making classification also parallels the Daniel Kahneman concept of System 1 (simple, automatic) vs. System 2 (complex, requires effort) thinking as described in his book: Thinking Fast and Slow.

Responsibility vs. Accountability

One other major caveat to watch out for in decision-making at companies has to do with the separation of Responsibility (who makes the call) and Accountability (who executes and gets the credit or blame for the call).

I’m not a fan of the separation of responsibility and accountability. Employees who can own a call, execute, and fairly take full accountability for a decision will be better motivated to execute strongly. This is the way.

A leader who makes a call and expects someone else to execute the call and blame them for failure demonstrates weak leadership. It’s even worse when those same leaders take credit for someone else’s execution.

Decision-making Speed

The speed at which companies make decisions can be a major source of competitive advantage. It has advantages towards moving progress forward more quickly but also in giving employees more reps and valuable experience more quickly.

In Atomic Habits, the book by James Clear, he related a story about a film photography class at the University of Florida who were divided into two groups.

Everyone on the left side of the classroom, he explained, would be in the “quantity” group. They would be graded solely on the amount of work they produced. On the final day of class, he would tally the number of photos submitted by each student. One hundred photos would rate an A, ninety photos a B, eighty photos a C, and so on.

Meanwhile, everyone on the right side of the room would be in the “quality” group. They would be graded only on the excellence of their work. They would only need to produce one photo during the semester, but to get an A, it had to be a nearly perfect image.

At the end of the term, he was surprised to find that all the best photos were produced by the quantity group. During the semester, these students were busy taking photos, experimenting with composition and lighting, testing out various methods in the darkroom, and learning from their mistakes. In the process of creating hundreds of photos, they honed their skills. Meanwhile, the quality group sat around speculating about perfection. In the end, they had little to show for their efforts other than unverified theories and one mediocre photo.

Atomic Habits, James Clear

For anyone who is also a fan of football, we know that live reps are critical to the development of players for improvement.

Framework for Decision-Making

I believe a fundamental organizing framework can help decision-making at organizations be made more efficiently, consistently, and with better outcomes.

Source: LILA Games 2021

At our company, LILA Games, we have 3 components to a decision-making framework or “operating system” of sorts that helps guide decision-making.

The first component is a presentation on Company Values. This document details how we should operate our business in different scenarios.

The second component is something we call our Operating Philosophy. This speaks to the question of: “How do we win?” I got this from Jim Harbaugh, Michigan’s football coach, but modified it a bit.

Jim Harbaugh’s philosophy is:

We’re going to win with character but we’re also going to win with cruelty.

Jim Harbaugh, 2010

For us at LILA, our Operating Principles are:

#1. We win with character. Character is fundamental to how we operate our business

#2. We win with discipline. Discipline is foundational to learning and improvement.

#3. Finally, we win with cruelty. We will need to make hard decisions and need to at times be ruthless about how we operate to achieve our mission. However, we will not compromise character for cruelty.

Finally, our third and last component is our Operating Mantra. This is something I got from reading, again, Amazon’s 2016 annual shareholder letter:

Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right. Gulp. It’s not that rare to hear a junior leader defend a bad outcome with something like, “Well, we followed the process.” A more experienced leader will use it as an opportunity to investigate and improve the process. The process is not the thing. It’s always worth asking, do we own the process or does the process own us?

Amazon annual shareholder letter, 2016

To effectively resist becoming owned by our processes, our executive team often repeats our mantra: “Common sense rules.” When something doesn’t make sense, then we will just ignore it and gives employees the freedom to override any formal rules or process.

The primary advantage of having this kind of framework is that it serves as a high-level guideline such that when new situations occur, we can quickly shortcut to help make decisions.

How To Make Difficult Decisions Discussion!

Join the Philosophy brothers – me and Brett Nowak – now in this typical deep and wide-ranging discussion on a very interesting topic!

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