The Startup Approach to Decision-Making – Feat. Jamie Morgon

In this U+ Insight, we sit down with our Head of Scrum Jamie Morgon to discuss how rigid decision-making structures can hinder corporate ventures, and what innovative organizations should do instead.

We often hear from leaders of large organizations whose innovation efforts are constantly and reliably thwarted, even when everyone involved has the best of intentions. It may seem like a mystery: in a well-resourced company filled with talented, hard-working teams, how come so many corporate ventures fail to take off?

Throughout his career, U+ Head of Scrum Jamie Morgon has been immersed in a variety of working environments, from old-school corporate to early-stage startup. Over time, he noticed that the structure of an organization itself often determines whether its innovation initiatives will fail or succeed – especially at the decision-making level.

Morgon recently talked us through the two main corporate decision-making models, and why one easily trumps the other for ambitious innovators. Let’s call them the ‘traditional approach’ and the ‘startup approach.’ 

The Traditional Approach

According to Morgon, the traditional approach to organizational decision-making is based on a model pioneered during the Industrial Revolution. “At the top is the business owner who makes all the executive-level decisions. Below the owner are the managers who break those decisions down into straightforward tasks. Finally we have the workers, whose job is to carry out those tasks more or less unquestioningly,” he explains.

Needless to say, modern knowledge workers like software engineers typically enjoy more autonomy, not to mention better working conditions, than a Dickensian chimney sweep in 19th century Manchester or an assembly line worker in early 20th century Detroit. Still, many large companies today maintain a clear-cut hierarchy through which decisions and tasks trickle down – effectively mirroring the old factory model. 

“In this system,” Morgon explains, “engineers and other workers are often quite far removed from the actual decision-making process, which usually takes place two or three levels higher up in the hierarchy. Not only does information cascade down from the top, but along the way each manager and intermediary puts their own little spin on that information based on their needs and the needs of their team. The result is like a recipe that has so many ingredients added to it that it ultimately doesn’t really serve anyone.”

Sometimes this method can work well. In broadly comprehensible market conditions, when leaders can perceive both the problem and the solution in clear terms, a “marching orders” approach is perfectly rational. However, for innovators who are looking to scout, validate, and build new business models from scratch, a very different working style is needed.

“The challenges of designing by committee are well-established,” Morgon says. He argues that this factory-style model has the following characteristics, none of which are ideal for launching new products and services:

• Rigid hierarchies 
• Solution-focused, rather than outcome-focused
• Low agency at the team level
• Communication silos
• Low visibility
• Slow validation process (hard to pivot)

The Startup Approach

Traditional organizations are often bigger and better resourced than startups, with more to offer in the way of perks and compensation. Yet working in such an environment requires a few tradeoffs. Because the factory-style decision-making process involves so many touchpoints, individual engineers have to give up a considerable amount of autonomy. 

There are valid arguments for why some workers might be happy with sacrificing autonomy for better pay, but when it comes to developing new businesses from the ground up, your organization needs teams that are empowered to be creative, independent, and decisive.

The startup model has the following characteristics, which are more or less in exact opposition to their more traditional counterparts:

• Flat hierarchies
• Outcome-focused
• High agency at both team and individual levels
• High visibility
• Open communication is incentivized
• Fast validation process
• Rapid-fire validation process (easy to pivot)

Of these characteristics, individual and team-level agency is arguably the most important for lean, ready-to-build organizations.

“What you find in large organizations is a low level of agency on a team, because decisions cascade down,” Morgan explains. “And it can take a very long time for those decisions to bear fruit. But by giving teams a lot of agency, you can ensure that decisions happen fast. To return to the factory metaphor, a lot of people in a company like U+ are empowered to ‘stop the assembly line.’ For example, if a tester is not happy with a release, it doesn’t go out. Ditto if an engineer finds a security vulnerability. Of course, there are risks and consequences when you give people this degree of agency. But it makes for more effective decision-making. So our engineers have a really high level of agency compared to a lot of other, more traditional companies.”

Traditional organizations may be exceptionally good at maintaining some version of the status quo, but without having a structure in place that empowers every stakeholder to play their part in turning ideas into reality, they will not not innovate successfully.

To start making decisions like a startup, you should do the following:

• Promote full, open communication. Every project has its obstacles, but by making honesty the baseline for internal communication, you can quickly identify the actual reasons for setbacks, instead of excuses.
• Embrace failure. Fear of punishment is a major reason why many corporate ventures never get off the ground. In a culture where failure is accepted, even celebrated, as part of the innovation process, workers will be empowered to engage their creative powers and act decisively.
• Choose visionary team leaders. At U+, we typically don’t have highly technical scrum masters. Instead, we select for people who can see the whole picture and communicate it well. This ensures teams are deeply familiar not just with the technicalities of the product they’re building, but with the business model as a whole and its predicted impact.
• Task teams with outcomes, not solutions. Instead of expecting teams to faithfully execute on a solution you have tasked them with, explain the outcome you’re looking for, and let them find and build the solution themselves.