Sample frameDay 090·Decisions · Timing

Good morning. The decision you moved to next week has a price, and it is being paid right now.

Decisions.

The Cost of Delay

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The question

Name the decision you have formally put back — the hire moved to next quarter, the price rise held for the new financial year, the supplier review rescheduled twice — and tell me to the nearest thousand what each week of that wait has cost you. If no number comes, the wait was never free; it is only that nobody sends you the bill.

The idea

Ask an operator what a new hire costs and you get a figure to the dollar; ask what a month of not making the decision costs and you get a shrug. Donald Reinertsen, an adviser to product development organisations, has built his work on closing that gap. In The Principles of Product Development Flow (2009) he set out the one number he believes every team should be able to state and almost none can: the cost of delay, the value of a week of time expressed in money. He had been pressing the point since Developing Products in Half the Time (1991), written with Preston Smith, which asked project teams to work out what a single week's slip did to lifetime profit. In company after company the pattern held — people argued for hours about headcount and budget, the figures that sit on a ledger, while the larger figure, the price of time itself, went unquantified and was therefore treated as zero. That is the trap. Delay never appears as a line item, so it gets spent freely, and the call that sat for six weeks is remembered as prudence rather than as an expense.

The framework

01
Convert the wait into a weekly number.
Take the decision you are carrying and ask what actually changes in the week it is made: revenue that starts, cost that stops, risk that closes, a person who begins real work instead of waiting on you. Put a figure on that week, then multiply by the weeks it has already sat. Precision is not the point and never will be; magnitude is. A defensible range — somewhere between four and twelve thousand a week — changes behaviour, while a shrug changes nothing, and a shrug is what this decision has been getting. The number stays invisible only because no cash leaves the account on the day you postpone.
02
Four invoices arrive, not one.
Most people price the obvious loss and stop there. Delay charges you in four places. The window: revenue and position that arrive later, and in a moving market sometimes never arrive at all. The carrying cost: the people, tools and cash held in place around an undecided thing, doing holding-pattern work that will be thrown away. The decaying option: the candidate with another offer, the lease, the partner whose interest has a half-life. And the queue: every decision stuck behind this one, which in a small company is usually the biggest bill of the four. Price all four, or you will keep concluding that waiting was cheap.
03
Sequence by cost of delay divided by duration.
When several decisions compete for the same week, urgency alone sorts them badly, because an expensive wait attached to a six-month job is not the same claim as an expensive wait attached to a two-day one. Reinertsen's answer is arithmetic: divide each item's weekly cost of delay by how long it takes to do, then work the list in that order, high cost and short duration first. It routinely inverts the order an organisation reaches on its own, which tends to run on volume of complaint, seniority of the asker, or the comfortable instinct to start the big strategic thing while eleven cheap and expensive-to-delay decisions queue behind it.
04
Buy information only when it costs less than the wait.
Ronald Howard, the Stanford engineering professor who named decision analysis in the mid-1960s, set the ceiling: information is worth no more than the improvement it makes to the decision it informs. So the test for another fortnight of research is arithmetic rather than appetite. Ask what the extra work could plausibly change, what that change is worth, and whether it beats two weeks of the delay price you have just calculated. Usually it does not, and the honest name for the additional analysis is comfort. Then close the loop the moment you defer anything: give the decision a date and a decider, or you have not chosen to wait at all, you have simply stopped choosing.

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