Better Decisions, Fewer Mistakes | Reid Hoffman on The Knowledge Project with Shane Parrish

Check out The Knowledge Project episode page

Key Takeaways

  • When scaling a company: “You have to be constantly evolving your learning pattern. What got you here, won’t get you there.” – Reid Hoffman
    • Examples: how you organize your management (work vs management duties in each role), go-to-market strategy (how to get new sales), adjusting the cadence of hiring (promoting from within vs outside org)
    • This applies to our lives too, not just business!
  • Want to be a better leader? “Root for better angels on people” – Shane Parrish quoting Reid Hoffman
    • Make everyone the hero of their own story—people often don’t realize their own potential to make the world a better place
  • It’s timely and costly not to have a process for making fast decisions, here’s how to improve (continue reading for more detailed instructions):
    • Be an explicit leaner
    • Learn your set of decision-guiding questions
    • Identify irreversible consequences
  • You should never try to optimize opportunity cost to be 100% efficient
    • Some of your decisions will seem like an opportunity cost upfront but turn out to be one of your most valuable experiences
    • You must leave yourself some room for exploration and serendipity

Intro

  • Reid Hoffman (@reidhoffman) is a partner at Greylock, the co-founder of LinkedIn, sits on the board at Microsoft, and is widely regarded as one of the best business strategists in the game.
  • Reid and Shane discuss strategies for better decision making, what he’s learned from 1000+ board meetings, how to scale a company (and ourselves), and why opportunity cost can be a bit of a façade
  • Host: Shane Parrish (@ShaneAParrish)

Master Scaler

  • When scaling a company: “You have to be constantly evolving your learning pattern. What got you here, won’t get you there.” – Reid Hoffman
    • Examples: how you organize your management (work vs management duties in each role), go-to-market strategy (how to get new sales), adjusting the cadence of hiring (promoting from within vs outside org)
  • Successful Scaling = Networking > Hiring
    • While hiring the right people is important, building your network of financial support and knowledge exposure can be more important to scaling
  • How do we scale ourselves? “The answer is easy, and the execution is hard” – Reid Hoffman
    • Identify your top skills to focus on
    • Delegate things you don’t want to do to other people
    • Use tools as a “catalytic network agent” (Reid uses OneNote rather than relying on his memory)

How to be a Better Leader

  • “Root for better angels on people” – Shane Parrish quoting Reid Hoffman
    • Make everyone the hero of their own story—people often don’t realize their own potential to make the world a better place
  • Understand “alpha tendencies” and how they can impact the project
    • People have varying levels of leadership instincts: I must be in charge (alpha) vs hands-off approach
    • Repressed alpha: leadership tendencies that come off as passive-aggressive rather than motivating—this must be addressed

Successful Board Meetings

  • “Successful board meetings don’t just happen by accident” – Shane Parrish quoting Reid Hoffman
    • Reid has been a part of over 1,000 board meetings at Microsoft, Airbnb, LinkedIn, PayPal, and more
  • Tips for a good board meeting:
    • Combination of governance questions (is the company on the right track) and questions about how you can help the company
    • Minimum contribution: have one important question that the company may not be thinking about and bring one new thing from the outside world that could be helpful to the company
    • Have repeated activities meeting-to-meeting (rituals)
    • “Adopt the workflows that are imposed upon you by your productivity software, design the rituals you want” – Reid Hoffman
  • Crises (big and small) cannot be brushed off at a board meeting, even if it’s not affecting your numbers yet
    • How well are you assessing the possibilities? All crises should be discussed as a potential threat or even as a potential opportunity.
    • Make judgments early: converting your business to a “new reality” as soon as possible is key to survival

How to Make Better, Faster Decisions

  • “Making a decision faster is always better” – Reid Hoffman
    • How much time and costs would it take to get more information to make a better decision?
  • How do you make decisions fast and well?
    • Be an explicit leaner: try to learn things in a way that you could explain them to others, this internal process will help you work towards decisions faster and easier
    • With every question, run a practice analysis on your immediate answer: who else would you talk to, what other data could you get, what are the consequences of the decision—learn your set of questions to run through
    • Identify irreversible consequences: the more irreversible the consequences, the higher degree of certainty you should seek (not all decisions can be made fast)

Technology and Decision Making

  • “All companies are in the process of becoming technology companies at different speeds because technology is changing industries” – Reid Hoffman
    • As technology grows faster, your decision-making needs to accelerate too
    • How fast can you perform an OODA Loop? Observe, Orient, Decide, Act.

Opportunity Cost: Nobody’s Perfect

  • “Opportunity cost is the possibility, and you might change your possibility landscape based on your action” – Reid Hoffman
    • Trying to optimize your opportunity cost to be 100% accurate can be counterintuitive
    • Some of your decisions will seem like an opportunity cost upfront but turn out to be one of your most valuable experiences
    • You must leave yourself some room for exploration and serendipity

More From This Episode

  • Shane covered a few more topics with Reid Hoffman exclusively for his Farnam Street Members:
    • Learning to be less impulsive
    • Books that have influenced Reid Hoffman the most
    • Stress
    • What success looks like
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Notes By Drew Waterstreet

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