Time Horizons in Decision-making
When you’re making a decision, you want it to work well. You want to get the optimum results. But the same decision may work well over one time period and not over another. This is where the concept of a time horizon comes in. It’s the time period beyond which you don’t care what happens. Living off your credit card is actually the best decision — if your time horizon is one month.
If you haven’t thought of decisions this way, you should: if you’re not sure what time horizon you’re optimising your decision for, you’re not optimising it, despite your intentions.
For example, if your startup is going to run out of money in six months, you want to optimise to reduce that probability, even if it puts you in a worse position later on, because you’re at least alive to play the game.
Depending on the situation, you can have different time horizons of a month, a quarter, an year or years. If you’re building prototypes for multiple products to show to users to ultimately pick one, your time horizon is days or weeks, after which the prototype won’t matter. So paying attention to good coding practices is a bad idea in this case. How can doing something good be bad? The answer is that things are not good or bad; they’re good over a certain time horizon and bad over others.
One founder I worked with on a project told me code quality doesn’t matter since we’re a startup and we need to move fast. It was a month-long project. In the first week, we saved a day by not caring about code quality. But in the last week, we wasted two days dealing with the bad code. So it was a net loss. His decision backfired. And many non-technical founders under-invest in code quality for the code horizon they need, because of a misconception that code quality matters over years, not months. Like a credit card, the bill comes due soon, sooner than non-technical founders have an intuition for.
So understand that optimising for a certain time horizon automatically means not getting an optimal outcome over a different time horizon, and what time horizon you’re optimising for, before you make a decision.