decisions, decisions

This article is part of the series decisions.

I believe the most important part of my job is helping people to make decisions.

My studies on this matter, and my decades-long technology experience has led to me a very simple conclusion. There are two very different types of decisions and many people don’t use the right tools or approach to them. In fact, most people don’t acknowledge the difference, and adopt a singular approach to decision making.

The first type of decision, which I will call a Type A decision, is one in which there is no possibility of changing your mind. This is like a decision to jump off a cliff. Once made and enacted, there is no realistic chance of changing the decision. You will have applied much thought, undertaken substantial risk assessment, made plans for the bottom of the cliff, and then committed yourself.

The second type of decision, a Type B decision, is more like choosing a door to walk through. If it is wrong, then you go back through the door and continue.

The difference between the two is a concept called “reversability”. In game theory, this means exactly what it implies. Can a decision be readily reversed without substantial penalty? If the answer is no, then it is a Type A decision. If the answer is yes, then it is a Type B decision. Also, the level of opportunity cost of a decision is important. High opportunity cost makes it more a Type A decision.

Although this article will discuss mainly business-oriented decisions, the approach applies equally to decisions in our personal life. Ham or salad sandwich for lunch? Clearly a Type B decision. Buy that house you like? That is a type A decision.

Although we would like to think of this a binary situation, the truth is that Type A and B sit at opposite ends of a continuum. What we need to do is evaluate the decision required, and put it into one or the other category.

But why do we need to do that?

We need to recognise the type of decision required so we can apply the right thinking and analysis to the matter.

On the face of it, Type B decisions look trivial, but that is not always the case. Although the decision might be reversible, it may well have consequences that need to be considered. Think of the scenario where you must decide on the font you use on your website. Clearly this can be easily reversed, but it does lead to wasted effort, brand image confusion, and the need to communicate, again, your intentions and direction. It is a non-trivial, but reversible decision.

To make a Type B decision, you just need to understand the potential upside and downside, and the probability of either. Once these are understood you can then act decisively.

Type A decisions need, usually, an enormous amount of analysis to inform the decision-making process, because once committed, you can’t come back. Everything needs to be considered and evaluated. Contingencies need to be gauged. Mitigations need to be planned. It is a heavy-weight decision process, for good reason.

My argument is that people apply the wrong thinking process to a decision, because they don’t understand the difference.

People seem to have a default-decision-making setting that is mainly aligned to Type A decisions. Everything they need to decide is treated the same way. They treat Type B decisions with far more consideration than they should, and it pains me to say, they don’t treat Type A decisions with enough consideration.

This over-thinking Type B decisions results in a couple of things. Firstly, it introduces “analysis paralysis” into matters that should be dealt with expediency. It reinforces lethargy, it kills agility, it stymies innovation, and it makes the organisation risk averse. People say that changing the course of the oil-tanker is hard – what they are really saying is that they spend too long on decisions. My experience in enterprise software has shown this to me time and again. An adequate decision now is worth so much more than a perfect decision sometime in the future. Decision velocity is more important than decision accuracy. These are, after all, Type B decisions.

A worry for me is I that have seen many Type A decisions taken as if they were Type B decisions.

Type A decisions need vision, rigour, investigation and consideration. Too often I have seen that people were not asking the right questions – they had a focus on what can be best described as process rather than outcome. Their thinking seemed to be that if all the boxes were ticked, then that was sufficient. What was missing from their deliberation was a true understanding of the implications of the decision, and what the future might look like afterwards.

Are the obvious risks mitigated? Yes – then let’s go. This is Type B thinking applied to Type A decisions. In my opinion, a recipe for disaster in most cases.

My experience has shown me that people do not understand the difference between Type A and B decisions. They over-analyse Type B decisions – of which there are usually many, many more than Type A decisions. Unfortunately, they then under-analyse Type A decisions.

What then happens is that Type A decisions which impact people, the organisation, the society around them are often ill-considered. If they are shown to be wrong, then huge effort goes into post-facto justification, or arse-covering. Type B decisions, which may well make the Type A decision successful, are subject to inordinate scrutiny, and lose most of their effectiveness because they take too long to happen.

To conclude, my questions to you are these. Can you identify Type A and B decisions? If so, do you have appropriate approaches for each?

In a later article I will discuss perfect, optimal and adequate decisions. I will also discuss solving problems for the right variable.

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