Collison: Discrete organizational decision-making is overrated compared to continuous systems
Patrick Collison · TKP Insights: Making (Even) Better Decisions · Oct 25, 2022 · at 44:29
Patrick Collison, co-founder and CEO of Stripe, reflects on organizational learning and contrasts running a company with binary investment decisions.
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“I'm inclined to say, I don't know if I actually believe this, but I'm inclined to say in response to that question that decision making in organizations is slightly overrated in that organizations are not like investment entities or funds or managers in that organizations, well, with investing, it's fundamentally very binary. There is a moment at which you either buy or don't, or sell, or don't, or whatever. And maybe it's somewhat more continuous in the case of, say, public market investing and so on, but given sort of constraints on just decision-making time, I think you have to treat it as a bit more binary. You assess this stock and you make a buy or a or not decision. Whereas in organizations, everything is much more fluid and continuous. It's much more about, I think, designing the feedback mechanisms, you know. More biological. Yeah, exactly. And, you know, there's the famous Sort of water model of the economy you know, with the sort of circulating fluids, and you can vary the interest rate or the inflation rate or whatever, but just kind of try to get a sense for the overall kind of biological apparatus. And I think an organization is much more like that. And so the, I think the things to optimize are the incentive structures and the Mindsets and the definitions of the goals and the feedback mechanisms from the outcomes to the inputs and the work and the operations themselves and all of those things, and less the binary decisions.”
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