Use Experiments to Get Your Aim, Before Firing the Cannonball
Knowing the difference between reversible and irreversible decisions can dictate the pace and momentum of your life.
Introduction
All decisions in business and life are not created equally. Some decisions are of high consequence and cannot be reversed easily, while other decisions can be made quickly with little consequence.
If high consequence, irreversible decisions are not treated methodically and deliberately, they can really come back and bite hard, namely through wasted time, money or resources.
Break complex, high-impact decisions down into a series of smaller decisions, using fast, low-cost experiments to test your assumptions before pulling the trigger on your big decision.
Great decision-making is a skill
In what would become known as the Cuban Missile Crisis, President Kennedy rejected the directions of his Executive Committee to launch a retaliatory air strike on Soviet missile sites in Cuba. This decision almost certainly avoided an all-out nuclear war with Russia.
On October 22, 1962 US spy planes discovered Soviet missile bases in Cuba. These missile sites, still under construction, but nearing completion, housed medium range missiles capable of reaching most major cities in the US, including Washington.
Rather than invade Cuba with air strikes, President Kennedy chose a different strategy, establishing a quarantine line around Cuba with US Navy ships. The quarantine line discouraged Soviet boats with military supplies from entering Cuba, instead forcing them to alter or reverse course. Even after a US spy plane was shot down over Cuba, the president did not respond with aggression.
After a tense couple of weeks, the Soviets finally agreed to dismantle the missile bases in Cuba, in exchange for the US removing its missile bases in Turkey. The world breathed a collective sigh of relief, stepping back from the brink of nuclear war.
“Leaders are made and remembered by their decisions” - Shane Parrish
Whether history thinks of a decision as good or bad, most of us were taught to believe that great decision-making is something we’re just born with.
This way of thinking about decisions gives the impression that quality decision-making is often more about luck than skill.
Decision making is a skill. It’s a critical thinking process that is deliberate in nature. Being a better problem-solver and decision maker comes from practice, not chance.
Great leaders understand how to balance emotion and reason to make decisions that allow them to respond to problems, seize opportunities or position for success in the future.
Good decision-making is compounding over time. When you make a good decision, it allows you to overcome existing problems, while also avoiding future problems too.
Decision-making is like playing Tetris
Making decisions is a bit like playing Tetris. When you make a good move, the blocks just disappear, and the future becomes easier. The problems were prevented.
“Decision-making is everything. Someone who makes decisions right 80% of the time , instead of 70% of the time, will be valued and compensated in the market hundreds of times more” - Naval Ravikant
When you make a bad move in Tetris, the consequences just keep stacking up and it gets harder and harder to make your way out of trouble and clear away the problems. Eventually, it’s game over.
All decisions are not created the same
The Decision Matrix
Type One decisions:
Some decisions are consequential and irreversible (or nearly irreversible) one-way doors. These types of decisions must be made methodically, with deliberation and consultation.
If you walk through a one-way door and you don’t like what you see on the other side, it’s hard to get back to where you were before.
With one-way doors, you really want to keep the door ajar as long as possible, gathering more information, before committing to passing through the door. These are Type 1 decisions.
Examples include:
- Having a child
- Making a large financial investment
- Getting a divorce
- Renovating your house
- Launching a new product at your company
Type One decisions are often treated as binary. We either do it, or we don’t.
Chip and Dan Heath, in their book Decisive: How to Make Better Choices in Life and Work, quote a study by Paul Nutt.
Nutt reviewed the outcomes of 168 decisions made within organisations. He found that in 71% of the decisions, the choice preceding the decision was binary. It was simply: Should we do this? Or should we not? Nutt found that decisions made from these binary choices had a failure rate greater than 50%.
He then looked at the success rate of decisions that involved more choices. The results were startling. Having at least one more option lowered the failure rate by almost half, down to about 30%.
Type Two decisions:
Most decisions in business and life are two-way doors. If we decide and don’t like the outcome, we can double back on the decision without many repercussions. You can just turnaround and come back out the door.
