Consequence vs Conviction -Mental Model 086

When Should You Delegate Decisions? 

When making a decision, if there are low consequences and you have a weak conviction, you should delegate the decision. You can let employees make their own mistakes and learn.

 

If there are high consequences and you have a strong conviction, you must make the decision.

 

Example: Keith Rabois was an executive at Square, a payment system startup in Silicon Valley. He wrote about weighing up the consequences and convictions of his decisions. One of his employees wanted to run a new marketing program where a truck would sit outside the stores of existing customers offering their Square payment devices. That way, when people used the device in-store and wanted one for themselves, they could grab one for free outside.

 

The Squares didn’t cost much money and the idea would help spread the word about Squares. The consequences were low. But, as Rabois writes, “At that time, my ten years of experience said it was not going to work on a meaningful enough scale for our metrics and I preferred not to do it.” ‘Preferring’ is hardly a strong statement, so his conviction could be considered weak.

 

Rabois let him go ahead with the program. As a result, his employee learned, “That when you measure this thing, it’s not massive. It doesn’t create massive value for the company.” In the end, Rabois believed that, “It was totally worth letting him make the ‘Mistake’.

 

Wisdom: “I have a fantastic team of people who run the Virgin companies, who have a lot of freedom to run the companies as if they were their own companies, I give them the freedom to make mistakes.” — Richard Branson

 

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