STREET DOGS

Many of the most successful people adopt simple, versatile decision-making heuristics to remove the need for deliberation in particular situations.

One heuristic might be defaulting to saying no, as Steve Jobs did. Or saying no to any decision that requires a calculator or computer, as Warren Buffett supposedly does. Jeff Bezos asks himself: is this a reversible or irreversible decision? His decision to found Amazon, for example, was made knowing that if it failed, he could return to his prior job.

As he explained in a shareholders 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.”

Reversible decisions can be made without obsessing over complete information. We can extract wisdom from the experience with little cost if the decision doesn’t work out. With practice, we also get better at recognising bad decisions, rather than sticking with the past. Equally important, we can stop viewing mistakes as disastrous and view them as pure information that will better inform future decisions.