Type 1 and Type 2 Decisions

“Make reversible decisions as soon as possible and make irreversible decisions as late as possible.” -Shane Parrish, Farnham Street

Speaking of decisions…

Jeff Bezos wrote up a great framework for decision making in an Amazon shareholder letter…

Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and 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. We can call these Type 1 decisions. But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.

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.

The chief task is figuring out which decisions are Type 1 Vs. Type 2.

Most decisions are Type 2, and we can reverse them. But we spend far too much time treating them like Type 1. Don’t.

That way we can save our time and energy for the truly few big Type 1 decisions that actually matter.

P.S. – This excellent Farnham Street article.