While Type Two decisions are inconsequential and reversible, in business, type two decisions are often subject to the same heavy-handed decision-making processes as Type One decisions.
Type Two decisions should be delegated further down in the organisation, with teams empowered to make these decisions based on their own judgements. Occasionally, teams may make a bad call, however, the speed of decision making, and organisational progress, is outweighed by any downside.
“As organisations get larger, there seems to be a tendency to use the heavy-weight Type One decision-making process on most decisions, including many Type Two decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention” – Jeff Bezos
One size fits all decision-making has pitfalls
Launching new projects or products comes at significant time and investment to any business. Inevitably, at some point, you will need to pull the trigger, stumping up the investment required to launch the product or service in-market.
Launching a new product is a Type One decision. Once you commit to launching the product, there’s no turning back.
You can never turn back on the time and capital spent taking that product to market. If you make the wrong decision, it’s only going to cost more money and time in future to correct the error of your ways.
“The right solution is expensive, the wrong one costs a fortune” - Anon
Remember, just like Tetris, your bad decisions compound over time, creating bigger problems in the future.
Use experiments to get your aim
New product development doesn’t have to be so difficult – use experiments to get your aim, before firing the cannonball.
Rather than viewing Consequential/Irreversible Type One decisions as binary, think about how you can break the big decision down into a series of smaller, Inconsequential/Reversible Type Two decisions.
The Decision Matrix - break Type One decisions into smaller Type Two decisions
It’s possible to break all big product development decisions down into a series a smaller decisions. For example, target segments, customer problems, solution design, value proposition, pricing, distribution channels, business model etc.
Each one of these smaller components of your product business model can be broken down and tested through a series of discrete experiments.
“One good test is worth a thousand expert opinions” - Wernher Von Braun
Working in this manner allows you to preserve optionality by learning from your customers, validating and testing your assumptions prior to market launch.
As new and unexpected learnings come to hand, it allows you to course correct and change direction quickly at low-cost.
Shifting decisions from the Consequential/Irreversible quadrant to the Inconsequential/Reversible quadrant allows you to significantly decrease business risk by learning more about the problem that you’re trying to solve from your customers.
Once you’ve thoroughly tested all of the core elements of your business model through a process of systematic, data-driven experimentation, you can light the fuse, firing the cannonball with a greater level confidence that you’re going to hit the target.
This approach allows you to gather more relevant data to support higher quality decision-making while also significantly reducing business waste (time, capital and resource).
How you can apply these techniques professionally
Take the time to think about the type of decision that you’re being confronted with. Is it a Consequential/Irreversible Type One decision or an Inconsequential/Reversible Type Two decision?
If the decision is a Type Two decision, delegate the decision to your team, or, use your judgement to make the decision, balancing speed and business risk
If the decision is a Type One decision, check your instincts so that you don’t turn this type of decision into a binary, either or, decision
Think about how you can break your Type One decision down into smaller component parts so that you can test and validate your assumptions to decrease business risk
Conduct fast, low-cost experiments with customers to gather data and information to facilitate relevant, high-quality decision-making on your big decision
Conclusion
In theory, decision-making is easy. Some people just make decisions based on gut feel and intuition, while others try to do it with their brain, being more rational.
Distinguishing between reversible and irreversible decisions helps you to act with speed, making better quality decisions.
Big, important decisions should not be viewed as being binary or set in stone. You should always aim to preserve optionality by keeping the door to Type One decisions ajar as long as possible.
Type One decisions should be broken down into a series of smaller Type Two decisions and tested with fast, low-cost experiments to validate your assumptions.
Experimentation helps you to preserve optionality, course correct quickly and decrease business risk and waste. Experiments provide a whole lot of information from your customers that it would be impossible to know otherwise.
Knowing the difference between reversible and irreversible decisions can dictate the pace and momentum of your career and life.
If you favour reversible decisions, you can always keep yourself in motion and learning. You’re not overanalysing or become mired in analysis paralysis.
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