Go Fast and Break Things: The Difference Between Reversible and Irreversible Decisions

Ignore the first part of the title (early Zuckerberg), pay attention to the second part (current Bezos). The key point of the article is that there are two types of decision making processes. Type 1 processes are ‘heavyweight’ and involve extensive knowledge gathering and analysis to ensure that a decision is ‘right’. Type 2 processes are ‘lightweight’ with decisions being made quickly with partial knowledge and the understanding that aspects will require future course correction. In addition:

  • Most decisions are reversible (sometimes with a cost),
  • Reversible decisions should be made when you have about 70% of the information that you wish you had.
  • This will increase decision velocity and be a competitive advantage.

This heuristic is one that can be adopted by any organization, and it’s one that most startup companies employ (sometimes misapplying it to non-reversable decisions as well). It’s also a heuristic that large companies seem to forget as they get larger and more successful.

As organizations get larger, there seems to be a tendency to use the heavyweight 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.

One aspect the author does not delve into is how to distinguish between a reversible (Type 2) and non-reversible (Type 1) decision. The assumption is that the differences will be obvious, but experience says otherwise, and the consequences of a mistake can be significant. That said, just being aware that there are two types of decision making mechanisms, and applying them in the appropriate situations, is a valuable practice for any company.

Original Article »

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