How to Make Better Decisions As An Entrepreneur (2 Frameworks)

Summary

In this video, I share two useful frameworks that will help you make better decisions as an entrepreneur. Throughout my career, I've found that weighing each decision based on its nature (programmed vs unprogrammed) and the associated risk (high-risk vs low-risk) is a surefire way of avoiding 80% of unnecessary mistakes when building.

Transcript

Entrepreneurship is a game of effective problem solving and the key to effectively problem solve is to make good decision at each step of the way in this video we're going to make the point that the easiest way of making bad decision is equivocating the framework under which you look to each decisions we're going to provide two clear frameworks that you can use to understand exactly what kind of decision are you involved in so that you are able to make the correct choice at each step of the way

hello everyone Leon Castillo here CEO and founder of Selfmastered if you don't know me i'm the ceo of a company that teaches entrepreneur how to operate a big performance so they can get what they want faster if you're new to the channel please consider subscribing because we release a few juicy videos every week to help people like you scale their businesses much faster so today i want to discuss something that i believe makes total sense to introduce the subject of this series which is decision making in the first video we discuss why the best way of being smart is actually avoiding being stupid right uh by making sure we know exactly what it is that we're deciding on that we have to correct data that we do not mismanage our expectations that we not fall for group think or we leverage the weight of an authority in our decision making to the detriment of the truth that we're pursuing and that's the first step right so how to make sure that we're not stupid when deciding so once you have that then what what happens well in order to take effective decisions you need to know what type of decision are you taking based on the risk the decision has and also what kind of decision it is based on the processes that it relates to and based on these two frameworks they're basically two types of decisions so based on the type of decision that is based on the processes and the systems within the business we have program decisions and unprogrammed decisions programmation are those that belong to some sort of routine some sort of system they are expected and in entrepreneurship this can be really anything that is repeated over time it can be related to marketing so how many uh social media assets are we going to build in the next quarter can be related to hr how many people do we need to hire to support the new business functions these are things that will eventually come if we keep doing the things that we are doing it's something that can be in a way forecasted and the unprogrammed decisions are those that cannot be forecasted because it just happened things that come your way normally these things tend to be uh negative events because a good entrepreneur is always planning ahead and foreseeing what can go wrong so based on this framework so what are routine decisions and what are non-routine so program or on program you need to think what is this decision that i'm in need of making in this spectrum how routine it is if you have been doing your job well as an entrepreneur you should constantly be facing unexpected non-program decisions because those are the ones that have the most leverage the routine tasks the things that don't carry much weight tend to be repetitive in nature so see if you keep deciding time and time again about the same stuff then you're probably not graduating yourself to the higher level problems that come with business growth so this is the first kpi you need to look at is this a program decision or a non-program decision if it's a program decision how many times have you had to make this decision before and why is that why isn't somebody else taking care of that decision if you have been in business for quite some years you probably shouldn't be the one calling the shots on how many social media posts are you going to publish in the next week that's somebody else's job you should be drafting a strategic partnership reacting to supply supply chain management problems those are unexpected decisions that imply higher leverage so that's framework number one based on the process or the system the decision belongs to and what's framework number two well framework true is related to risk how risky a decision is and based on risk there's two types of decision and this framework that comes from jeff bezos himself the ceo and of amazon and he says that to him there's two types of decisions type one is those that are irreversible high consequence very difficult to reverse so they need to be taken very seriously they need to be very weighted upon make sure you have all the data make sure that we are actually focused on signal and not noise and make sure that we have some sort of way of knowing if we actually make the right call that's type one decision step two decisions are fast intuitive those decisions that can be easily reversed so they don't carry that much weight and in business framework those type 2 decisions need to be taken as quickly as possible because that's how you generate momentum that's how you go fast in your company type 1 decisions have to be taken slowly consulting all the stakeholders of that decision and ideally agreeing on some sort of consensus that can make sure that all incentives are aligned within the company in his view there's two types of ways a company can go wrong type one is when all those fast decisions are taken slowly so that over time that creates unnecessary waste that stifles innovation breeds complacency and those companies tend to get uncompetent so that's a one way decision making can go wrong in terms of risk the other way is just the opposite taking slow decisions fast so you do not weigh the risk so you are just carelessly deciding and moving forward and pushing ever without really waiting what it's at stake and that's how most companies eventually uh go bankrupt because they do not don't minimize the risks so every time you need to look at a decision and just as a wrap-up think about is it something that is programmed or is it something that is unprogrammed if it's programmed chances are that you have done this before so you should look for ways of systematizing and automating and delegating those decisions because they tend to carry low leverage if on the other way you are facing things you haven't seen before that it's probably signaling a bigger problem or a bigger opportunity and that's when you need to go all in and really weight your decisions very carefully and based on risk if you are taking normally a program decision so something that has low risk and low leverage take those very very quickly move fast generate momentum teach your team to really don't overthink stuff on the other hand if you have a big thing that cannot be reversed ideally that's a non-program decision too those are one that need to be very very well thought out so hopefully this was useful this is the second video of the series about decision making we want to empower you aspiring successful entrepreneur to not make unnecessary mistake in your quest towards success so uh this is it for today uh please like subscribe comment do everything you guys know you need to do so we can keep growing and keep uh delivering this value to you and of course if you think we can help you accelerate your performance we're more than happy to have a chat just let us know how can we help you and we'll get in contact thank you very much