Decision making under uncertainty

Choosing when you cannot know. Most business decisions.

What it means

Practical approaches include working out what is reversible, deciding what evidence would change your mind, and sizing the downside before the upside.

Why it matters

Waiting for certainty is itself a decision, and usually a worse one. The useful question is how much it costs to be wrong.

What it looks like in practice

Separate reversible decisions from irreversible ones and make the reversible ones fast. Write down what you expect to happen so you can tell later whether the reasoning was good.\n\nSize the worst case first. If it is survivable, the decision is usually easier.

What to watch out for

Sunk costs. Money already spent is gone and should not affect what happens next, which everyone knows and almost nobody applies.

Where to get proper advice

A non-executive director or peer group for the decisions that matter.