As a PM you are responsible for either making decisions or ensuring a decision gets made. The definition of a good decision is usually limited to it being right, though outcomes are many at times determined by factors outside of one’s control. Therefore one should focus on the process of making a decision rather than on the outcome. Decision-making can feel daunting, but accepting the probabilistic nature of reality brings some ease. To become an effective decision maker, it is crucial to use the right amount of information to maximize the likelihood of being right. In a role where one makes numerous decisions, one needs to first understand the importance of each of the decisions to be made and then spend a proportional amount of time making it.

Every kind of imaginable decision has already been solved and the mental models are available to use. That is a good reminder for the moments you feel unqualified. Backcasting is one such popular mental model. As you envision the desired future, you can break it down to the steps that would land you there. You can also use mental contrasting to think through what obstacles could prevent you from reaching the goal. Shreyas Doshi calls it the pre-mortem, where you assume that a project has failed and determine the reasons why that could have happened. Hedging against failure then becomes easier.

Starting with a set of questions like the following can be in adding some structure to the chaos:

• 1. What judgment calls need to be taken?
• 2. What variables need to be considered to make an effective decision?
• 3. What are the unknowns?
• 4. What does success look like?
• 5. Who are the folks who will be affected by the decision?
• 6. What is the risk factor associated with the decision?
• 7. How easy is it to reverse the decision?
• 8. When should the decision be revisited?

99% of the decisions one makes are reversible. It's only smart to be more careful while making Type 1 decisions because if you are wrong the 1% time it matters, you are not effective at decision making. The importance of a decision and the time you spend making it can be evaluated by computing the resource investment, the impact of a positive outcome, and a negative one.

The information serves as input to make a decision and therefore the next natural question is around, how much information you need to gather for effective decision making. The amount of information one has before making a decision, determines the confidence one has in a positive outcome. 80% of the information is readily available in most cases, it is the last 20% that requires significant effort. Therefore, the less important a decision, the less information you should seek to make it.

To summarize, when changing the color of a button, you can do it with a lower confidence threshold and the decision should be made in near real-time. Whereas a change in the checkout page needs a higher confidence threshold and you should take your time with it.

Most decisions fall under these three buckets:

- A yes or no decision i.e. binary

- Prioritization

- Picking a single option from multiple possibilities.

Based on the type of decision and the risk associated, you can determine if you need a single decider, a majority from several deciders, or a unanimous yes from all the decision-makers. As we move to the right on the scale, the time it takes for the decision to be made increases but it hedges the risk to an extent.

Good decision making

- Decision maker(s) are identified beforehand

- Disagree and commit

- Made timely

- Each viewpoint is recorded for review and learning

- People choosing to make the right decision

- Transparent information sharing

Bad decision making

- There is no clear decision maker or is hastily defined too late in the process, usually by rank

- People who disagree do not feel involved enough in the execution, have a sense of resentment

- Slow, dragged

- Verbal discussions that fade away

- People proving to be right

- Partial or unidirectional information flow

It is crucial to note down any assumptions that you’ve made while making the decision and revisit them. It can come in handy as a reference for future decisions or to mull over a decision that didn’t produce the desired outcome. Mistakes are good but shouldn’t be repeated. The impact is driven by those who drive a lot of decisions quickly, and are right when it is really important to be.

Once the decision has been made, you must communicate the decision-making process and the rationale behind the decision, to the entire team.

Well, that closes the decision-making loop!

Adding a few resources below for reference:

• https://barmstrong.medium.com/how-we-make-decisions-at-coinbase-cd6c630322e9
• https://medium.com/@shreyashere/how-to-use-pre-mortems-to-prevent-problems-blunders-and-disasters-6ecc6df6e22a
• https://blackboxofpm.com/making-good-decisions-as-a-product-manager-c66ddacc9e2b
• https://twitter.com/_alexbrogan/status/1557356862760046592

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