Four Rules to Improve Decision Quality as a SaaS Leader

“As a senior executive, what do you really get paid to do? You get paid to make a small number of high-quality decisions…three good decisions a day, that’s enough, and they should just be as high quality as I can make them.”

— Jeff Bezos

The thing that leaders “do”, when you boil it down, is to decide.

Sure, leaders of smaller-scale software businesses of the sort Arcadea is designed to serve often get involved in actual execution in every part of the organization. But whether a 2mm or 20mm ARR business, the ultimate responsibility of senior leadership is to “make the call” on the strategy, budget, acquisition, or whatever allocation of time & capital is on the table.

This task has never been more difficult for leaders than it is today. Competition is fiercer. Markets are more efficient. Strategy, plans, and talent are transparent and liquid.

But the single biggest difficulty facing high-quality decision-making is distraction. We’ve never been more distracted in the business world than we are today. Every system on your laptop is desperately trying to take more of your mind share. Alerts, notifications, and reminders barrage us. You probably pick up your phone 50 -100 times a day. And in a no-travel, Zoom-first world, our calendars are increasingly busy with less and less uninterrupted work time available. Add to it all the fact that most of us are more stressed than we’ve been in quite some time.

All of these trends, which have been well covered by others in the academic & scientific community, are extremely damaging to this most important thing we as senior leaders do – make decisions.

We will skip a detailed discussion of the numerous academic studies showing how our modern world is damaging to decision making quality. That’d be too long of a post.

Instead, we wanted to share the decision-support rules we’ve put in place here at Arcadea to ensure decision quality is as high as possible. These four rules are easy to implement in any business, take very little time, and cost nothing.

1. No decisions after 5pm

For most of us, decision making quality declines throughout the day as our internal systems get more fatigued and as we approach the sleep phase. There’s been plenty of research showing will power declining throughout the day and as a function of total decisions made. There’s further research showing changes in decision orientation throughout the day, especially after sustained periods of effort or when blood sugar is low (this was most famously shown in a study assessing the likelihood of judges granting parole to prisoners as measured by time since a break or meal).

Upon reading about this phenomena – and experiencing it empirically throughout our careers – we’ve made a rule that no important decisions can be made after 5pm in order to protect ourselves from expediently rushing through things to get on to dinner and rest.

2. Openly state emotional dispositions before deciding

Emotion almost never helps with a decision. If you’re angry or ecstatic, negatively or positively oriented at that moment, the emotion is pulling you further away from a cooler, more rational place of deciding.

Most of us cannot turn off the emotional stream, and that is not the goal. But we can acknowledge the emotional state we are in to powerfully remove its influence in our decisions. Annoyance from a stressful morning at home, elation from a big sale or frustration from a tough vendor negotiation are all examples of emotions that can undermine the quality of the next decision you have to make.

Mindfulness and deep self-awareness (both in a moment and in general) allow for a more balanced platform from which to make high-quality decisions. Neither are easy, and they are often uncomfortable, especially when just embarking on a journey towards either. But the effort is worth it.

3. Set aside “deep work” time to consider the facts

One of Arcadea Group’s favorite books is Deep Work, by Cal Newport. In it he explains concepts like switching / attention residue, distraction, and flow state. The short of it is that to generate high-quality thought, humans need time to think. Doesn’t sound so surprising! But if you were to look at your calendar right now, how many 4-hour blocks of time are in it per week or even per month? Probably not any, unless you’ve read Deep Work already!

When we at Arcadea have important decisions such as whether to partner with a company, what valuation we can support, or whether to spend on an expensive portfolio company initiative, we ensure that we have ample time to consider all the facts in an undistracted, deep block of time. It’s not worth making a decision if you skimmed the customer proposal on your phone in between calls, or reject your Product Manager’s ideas for a new feature set after thinking about the idea for 17 minutes while eating lunch and scrolling on social media.

Take the several hours that you ought to and think deeply about the topic without distraction.

4. Succinctly, clearly write down your thinking, and save it somewhere safe

Writing your thoughts in simple prose is the best way to test clarity of thought leading up to a decision. The process of converting your thoughts into words acts as a fitness or cleansing function of sorts, making sometimes faulty logic or leaps in thinking more evident.

Writing succinctly, with brevity, ensures even further that what you are going to decide is based on clean and efficient data, logic, and a clear understanding of risks & rewards. A number of famous minds throughout history have written something to the effect that “If I had more time, I would have written [it] shorter.”

Writing things down has the added benefit of allowing for post-hoc analysis of your thinking. We are big believers of the “science of business” here at Arcadea, and a core tenant of the scientific method is testing your hypotheses. Without memorializing your thoughts (and forecasts), you’ll never improve your ability to make good decisions over time.