The context of new technology ventures is a fast-changing and unstable environment, where strategic decisions are particularly difficult to make due to the high level of uncertainty, complexity and the required speed of decision-making.
Information is often ambiguous or inadequate – for example the reliability and adoption of new technology is uncertain, market demand is unpredictable, buyers intentions are unclear.
As observed by researchers, “with entrepreneurial ventures, the window of opportunity would often be gone by the time all the necessary information became available for more rational decision-making”.
Moreover, the development of new ventures invariably involves overcoming a number of practical difficulties and obstacles with limited resources and a high level of managerial discretion – executive decisions produce remarkably strong effects in smaller entrepreneurial firms.
Against this background, Vangelis Souitaris of Cass Business School and Marcello Maestro of Imperial College conducted an interesting empirical study to understand the consequences of the temporal patterns of decision-making activities on the performance of new technology ventures.
The results, published in the Strategic Management Journal and Harvard Business Review, are counterintuitive and suggest the actual bias against multitasking may be misplaced – especially in the context of entrepreneurial decision-making.
The authors found that a particular kind of decision-making process, defined as polychronicity, is positively related to their ventures’ performance. “Polychronicity is the extent to which [decision-makers] mutually prefer and tend to engage in multiple tasks simultaneously or intermittently instead of one at a time and believe that this is the best way of doing things.”
The study shows the impact of polychronicity on strategic decision speed and comprehensiveness and, subsequently, its effect on new venture financial performance.
The research found that “contrary to popular time-management principles advocating task prioritisation and focused sequential execution … polychronicity has a positive effect on firm performance in the context of dynamic unanalysable environments”.
Why does it matter? The authors observe that the polychronic decision-makers “tend be superior information brokers, absorbing and disseminating more-insightful information than their average and monochronic counterparts”.
“As a result, they were much less apt than the other teams to bog down. They could make strategic decisions faster, placing less emphasis on analysing large quantities of data. Their expedited decision-making process, we believe, boosted their companies’ performance.”
If so, then the process of our decision-making activities does matter a great deal. In fact, the study suggests that “executive polychronicity may benefit other sorts of companies, too; after all, effective information brokering and quick decision-making can aid established corporations and firms in a variety of fields. But … these skills are essential for new ventures and small companies that must negotiate dynamic business environments – social media, clean technologies and internet security, to name a few. In such cases, a polychronic culture can position the executive team for success. Entrepreneurs and the venture capitalists who back them should keep this in mind when staffing the top ranks of a start-up.”