Decision making is a perennial topic for leadership and employee training around the world. It is one of those skills that we all use every day. Yet we know it is sometimes hard, and we could probably be better at it. There are many tools and techniques to help make decisions, especially the complex ones often required in organizational life. And those are worthy of exploration and learning.
Today though, we are going to step back. We’re not going to start with decision making, but with the decisions themselves. Let’s use that as a starting point to help us make better decisions.
Two Types of Decisions
I want to begin with a distinction between types of decisions that I first read from Jeff Bezos in the Amazon Annual Report in 2016. Bezos defines the two types of decisions this way:
- Type 1 decisions are not reversible, so they require much care when making them.
- Type 2 decisions are like walking through a door — if you don't like the decision, you can always go back.
But then he went on to describe the problem with not distinguishing decisions in this way:
As organizations 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… and any other large organization maladies we can identify.
Later, he acknowledges the opposite challenge of taking Type 1 decisions too lightly:
The opposite situation is less interesting and there is undoubtedly some survivorship bias. Any companies that habitually use the light-weight Type 2 decision-making process to make Type 1 decisions go extinct before they get large.
Companies that are willing to look at decisions this way will take more risks and move faster on the Type 2 decisions. Does that sound like Amazon to you?
How the Distinctions Help You
This powerful distinction, when intentionally added to your thought process, can aid in better and more effective decision-making.
Here is a three-step checklist to help you use this distinction effectively.
- Determine what type of decision it is first.
- If Type 1, dive in deep.
- If Type 2, get started.
Once you do step one, you can decide what types of tools you need to use to tackle the decision itself. In my experience, most of the decisions we face are of the Type 2 variety. As such, this gives us the freedom to move faster, take a bit more risk, and allow for “failure.”
Perhaps even more important, if we as a leader, or by extension our teams, can identify a decision as Type 2, more ownership can be granted to the team, and more delegation can likely happen from the leader.
Decision making is important and can be challenging. Implement this decision distinction to make your decision-making process more effective, whatever tools and techniques you choose to use.
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