Incomplete information

It is more than two years I want to do this. Though, it is possible to see that the priority was very low and I never really stopped to start writing. Of course, during the course of these years I have been keeping a journal with the main events happening and several notes of important meetings, great ideas, big questions, that would constantly come to mind while I was creating my startup. The first rule of creating a startup is that your mind will always be so focused on solving any number of problems that you always think writing is just wasting time.

Over the years I have accumulated a lot of reading hours about management, innovation techniques, etc. There are so many good books out there which makes your eyes sharp to identify patterns, or at least make you believe you have identified one. Many readings help you organize your company for problems you will never have. But many of the readings were really spot-on. The only problem is that you only know which material is spot-on after the fact. Basically it takes hundreds of little mistakes to be able to move the company one step closer to any defined milestone. In this essay I want to discourse about my current approach to minimize the costs and maximize the returns of each little mistake one eventually makes during an entrepreneurial endeavor.

A big problem for me was taking decisions while having incomplete information about a problem. In a startup, as in life, dealing with incomplete information is a given. So it is better to embrace it. There is never complete information about a problem. It makes no sense to simply try to wait indefinitely trying to have complete information about a certain problem, before acting. As well as it makes no sense assuming one does have complete information about a certain problem. Most part of the times, one does not have complete information (can you really know what goes in the mind of a customer or your investor?). Having complete information is wishful thinking when you are dealing with complex problems in the startup world. Below, I list some of the techniques I use for taking decisions while knowing I have no complete information.

1 — Ask why. You have to really identify what is really the problem you have to solve. It makes no sense to act before knowing which problem you have to solve. As in Alice in the wonderland: If you don’t know where you are going any road will take you there. This is also called first principles thinking. You have to break down the problem in its fundamentals parts which you know are true and then building up your knowledge from there.

2 — Read. Reading different books and blogs helped me see problems that other people got into. Reading other people experiences helps me in growing the number of potential outcomes and risks I can think of for a certain situation I am facing.

3 — Create a map of the situation. Maps help me to create situational awareness. On the other hand I always write on my maps “this is what you believe reality is” so that I don’t forget I am only looking to a possible representation of reality. Reality is much more complex than a map one can make. I like to represent the market using Wardley maps.

4 — OODA loops. Observe Orient Decide Act help to look at the situation, and take a decision while knowing that the decision making process needs to be done in a continuous loop so that you can simultaneously mitigate damage, achieve your goals.

5 — Slow down. When a certain situation looks quite challenging, for example, a contract which you believe you should close, but your gut feeling says the opposite. You can strategically and intentionally slow down. That way you can see how other react and eventually people show new information which was not available hours, or days before. The challenge with slowing down is that you have to be very aware of the reactions of other people. It makes no sense to slow down so much that you piss-off your possible customer/client that she will decide not to work with you.

6 — Identify what are aspects that can really break you down in irreparable ways. You have to know what are the things that really matter for your company and that can break you. For example, having a lawsuit and not having protection against it.

7 — Understand people motivations. You have to understand people motivations, instead of simply assuming they have motivations similar to yours. Once you better understand other people motivations it is much easier to understand and acquire more useful information about the situation you are facing.

8 — A different perspective always helps.