The Four Types of Decisions

Some members of our team (me included) were recently stuck on a decision, and that led to us getting stuck in a discussion vortex. After a couple weeks, we found ourselves scrambling to choose a path in the face of a looming deadline. We got it resolved, but that kerfuffle reminded me that there are always only four types of decisions.

From less to more involvement of team members, those decision types are:

1. Command – leader takes charge, asking no questions and just directing (mainly used in crisis);
2. Consultative – decision maker gets individual feedback from team members, then makes a decision;
3. Collaborative – team has a discussion, after which decision maker makes the call; and
4. Consensus – everyone has to agree or majority wins. This is only used for things like where to go to lunch.

90% of decisions are either #2 or #3. #1 through #3 require decision maker to be named before launching into the process.

Staying mindful of the four types is empowering for everyone who participates. When we aren’t mindful of which type of decision we’re making, frustrations can emerge. For example, people might think something is a consensus-driven decision, but others actually understand that it is really collaborative. Then people become upset because the decision maker simply made a decision without calling for a vote or without consensus being reached. But when we are mindful of the decision type, each person knows their role to play, and instead of trying to get their desired outcome, they are more apt to focus on fulfilling their role (giving thoughtful counsel).

Trust and a clear understanding of who is ultimately making the decision are big requirements for us to make good decisions and for everyone to feel good about the process. The participants need to trust the decision maker’s judgment, and also trust that the decision maker will thoughtfully consider their input.

Within a trusting team, choosing a decision maker is almost always easier than reaching agreement.

Thanks to Craig Johnson for introducing me to this idea.


Five not-so-business books that informed my perspective on business

Jaywalking came up in conversation recently, and reminded me of a wonderful book that devoted an entire chapter to the subject: James Scott’s Two Cheers for Anarchism. That got me reflecting on all the other non-business-y books that have informed my thinking about business.

The Valve Handbook for New Employees

Through their employee handbook, Valve introduced me to the idea that an empowered work environment can work at a large scale.

Shop Class as Soulcraft: An Inquiry into the Value of Work, Matthew Crawford

A recovering philosopher and disillusioned think tank executive director decides to start a motorcycle repair shop. The book articulated an important idea that I now reflect on nearly ever day: extrinsic vs intrinsic motivation.

Two Cheers for Anarchism: Six Easy Pieces on Autonomy, Dignity, and Meaningful Work and Play, James Scott

Scott shares six short stories of how anarchy (I’ll define anarchy as “emergent order without authoritarianism”) guides the overwhelming majority of human interactions. The book was a great reminder to me of the danger of top-down and the virtues of bottom up.

Atlas Shrugged, Ayn Rand

This book probably has the second largest number of attacks and dismissals penned by people who have never read it (the Bible holding the top spot). Rarely have I come across a critic who has ever opened it. Atlas Shrugged is a story about creativity, what it means to be creative, how that affects the world, and what would happen if we lost our creative people.

The Man Who Planted Trees, Jean Giono

This very short and beautifully illustrated book follows a French shepherd named Elzéard Bouffier, from the eve of WWI through the end of WWII. It’s the story of what happens when vision meets consistent and deliberate action. Setting out to plant a garden is aspirational; Setting out to plant a forest is visionary.


On Doers: My interview with Michael Tavani

Last week, Michael Tavani (of Switchyards and Scoutmob) visited GuildQuality’s headquarters to interview me for his On Doers series. I’ve known Michael via Twitter for years, and this was the first time I’d met him face to face. What a super guy. Thanks Michael. I am honored to be a part of this.


The CEO as Steward of the Tree

Some friends and I were recently discussing the CEO job description, with each of us sharing what we do everyday. The CEO role is different from that of a Founder, and I approach my responsibilities as CEO by viewing myself as Steward of the Tree.

Over the years, we have nurtured a tiny seed of a company into a healthy little tree. Our tree helps all sorts of creatures live their lives: it offers shade for customers, fruit for owners, and branches on which employees can build their nests. The leaves that fall during autumn decompose and fertilize the forest floor of our community. Our seeds scatter in the wind, take root elsewhere in the forest, and begin their own journey toward tree-dom.

Our tree is still young, and has plenty more room to grow. My task as Steward of the Tree is to help it fulfill its potential – to grow to maturity so that it’s impact is amplified many times over what it is now.

I can make reckless decisions that stunt its growth or kill it. I might push it to grow at a rate that’s ultimately unhealthy, and would cause its branches to weaken or would jeopardize it’s strength by not giving its roots time enough to dig deeper into the soil. Or I might be negligent or lackadaisical, so that other trees reach up and block our sunshine, and then our little tree will wither.

When I’m being most effective, there’s not really anything that I must do. The tree is just fine without me tending to it for a few days. But there is always something I could be doing: whether it’s pruning a rogue branch, inspecting a fungus, or simply learning about how to help trees be healthier.

