Making decisions under uncertainty
In one sentence
Judge decisions by the thinking behind them, not just the result — and watch out for your brain's shortcuts.
The simple version
A good decision can lead to a bad result through bad luck, and a bad decision can get lucky. Annie Duke calls judging only by outcomes 'resulting'. Daniel Kahneman shows our fast, gut brain (System 1) makes predictable errors, so big calls deserve slow, careful thinking (System 2).
Why it matters
Founders make big calls with little information. Better decision habits beat chasing perfect information.
How to do it
- 1Ask: how sure am I, as a percentage?
- 2Think of decisions as bets with odds.
- 3Write down your reasoning before you know the outcome.
- 4Review decisions later: was it luck or skill?
- 5For big choices, slow down and seek someone who disagrees.
Real-world example
A founder hires someone who quits after a month. Instead of 'I'm bad at hiring', she reviews her notes and finds the process was sound — it was bad luck, plus one warning sign to watch next time.
What the books say
Don't confuse the quality of a decision with the quality of its outcome — that mistake is called 'resulting'.
We think with a fast, intuitive System 1 and a slow, effortful System 2; System 1 makes systematic errors.
Common mistakes
- Judging every choice only by how it turned out.
- Trusting your gut on unfamiliar, high-stakes decisions.
- Surrounding yourself with people who agree.
Questions people ask
How do I decide faster?
Separate reversible decisions (decide fast) from irreversible ones (slow down).
References
- [1]
- [2]
More books on this in the library
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The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers
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The Mythical Man-Month
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The Mythical Man-Month: Essays on Software Engineering
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The Score Takes Care of Itself
Bill Walsh's leadership philosophy that transformed the San Francisco 49ers from worst to legendary dynasty. Focus on excellence in process and preparation rather than outcomes, with lessons applicable to building any organization.
Out of the Crisis
Out of the Crisis by W. Edwards Deming is highlighted by Roger Ehrenberg of IA Ventures as critical for startup founders. The book emphasizes respecting employees, focusing on process, and collecting and analyzing data, applicable to businesses of any size.