Transcript

Theodore Roosevelt once said: “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing”.

Most of the time, the right decision is there, staring at your face. But fear is the overriding force that is stopping you from deciding and taking action.

Deciding is the only way to move forward, even incorrect decisions. A person who makes a thousand wrong decisions is better off than a person who makes no decisions at all.

Why?

Because a person who has made a thousand wrong decisions has ruled out a thousand things that do not work for them. They are much better prepared to move forward towards success than the person who procrastinates.

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In Jeff Bezos’s 1997 letter to Amazon’s shareholders, he said that one common pitfall that hurts organisations, and their speed and inventiveness is a “one-size-fits-all” decision making.

This is profound and applicable, even until today.

Some decisions are consequential and irreversible or nearly irreversible at the point of deciding. They are one-way doors.

These decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before.

These are called Type 1 irreversible and highly consequential decisions. They are few in numbers.

But most decisions aren’t irreversible.

Instead, they are changeable and reversible. They’re two-way doors.

You don’t have to live with the consequences for long. You can reopen the door and go back through again.

These are called Type 2 reversible decisions.

Carefully distinguish these two kinds of decision when you think about taking risk and making informed decisions amid uncertainty.

If a decision is reversible, you can make it fast and without perfect information. Take risk and stop viewing mistakes or small failures as disastrous. View them as information that informs future decisions or improvements.

If a decision is irreversible, you had better slow down the decision-making process. Ensure that you take time to consider the information and understand the problem as thoroughly as you can.

These decisions can and should be made quickly by individuals or small groups. Empower people to make decisions and learn from their mistakes. Create a learning culture instead.

The reality is that most irreversible decisions can be reversible over time. But it will take effort and commitment to unwind the consequences of so-called irreversible decisions.

Let’s say you decide to try a new restaurant after reading a review online. Having never been there before, you cannot know if the food will be good or if the atmosphere will be unappealing.

But you use the incomplete information from the review to decide, recognising that it’s not a big deal if you don’t like the restaurant. You will never go back there again. This involves a Type 2 reversible decision.

In other situations, uncertainty is a little riskier. You might decide to take a new job, not knowing what the organisational culture is like or how you will feel about the work after the honeymoon period ends.

Even though it may feel like a Type 1 irreversible decision at that time, you may find another job months or years later and move to a better job, reversing your earlier decision over time.

The key problem comes from confusing the two kinds of decisions.

Bezos writes:

“As organisations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention. We’ll have to figure out how to fight that tendency.

And one-size-fits-all thinking will turn out to be only one of the pitfalls. We’ll work hard to avoid it….”

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As further guidance, Bezos considers 70% certainty to be the cut-off point where it is appropriate to decide. That means acting once you have 70% of the required information, instead of waiting longer. Deciding at 70% certainty and then course-correcting is a lot more effective than waiting for 90% certainty and losing the opportunity.

You can learn from Bezos’s approach, which has helped him to build an enormously profitable business while retaining the tempo of a start-up. It is about being effective and not about following the norm of slow decisions.

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Thanks for watching.

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