If there’s nothing in particular that I need to do on a given day, rather than feeling lost, useless, or guilty about it (which I’ve come to learn is a common feeling among CEOs), I should feel some pride: I have helped a seed grow to a strapping young tree that doesn’t need my immediate attention. If the tree needs my constant tending—if I am fighting back blights or urgently toting buckets of water during dry spells—then perhaps I am tending it in the wrong way. That’s probably a signal that I could be doing a better job as a steward.

A core responsibility of the steward is to provide. Provide comes from the Latin prōvidēre, with prō meaning “forward,” and vidēre meaning “to see.” To be a provider, one must literally see forward.

Our executive team recently finished The Hard Thing about Hard Things, and we spent a good bit of time on the one of the common themes in the book: the difference between “wartime” and “peacetime” CEOs. In growing our business through four years of a great economic apocalypse, every day certainly felt like battle, and I’m grateful to have shared that difficult journey with some incredibly talented and committed people.

Today, we may not feel so many immediate threats to our existence—we have enough recurring revenue, enough operating income, and enough cash on hand to withstand a great many blows—but insidious threats still loom. We are no longer battling to ensure that our tree survives until tomorrow or next month. Today, we battle to ensure that our tree is thriving years from now. The threats are less obvious and palpable (which makes some aspects of the steward’s job more challenging), but they’re still all around us. We must still combat our greatest enemy: complacency.

A handful of writings and people that have influenced my thinking about the CEO’s job:

The Man Who Planted Trees, Jean Giono

How Andreesen Horowitz evaluates CEOs, Ben Horowitz (this post was also in THTAHT)

What a CEO Does, Fred Wilson

I first came across the “CEO as Steward” analogy from one of our customers, Scott Barr of Southwest Exteriors, an accomplished remodeler in San Antonio.


Communication is terrible

Via Fast Company

One of Bezos’s more memorable behind-the-scenes moments came during an off-site retreat, says Risher. “People were saying that groups needed to communicate more. Jeff got up and said, ‘No, communication is terrible!’ ” The pronouncement shocked his managers. But Bezos pursued his idea of a decentralized, disentangled company where small groups can innovate and test their visions independently of everyone else. He came up with the notion of the “two-pizza team”: If you can’t feed a team with two pizzas, it’s too large. That limits a task force to five to seven people, depending on their appetites.


(Really) Young Entrepreneurs

Thou shall not pass without buying some lemonade or iced tea

My kids are always starting businesses. They aren’t often successful businesses, but I love their effort and their indomitable spirit.

The lemonade business has been pretty good, but only when they time it right. The front-yard restaurant was surprisingly successful despite them selling only imaginary food. But the rock business! That one was horrible.

Both my kids love rocks. They don’t love rocks so much that they’d be willing to buy one, but their love for rocks is so strong that they believe other people would gladly pay 50¢ for any one of the small stones they’ve pulled from the creek behind our house.

Two winters ago, when the lemonade business wasn’t really a good option, they set up their rock stand and tried selling to passers-by. Whenever anyone would get close, Alex would shout, “Rocks for sale! Get your cool rocks here!”

Unfortunately, there wasn’t enough foot traffic for them to get any real traction, so they decided to take their game on the road. They bagged up the rocks, and started walking around the neighborhood. I tagged along.

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The College Grad, the Endurance Athlete, or the Ferrari Owner?

The New York Times revealed that college graduates earn 1.8x that of high school graduates with no college. The author concludes that “15 years or 17 years of education [makes] sense as a universal goal.”

The author doesn’t share absolute average earnings for college graduates and high school graduates, but a little googling suggests that high school grads with no college earn an average of around $35,000. So it appears that people can boost their income to an average of $68,000 by earning a college diploma! That’s a huge difference, and it makes for a compelling argument in favor of going to college, right?

As bold as they are, I think they aren’t pushing that logic far enough. If we really want people to be more prosperous, we should have everyone become an endurance athlete!

Fortune says that people who sign up for triathlons earn an average of $126,000 (which is over 3.6x high school grads). Even better, we should have everyone sign up for the New York City Marathon. Those folks earn an average of $130,000 (a 3.7x premium)!

My point, of course, is that earning a college degree correlates with high monetary earnings, but does not necessarily result in earnings. If correlation was causation, we’d be better off encouraging folks to sign up for triathlons and marathons. Endurance events are much much cheaper, and one can prepare for a marathon in less than half a year.

Someone in here claims that the average income of Ferrari owners is $570,000! That’s over 16x the average for high school grads! Ferraris for everyone!

Question: If you had to hire one of three people, and you knew only one thing about each person – that one had a college degree, one had completed a marathon, and one owned a Ferrari – which would you hire and why?